The coronavirus pandemic forced millions of people to truly evaluate their finances and consider frugality as layoffs swept the nation and stimulus checks couldn’t come fast enough. A poll by Slickdeals found that 60% of Americans say the pandemic changed their purchasing behavior, with many cutting spending on movies, clothes and entertainment. As the economy starts to thrive once again, will responsible financial habits picked up during the pandemic stick around? A new survey from coin counting company Coinstar shows good budgeting developed during COVID-19 will continue.
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If you’re considering locking down on spending habits, here’s a list of the most effective ways to stash away cash for savings, retirement or an emergency fund.
1. Place a value on your spending: Taking dining, travel, and other activities off the menu can eliminate enormous expenses and place higher value in things such as quality time with family, your children, etc. Placing a qualitative value rather than a quantitative value on your spending and experiences can really change your perspective on things. $125 for new clothes suddenly seems a lot less appealing when you compare it with the option of $125 for a dinner date with your spouse and a babysitter. Those clothes might be what you want now, but chances are you will place a higher value on quality time with your partner and time away from the kids (parents understand this one deeply).
2. Embrace wait times for products: Many of us probably skipped purchases of trivial items in COVID because of the seemingly eternal wait times to receive the product. If you’re upset that you can’t get your new coffee mug with “Crazy Cat Lady” or “Stay at Home Dog Dad” on it within two days via Prime Shipping, you might be making some impulsive decisions that add up over time.
3. Don’t just save with your bank: If you had extra money laying around during COVID, you may have been one of the investors taking advantage of the rapid market repricing in the spring of 2020. It’s time to reorganize your thoughts on investing in stock markets. Working with your advisor, or finding an advisor, you could have made educated decisions with your portfolio to take advantage of this major market discount in a disciplined manner. No, this isn’t one of those times where timing the market is going to make you rich, but it will open opportunities to buy at a discount far greater than those around you who are in a panic. We are so quick to run to Best Buy on Black Friday to save 30% on a TV, why aren’t we looking for deals in our savings for the future?
4. Setup autosave: Don’t feel like you have the willpower to save more, even though you’re spending less? Now is the perfect time to set up an automatic savings mechanism that automatically invests that amount monthly at a bank, brokerage, or mutual fund company.
5. Evaluate your current valuables: Perhaps it’s time to take inventory of what really matters and how much can be saved with something simple. Yes, interest rates are at a low, but do you really need that new car with the upgraded Bluetooth? Chances are, you don’t feel like paying 10% premium over asking or waiting 6 months to receive the car you ordered. We as people have desires to always get the next, nicest thing, but perhaps we should take these major shifts as an invitation to slow down and enjoy what we have. And oh, by the way, not having a new car payment and outstanding debt obligations in the meantime.
6. Save what you would’ve paid in student loans: If you’ve recently paid off student loans or were able to get a break in payments, continue to save what you normally were spending monthly.
Author: Jake Guttman, FSCP, is the founder and CEO of Rosevest Financial that provides a variety of services including financial, legacy, investment and retirement planning, as well as risk and wealth management. For more information visit rosevestfinancial.com. Securities and advisory services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC.
