June 08, 2022
The lessening of COVID precautions in 2022 is causing a slow shift back to "normal," and the return has ushered in new opportunities to spend money. In a new study on Americans’ financial perspectives since returning to normal, 47% of Americans have found themselves spending more money recently. The results were similar for Philadelphians; 49% of residents surveyed have found themselves spending more recently too.
The survey uncovered that half of Americans plan to splurge. About 48% of those surveyed who saved money have either splurged on a big purchase or plan to do so in the near future. Sixty percent of young Americans, aged 18-34, are more likely to do so compared to only 33% of those 55 and older.
Although half plan to splurge, Americans are most worried about cost of living, inflation and gas prices. When asked about their top three biggest financial concerns, 53% of Americans listed cost of living, 44% said inflation and 41% said increased gas prices. In Philadelphia, debt and lack of savings worry younger residents. Debt and lack of savings surpass gas prices and inflation as top financial concerns for younger residents. Forty percent included lack of savings among their top three financial concerns; 35% had worried about debt. Compare that to 24% for inflation and 31% for gas prices.
As we enter the next stage of pandemic life, staying financially literate is essential. With spending increasing in 2022, 65% are searching for easy budgeting tips to help save to afford their plans for the remainder of the year. While you deserve to have some fun after the last two years, it’s important that you are financially prepared to handle the “new normal.”
Here are insights into how you navigate this new "normal" and tips to keep in mind for your post-COVID finances:
Have you gone back to a restaurant yet? Or started working in person at your office? Since we’ve been home for the last two years, your budget has probably looked a lot different than it did in 2019. Eating out, transportation to and from work, and buying new clothes might all be things you haven’t had to think about (or budget for) in a while. But as in-person life starts up again, make sure that you are financially prepared to deal with all of these old/new expenses.
Consider these factors as you reassess your budget:
• Clothes: Do you need to buy new clothes for work/school/going out? Make a list of essentials, then hunt for deals online or save by buying consignment pieces. This way you won’t go overboard on your shopping spree!
• Transportation: How many times a week will you need to buy gas now? Do you really need to take advantage of ride-sharing services? Philadelphians, in particular, have been taking advantage of ride-sharing services. Around 43% have taken an Uber, Lyft or other ride-sharing service at least one time in the spring. Instead, think of ways to save on travel, like taking public transportation, riding a bike or even walking instead of driving.
• Pet/Child/Elder Care: If you have people (or fur babies) at home that will need to be cared for as you go back to work, compare care options and find the one that fits your budget. Look into free or low-cost programs that care for the elderly, such as those offered through the Pennsylvania Department of Aging. Consider asking a friend or relative if they could watch your child or pet and agree to cover the costs of food/entertainment.
While COVID has been a struggle for everyone, hopefully you were able to use the time at home to save money on many things, from movie dates to gym memberships. But to fill the void of some of these things and experiences, there may be new items or services you’ve started spending money on. While it might be hard to let go, some of these expenses could blow up your budget if you maintain them. Now that we’re getting “back to normal,” use your weekly or monthly budget check-ins to assess what you spent money on during the pandemic.
Some helpful advice during check-ins:
• Understand where you currently stand financially. You should do regular financial health check-ups. Set a reminder on your calendar to review your finances on specific dates to get a better sense of how much money you have coming in, how much you’re spending and how much you have in savings. Knowing where you stand financially can help you map out what steps to take to improve your situation, if you haven’t maintained your budget.
• Consolidate auto-pay subscriptions. Think Gym memberships, television and music streaming services, and food subscriptions boxes – while these costs are relatively small individually, when added up they can account for a large chunk of change. Take an afternoon to search through your weekly and monthly spending to add up all your recurring subscriptions. In organizing your subscriptions, you may find there are some that you intended to cancel, but they slipped through the cracks.
• Rebuild savings. With rising costs and new expenses, saving can be difficult. But putting away some money every week into a savings account, even as little as $20, can add up over time and provide a potential safety net down the road when you need it. Don’t view these funds as extra money that can be used for anything. Only dip into your savings fund if it is a real emergency or for the reason you started the savings account in the first place. Rebuilding savings will hopefully set you on the right path to being secure in your finances.
Many people have decided to use the money they saved throughout the pandemic to “revenge spend” in an attempt to regain a sense of control in an otherwise chaotic time. Spending money on things you really missed can be fun, but there are ways to “revenge spend” without blowing a hole in your budget.
Follow the below tips to be savvy in your revenge spending:
• Have an account just for splurging. Don’t dip directly into your accounts designated for expenses and emergencies. Create a single account where you deposit a certain amount of money from each paycheck going forward. Or, if you were able to save monetary gifts, bonuses or tax refunds, consider using that as your “fun money.”
• Stick to your budget. Once you’ve decided to go on that trip or buy a pricy new gadget, create a hard limit for how much you’ll be spending. Keep a close eye on the mounting expenses of your trip or the price for that new flat-screen TV, and find places to cut costs. Another way to stay on budget is to only use the amount in your splurge account—once those funds are gone, they’re gone.
• Review prices due to rising inflation costs. Keep in mind that the cost of seemingly everything is on the rise. The most notable price hike has been gasoline. According to data from AAA, the average cost of gasoline in the U.S. hit a record high of $4.374 a gallon. You may want to consider public transportation or carpooling as an alternative method for getting to/from to protect your wallet.
• Find a less expensive alternative. If you’ve been dreaming of lounging on a beach for the last two years, you don’t have to go all the way to Mexico or Hawaii. Do some research into locations closer to home that might satisfy your travel itch. Utilize travel sites like KAYAK, Expedia or Orbitz to compare deals on hotels, flights and excursions to get the best price.
One thing the pandemic has taught us is how to be more creative in our spending and saving. And just because things are “getting back to normal” doesn’t mean that has to change! You can maintain all of the financial momentum you’ve built for yourself while still having fun. PFCU also offers resources and additional information to its members and will work with them to achieve their financial goals. For more information, visit pfcu.com.
We hope these questions and tips will help you establish a solid plan for your finances as our city moves into this next chapter.
View the full research report here.