It’s common to at least try to start each new year off on the right financial foot. In January, you probably pledged to spend less day-to-day or to finally open up that IRA to put away money for retirement. And maybe things were going well — until coronavirus swept in and completely changed how we are living and therefore spending.
“Many people had to put a pause on their financial goals and are focusing on necessities,” explains Sara Lundberg of BudgetSavvyDiva.com. You may be feeling the need to stock up at the grocer or drug store so you don’t have to shop as frequently, or home entertainment so you don’t get bored (research from McKinsey confirms this is typical). On the flip side, many of those needed pre-pandemic are no longer in play like gas for the car or tickets to the concert.
So, are we spending more or less? It’s it is expected that many people are spending less due to cut costs of eating out and a decrease in child care payments, says Kristy Archuleta, Ph.D., Associate Professor of Financial Planning, Housing, and Consumer Economics at the University of Georgia, although she acknowledges that it’s hard to generalize since every individual’s current financial situation is different.
Simultaneously, many people are dealing with unexpected changes on the other side of the budget equation. If your income has dropped because of a job loss, furlough or reduction in self-employment income, that could also be wreaking havoc on your savings rate. Bottom line: How do you deal with all of these budgetary changes at once?
With Rebecca Cohen