Are you ready to spend money again?
Those of us who have been lucky enough to escape financial catastrophe due to the pandemic have built up our savings. How will the re-opening of the economy and increased spending opportunities affect your finances?
Are you ready for the pandemic to end? I mean, financially?
It appears that everyone is SO OVER the pandemic that we’re ready to throw caution to the wind and resume our pre-pandemic lives RIGHT NOW.
I went to Costco last week. For months now, it has been a fairly pleasant experience. People have generally been courteous to one another, giving each other space, trying to smile with their eyes to communicate what their mouth can’t show. It was a quick in-and-out operation as people didn’t want to take up too much space or spend extended amounts of time potentially exposing themselves to the ‘Rona.
That all has apparently come to an end. Hoards were converging upon the end caps displaying the latest deals. People were taking their time contemplating the difference between the name brand and Kirkland brand vitamins. And worst, giving me all sorts of dirty looks when I dared come around a corner only to find myself temporarily in their way as they were coming down the aisle. Even my quick maneuver out of the way and apology did not quell their annoyance.
Here in Minnesota, like many other states, we’re itching to re-open. The governor seems intent on giving Minnesotans back their beloved state fair food-on-a-stick, butter sculptures, and seed art. We’re opening up baseball, weddings, and other large events (masked, with distancing, at least).
After months of limiting our spending to new pets and home improvements, we have a pent-up need to return to our pre-pandemic spending habits. Money is burning holes in our pockets (or bank accounts).
The U.S. savings rate, according to the Federal Reserve Bank of St. Louis, went from 7.6% in January 2020, to a whopping 33% in April. It has since decreased again, but the lowest point was still 12.5% in November as holiday spending ramped up.
How many times in the last year have I heard things like “I’ve stopped shopping for new clothes because I have nowhere to wear them”?
We’re filling up our cars less and spending less on entertainment and eating out. All the times we’d head to the mall or the movies out of boredom disappeared as we took full advantage of the Netflix memberships we were already paying for.
So as the economy opens up in the coming months, will we be able to sustain our increased savings rates?
(It’s worth noting that financial experts recommend saving 20% of your income and we’re still far below that.)
Most importantly, do you have a plan for your money? Are you fully prepared for the return of temptations and the increased availability of things to buy?
Before we get back to normal, it is worth taking some time to evaluate your finances and make sure that you’re taking care of yourself both now and in the future.
How You Can Be More Intentional with Your Spending
Evaluate your expenses for the past few months.
Ask yourself what spending habits you want to keep. What purchases have made you happy? What pre-pandemic expenses have you not missed?
Think about your future goals and make sure they’re funded first.
Now’s a great time to set up automatic transfers to savings accounts for retirement, a new home, college education, vacations, or whatever your heart desires. Lock in your savings so that you’re less tempted to spend the money instead of stashing it away.
Read more: Why You Should Automate Your Finances
Get clear on your values.
What parts of life are truly important to you? When you know what kind of life you want, you can stop spending on things that you think you’re just supposed to want.
Make an intentional spending plan.
As the economy re-opens, you’re probably going to find yourself wanting to spend money on all of the things you’ve missed at once. Don’t go wild. There’s no need to do it all right away. Make a list of things you want to do or buy and prioritize them.
Obviously, none of us would have chosen to endure the pandemic, but it is providing us with a great opportunity to become more intentional with our finances and start building a rich life now and in the future.
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