The COVID-19 pandemic forced people to limit socialization, and very few people were prepared for just how significant this change would be. A byproduct of this forced isolation is that many Americans ended up saving more money than usual. However, now that pandemic restrictions are easing, many people are itching to get out and spend the money they have saved – to the extreme. While this is understandable from a psychological perspective, this is not necessarily the best financial decision. If you notice you are overspending, or if you are worried about this in the future, read on to learn more about overspending in the post-pandemic era and strategies that can help you to avoid it.
SIGNIFICANT SAVINGS DURING THE PANDEMIC
Americans saved more than usual during the pandemic, if for no other reason than they were virtually forced to. With travel shut down, brick and mortar retail stores closed, and restaurants largely limited to takeout only, combined with government stimulus checks, Americans have accumulated a total of $2.6 trillion in excess savings. Almost 80% of all Americans have said they saved money in 2020, the majority of which is attributable to the pandemic.
SIGNIFICANT SPENDING POST-PANDEMIC
Now that Americans have been cooped up indoors for so long, and largely restricted with the activities in which they can take part, many people are itching for the opportunity to spend their money. Demand is particularly high for traveling, high-end meals, salon visits, spa treatments, and home remodeling, among other things. “Retail therapy” is feeling like a real necessity for many Americans! Importantly, people are spending / being tempted to spend on items that they do not need but that they simply want to buy out of what some refer to as “revenge spending.” That is, spending for the sake of spending. However, the fact of the matter is that long-term satisfaction will not improve with this near-term spending, so it is important to employ strategies to responsibly manage your post-pandemic spending.
STRATEGIES TO CONTROL SPENDING
There are a number of strategies that will help you control spending. Here are some key ones to focus on:
- Avoid temptations – try to avoid comparing yourself to others, especially via social media, as this can tempt you to overspend due to fear of missing out.
- Shop local – shopping locally and in person can help make you more conscious of your spending, especially if you decide beforehand how much to spend.
- Think before buying – consider giving potential purchases one or two days’ thought before buying to make sure they are things you really want.
- Invest your money – you may miss out on short-term splurging, but you can realize significant long-term gains.
- Stick to your budget – ultimately, if you craft a budget and stick to it, this will help to guide where and when you spend your money.
Employing even just one or two of these strategies can really help to curb overspending. Of course, there will be times when you may give in, but the faster you can get yourself back on track and following these strategies, the better job you can do to control your spending.
LEARNING FROM THE PANDEMIC
To say that the pandemic era was a difficult time for so many is an understatement. However, there are important lessons to be learned, especially when it comes to managing personal finances. You may be tempted to overspend now that restrictions have eased but remember that continuing to be financially responsible with your spending can really pay off long-term!