COVID-19 has impacted everyday spending habits, budgeting, and saving strategies. Here are 7 budgeting lessons we've learned as a result of the pandemic.
Since the start of the global coronavirus pandemic, the ripple effects of this health crisis have made a sudden and powerful impact on our everyday behaviors and habits. This includes regular spending on things like restaurant dining, shopping, and travel. Many of the ways we spend, budget, and save, look much different than they did just a few months ago. Here are a few budgeting takeaways to make note of from the pandemic.
Spend Conservatively on Entertainment and Dining Out
At the beginning of the pandemic, the first item to cut back on for most people was going out to restaurants, shopping, and other recreational activities. This was partly by default due to the restrictions on businesses to minimize the spread of COVID-19. Over time, adults and kids alike quickly made the shift from in-person engagements to virtual chats, to celebrate milestones such as birthday parties and baby showers.
Others took this time to pick up new hobbies like baking, sewing, and crossword puzzles. While indoor activities are unlikely to permanently replace the excitement of concerts and other live events, the mandatory quarantine has allowed us to get creative—and save a few extra dollars at the same time. Even as businesses cautiously start to reopen, many consumers continue to cook and entertain themselves at home until things feel a bit more stable.
Short-Term Emergency Savings > Long-Term Investments
Saving for retirement has long been a top priority in financial advice from most experts. This all changed several months ago when many people lost their jobs and faced other emergencies that require cash on hand. While it is still important to set money aside for retirement and other long-term investments, the current climate calls for an easily accessible savings cushion.
To prepare for an unforeseen job loss or medical emergency, it is wise for even those with stable jobs to build up a savings fund that will last for three to six months. And because we still have yet to know how long it will take for the economy to fully rebound from COVID-19, an emergency fund that covers one year of expenses or more, is even better to ensure peace of mind.
Online Banking Saves Time and Extra Headaches
Online banking is a convenient and easy way to handle most financial needs like bill pay, direct deposit, and more. Despite this, there are consumers who still prefer going to a branch to take care of their banking needs. Now that many banks have closed or operate on limited branch hours, it’s more necessary than ever for consumers to set up an online account to access services.
To provide flexibility in light of current events, some banks offer increased daily transfer limits and free bill pay to their customers. In addition, mobile apps are available to check account balances, send and receive money, and find local ATMs.
Expect Ongoing Changes in Childcare Costs If You’re a Parent
Childcare has been (and continues to be) a considerable source of stress for parents across the country. Some parents have either been able to suspend regular payments while daycares are closed, or continued making payments to reserve their child’s spot, depending on the provider’s policies.
With states and schools still in the midst of decision-making on whether to reopen in the upcoming months, parents may want to brace for what that might look like for their financial situation. Whether it’s allocating usual childcare costs to pay a family member or friend or keeping your kids at home for the rest of the year, there are still many unknowns to anticipate.
The Absence of a Commute Frees Up Your Budget
For those with employers who have decided to stay remote for the foreseeable future, this means a temporary relief from regular commutes. Along with a commute comes with expenses like gas, repairs for normal wear and tear, and auto insurance. Reducing these costs can provide some much-needed breathing room in your budget that can go toward emergency savings or other immediate needs. If you haven’t already, check with your insurance provider to see if they offer options to discount your coverage while you’re at home.
The Importance of Charitable Giving
Although a lot of the financial impacts of a global pandemic are bleak, there are some positives. For those who have been fortunate enough to remain employed, one positive impact is a generally increased desire to contribute to charitable causes. With the money that would otherwise be spent on movie tickets or a family vacation, some consumers have instead put it toward donations to homeless shelters, food banks, and other organizations that are overwhelmed during this time.
Consider Investing in Personal and Career Development
It’s always important to invest in yourself both personally and professionally, and even more so with the number of drastic changes in the past several months. If you’ve lost your job or work in an industry that’s been hit hard by the pandemic, you're probably in need of ideas for your next career move.
Take a close look at your interests and skills and map out a few different career choices that align with what you want. It can help to take an online course or participate in a webinar in your desired industry to get a better idea of whether it’s the best fit for your goals.
If you have no idea what you want to do or whether your career interest is even a possibility with so many unknowns, that’s perfectly fine. In this case, working with a life or career coach could be a worthwhile investment to give you support and motivation as you plan out your next steps.
More Changes to Come
With an increase in cases around the country and potentially another round of stimulus relief, there will likely be ongoing changes to reflect COVID-19 related developments. These changes are sure to have both short-term and long-term effects on your budget and spending. This is a challenging time for everyone and if you’re in need of support to maintain your financial wellbeing, this checklist provides additional resources.
The views expressed by the authors are not necessarily those of Fifth Third Bank, National Association and are solely the opinions of the authors. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, National Association. Member FDIC.