As we have all been forced to change our behaviors and depart from our “normal” routines, it is no wonder that our spending behaviors have changed too. For many, this means the opportunity to shift our constant spending to adopting more pragmatic mindsets and behaviors with the goal of becoming world-class savers.
HOW SPENDING HABITS HAVE CHANGED DURING COVID-19:
- Americans are spending markedly less on restaurants and hospitality, travel, and transportation 1
- Grocery sales have increased, as more families are making meals at home 1
- 52% of Americans have cut their spending due to fears over the economy or stock market 2
- 40% of U.S. consumers report being more mindful of where they spend their money 3
- 31% of U.S. consumers are switching to less expensive products to save money 3
- 78% of respondents in a global Nielson survey reported they are cutting back to save on household expenses 4
- 21% of U.S. consumers with job security concerns also have less than 4 months of savings to live off of 5
The common theme: For many, the impacts of COVID mean that succeeding financially may mean continuing to tighten belts and adopting mindful approaches to personal finances. Whether COVID has impacted your own family’s personal financial situation or not, instilling long-term savings habits can help increase financial confidence for all. Below, we’ll review some examples of how you can make changes in your spending to adopt a saver’s mentality in the current economic climate and beyond.
ADOPTING A SAVER’S MENTALITY
In an environment where it may feel like your financial needs are outpacing your income, there is still hope. There are several ways you can turn spending into savings.
SHIFTING TO SAVE FOR RETIREMENT
While the pandemic has impacted many people’s work status or hours, if you’re among those who have not been laid off or furloughed, COVID-19 shouldn’t stop you from contributing to your Roth IRA or 401(k), regardless of whether your employer has temporarily suspended its match. Moreover, if you’re spending more time working from home, you can channel the money you’re saving on your commute, eating out, office happy hours, etc. into savings.
If you’ve been furloughed or your work hours have been reduced, your goal should be to protect the money you’ve saved for retirement as much as you possibly can. This could mean leveraging unemployment if you’re eligible, or tapping into any emergency savings you may have socked away. A qualified financial professional can also help you shift your retirement strategy and keep you on-track.
SHORING UP TO SAVE FOR EMERGENCIES
Rainy day funds are meant for times like these. If you haven’t already, now is the time to work with a financial professional to reexamine your budget, or set up a budget if you don’t have one. Additionally, keep a careful eye on where every dollar you spend goes. This can make a critical difference in helping your family stay afloat when the waters get rough. And if at all possible, keep your hands out of your retirement savings.
FINE-TUNE TO SAVE AROUND THE HOUSE
There’s a lot going on and, understandably, it can be challenging to know where to start when it comes to shifting your money habits. There are a lot of ways you can adopt a saver’s mentality by fine-tuning your household spending, including writing out a list of your monthly expenses, and then determining where you can cut back unnecessary spending. Buying in bulk can help too. By rethinking and shifting your approach to food, entertainment and even household chores, you can save a significant amount of money over the long haul.
SPEND (AND STASH) MORE MINDFULLY
Starting with a simple calculation of your spending habits can provide clarity on how your spending lines up with your priorities. Additionally, saving in small increments with the help of technology or apps can help you reach your goals more quickly.
Finally, don’t forget to take some time for your own self-care. Economic shake-ups are all but inevitable, so don’t panic. If you find yourself feeling a little overwhelmed, a financial professional can walk you through options and strategies, and create a plan that fortifies your finances..
Working with a financial professional can help you ensure that as your financial situation, and priorities, shift with the changing environment, that you can be confident with protection, savings and growth strategies.
Brought to you by The Guardian Network © 2020. The Guardian Life Insurance Company of America®, New York, NY
2020-108339 Exp. 9/2022