The US Department of Commerce reports that consumer spending, which accounts for more than two-thirds of U.S. economic activity, plunged 13.6% in April of 2021, the biggest drop since the government started tracking consumer spending in 1959.
The sources of the largest decreases in consumer spending include the following:
Bars and clubs
Out-of-home entertainment (movies, concerts, etc.)
But the funny thing is, many people realized during Covid-19 how much they don’t miss the things they thought they couldn't do without. In fact, a large majority of consumers came to an important realization: They plan to continue many of these cuts even after the end of the pandemic.
Financial Changes To Keep after COVID-19
Over the last year and a half, many people have developed some major new financial goals. These goals include getting debt-free, padding emergency funds, investing more, and working towards financial freedom. As a result, some financial changes, even after things “go back to normal” include the following:
1. Eating at Home and Cooking More
By cooking and eating at home you save a lot of money but eating at home can also be much healthier. When you cook you know what is going into your body. This is a big health-finance win-win. Cooking also presents a great opportunity to practice mindfulness, a life skill that comes in handy during turbulent times in the world. When you focus intently on the process of cooking as well as the process of eating it just makes the food taste better. Not to mention more time spent with your family.
Of course, when you feel safe to do so you know you will return to restaurants; there’s no reason to completely deprive yourself. But this habit of cooking and eating at home is something many people will not give up.
2. Drinking Less
Just as we haven't spent time in restaurants, many people have also stop spending time in bars. The habit of going to a bar to drink was sorely missed by many people during the Covid-19 lockdown, but drinking at home costs far less because you do not pay the kind of markup you pay when you order alcohol with dinner. Like with restaurants, you may not plan to stay out of bars for the rest of your life. Rather, you learned during Covid-19 to accept consuming far less alcohol than before. It’s healthier, you feel better and spend far less money. Another win-win.
3. Buying Fewer Clothes
Consumers tend to go through cycles of buying clothes. When you feel good in your body, you want to purchase new clothes. Before the virus, we were required to wear different clothes for all kinds of different settings: work clothes, relaxation clothes, gym clothes, casual dining out clothes, fancy dining out clothes. You can see how all that money adds up. But since the pandemic, you learned that you barely buy any clothes and wear a very small percentage of what you actually own.
This has saved consumers a lot of money and many have realized that they don’t need such a large wardrobe. The pandemic has taught us about the value of quality over quantity as well. By buying higher quality, classic-looking clothing that you can wear basically anywhere, you find that your wardrobe looks and feels good in a variety of different settings.
4. Less (and Cheaper) Entertainment
Before Covid-19, music lovers were constantly buying albums and attending concerts and other musical events. For avid fans of live music, this hurt, a lot. But we survived and in the process saved a ton of money. The same applies to going to the movies, traveling to casinos, going on cruises, and other forms of entertainment outside the home.
We were forced to stay at home and learn how to entertain ourselves during Covid-19. Now, if you ask someone who was always on the go, seeking entertainment in places other than their own home, you will find that many consumers are happier. They have found ways to entertain themselves at home, by playing board games, watching Netflix or other streaming services, and spending quality time with their families, while saving a whole lot of money. Now that Covid-19 restrictions have been lifted, of course outside entertainment lovers will go back to attending events, but you can bet a lot of them will be cutting way back on that form of entertainment and maintaining their new happy equilibrium.
5. Exercising at Home
Many consumers had enjoyed the luxury of a fancy gym before Covid-19 shut them all down.
But what they ultimately discovered was that working out doesn’t need to be luxurious. It just needs to be done. And most of us have discovered that we can burn all those calories either right in our own homes or by exercising in that free gym known as the great outdoors. Walking and running in nature has made a tremendous comeback. And there are plenty of free exercise videos on YouTube.
We would imagine if a survey at this time, many gyms are suffering even after the Covid-19 restrictions are lifted from lack of returning members. People wised up. Of course, many will return to the gym but just the fact of learning you have other options is very freeing.
As a result of the above changes in the way we spend money, many consumers now have more in savings than they ever have. This feels good, having your personal finances in the black. To help you keep them that way, MoneyThumb has a version of our PDF financial file converters designed specifically for personal use. This tool will make it much easier to handle your finances and keep things in order.