Lucas Casarez, CFP®
If you are anything like my family, your spending habits changed significantly during the pandemic. Yet, if you managed to maintain employment, you may have found that your savings actually grew.
Or perhaps you’re a stress shopper and with more time on your hands, you managed to find new ways to spend money.
Either way, your spending habits are likely to change again as we approach “the new normal.”
Here’s a snapshot of my clients’ significant expense changes over the last year and a half:
Savings Increased due to:
- Less Travel
- Less Gas Consumption
- Less Dining Out
- Less Entertainment
- Deferred Student Loan Payments
Spending Increased due to:
- More Home Delivery
- More In-home Entertainment
- More Home Goods Purchased
- More House Projects Undertaken
- New Hobbies or Projects
- Stimulus Check Spending
The tricky thing with habits is that they tend to stick around. If you increased spending in new areas, some of which are listed above, will you curtail these newer spending habits as you start ramping up spending on things you used to spend money on? For example, moving forward, my wife and I decided to stick with grocery delivery.
If you didn’t receive a significant pay increase over the last year and a half, as the world opens back up, it might be too costly to stack your old spending habits on top of your new habits.
Here’s how you can prepare for the shift:
- Know where your money is currently going — track it with a dated list of expenditures.
- Identify your short-term goals and upcoming expenses for activities that you’re eager to do once things open up a bit.
- Will they all fit within your budget and still allow you to maintain your long-term goals?
- Identify lower priority expenses that can be eliminated in favor of expenses that will add more value to your life.
These effective yet simple steps will help provide clarity on what you can comfortably afford as your spending habits shift moving forward in response to “the new normal.”
Lucas Casarez is a husband, father of three amazing kids, and a Certified Financial Planner™. He founded Level Up Financial Planning, one of the few fee-only financial planners in Northern Colorado. The mission of Level Up Financial Planning is to guide his clients in taking their financial confidence to the next level.
Have a personal finance question you would like me to answer in a future week?
Lucas Casarez (he, him)
Certified Financial Planner®