As we started to face the health risks of COVID-19, we were forced into rethinking and revising spending habits, given quarantine restrictions and job loss. Suddenly, the ability to go out to a nice restaurant or plan a weekend getaway was impossible and many people were left wondering how to make a month of savings last much longer.
While there is no doubt the pandemic turned normal day-to-day living upside down, there are some positive changes that we can actually make permanently to create a better retirement than we ever could achieve by continuing our routine spending habits.
According to a recent study by McKinsey & Company, four out of five Americans have not yet returned to pre-COVID 19 levels of comfort and activities. Financial changes by both unemployed and employed Americans include savings on commuting and dining expenses, and even gym memberships. Research also shows Americans are more likely to host small gatherings with friends and family rather than more expensive and risky restaurant parties. People have purchased at home gym equipment and now do not have the need to go to a gym.
These positive financial changes are a step in the right direction. But how can we turn this year of unprecedented changes into financial security? Here are four key tips to continue to follow to keep spending in check and save more money for retirement.
While we might not have thought twice about walking into a department store and making an impulse purchase or getting takeout for lunch, these decisions now require more thought to take place. This can be an advantage, since being deliberate about every expense can help you recognize how you can save more money. Setting spending limits on your credit cards can help to lower your spending habits and keep them in check.
With the shift to working from home or even just spending more time at home, this leaves more time for other things that normally would require paying a service person. Many people during the quarantine months taught themselves to cook, cut hair, garden, or even make upgrades to their homes. Continuing this trend can help to save you considerably, so take advantage of any extra time and new skills you may have and avoid making a call to pay someone else for service.
While many people have more time on their hands, many have less money, making it important to make money last longer and purchase items of value, not luxury. With spending more time at home and less time out at social events and offices, purchases such as suits and cosmetics have not been needed. If you tend to enjoy the newest styles and name brands, shift your thinking. From clothing to household supplies, consider the lower end more affordable choices that can encourage money savings.
While travel spending is often a chunk of extra money every year, consider holding off on these extras or choose local weekend road trips and cottage accommodations instead of trips that require long flights and fancy hotels. This change can add up to thousands in savings over the years. It might be a better choice to put vacations on hold all together and invest in your home to make it permanently somewhere you enjoy spending time off and feel as though you do not need to go on vacation to relax.
There are many ways to take advantage of the spending changes that COVID 19 has brought so suddenly and create permanent shifts in your financial habits. It is the perfect time to reevaluate your financial health and retirement plan to ensure that you can have the freedom to make choices in your retirement.
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Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.
Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.