Pandemic forces shift in finances to prioritize, simplify and save
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The pandemic has caused many people to reassess their priorities. There is talk of moving out of the city, simplifying life and saving more money.
鈥淚鈥檓 not going to spend money like that anymore,鈥 my millennial daughter told me recently, talking about past shopping sprees on handbags, jewelry, and yes, lattes.
鈥淔inancial security is fun now.鈥
This from the same person who, until recently, has annually paid to upgrade to the latest version of smartphone ever since she purchased her first Juicy Couture Sidekick back in 2005.
But, as usual, my daughter alerted me to a growing trend.
In an annual survey, consumer research firm The Family Room LLC identifies prevailing trends in more than 150 psychological drivers. Determining changing priorities from year-to-year helps identify emotional hotspots among different age groups.
The latest results show dramatic shifts in attitudes, the company says, including a 14 percent increase over the previous year鈥檚 survey among parents in 鈥渕aking my life simpler and less complicated.鈥
Changes are happening in the way people save, too.
Among US adults who say they developed new financial habits during the pandemic, 58 percent said they plan to continue cutting back spending on 鈥渨ants鈥 in 2021, according to a recent NerdWallet survey. Many (36 percent) plan to continue building up savings, and 30 percent will continue stashing money in emergency savings.
Here are some ideas for simplifying your life and morphing your money habits from carefree to careful.
Leo Babauta, 46, a writer in Southern California, is on a mission to help people 鈥渋mplement Zen habits in daily life.鈥 He believes the pandemic has given us the gift of prioritization.
鈥淲hen things are falling apart, it helps us realize what鈥檚 most important to us,鈥 Babauta says. 鈥淭his will help us to simplify our lives as we move forward because simplicity really boils down to two steps: Identify what is most important to you and eliminate everything else.鈥
On Babauta鈥檚 blog at ZenHabits.net, he chronicles a long list of life changes through the years: quitting smoking, paying off debt, losing weight and taking control of his finances.
He stopped living paycheck-to-paycheck by addressing the things that turn us to bad financial habits in the first place: fear, anxiety and stress.
Babauta says that the COVID outbreak has sparked him to be even more focused on 鈥渢aking care of myself, meditating, walking and getting rest.鈥
鈥淚f we鈥檙e shopping too much, it鈥檚 because we鈥檙e stressed,鈥 he said.
鈥淚f we avoid budgeting, it鈥檚 because it causes us anxiety. Breaking the cycle is about choosing better habits to deal with that stress, like going for a walk or making a list, and then creating accountability and support to do the new habit every day, instead of the old habit.鈥
Simplifying life is a theme echoed by Richard Liu, 26, a marketing manager in Sydney, Australia.
鈥淥ne of the ways I helped simplify my expenses is using a money tracking application. Since so many things are digital, making purchases online has been the norm, so being able to track spending is essential,鈥 said Liu, who keeps tabs on his expenses, investments and net worth.
Like so many other COVID castaways, Liu says he is saving money on transportation due to less commuting 鈥 and on food by doing more of his own cooking. He also found ways to prepare for a post-pandemic financial rebound:
1. Trim nonessential recurring expenses.
These include things like monthly subscriptions and gym memberships. Make a list of them all. It鈥檚 possible you鈥檒l find more than a couple you鈥檝e either forgotten about or haven鈥檛 used in a while.
2. Refinance existing debt while interest rates are low.
A mortgage, student loans or personal loans are all candidates for rate improvements. Perhaps even your car loan.
3. Shop for better deals on existing insurance policies.
With people driving fewer miles, some vehicle insurance rates have fallen. Many insurers have even issued rebates to policyholders.
Liu says he鈥檚 combining these money-saving ideas with another important moneymaking component: He鈥檚 been taking on additional freelance work to help make extra cash.
鈥淚 think it鈥檚 never been so important to create side income or develop new streams of money,鈥 he said. 鈥淢ore money means more savings, but also stability. This has been my main focus and priority and will continue to be.鈥
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