In many ways, Covid has accelerated changes that were already happening. The high street, for instance, has been in trouble for some time, use of online learning was increasing anyway and digital payments were already gaining traction.
But the pandemic has also created brand new habits for us all – who would have thought that remembering a face mask when you leave the house would become as essential as your keys?!
An area that’s seen significant impact is how we spend our money. With pubs, cinemas and cafes closed and holidays, social events and leisure activities restricted, many of us have seen a shift in our financial habits.
Should our spending habits bounce back?
Sometimes events make us jump forward in ways we didn’t expect, and for all the anxiety that brings, there are always silver linings too. When JFK said that in the Chinese language, the word “crisis” is composed of two characters – one representing danger, the other opportunity – he was wrong on the linguistics but 100% accurate on the sentiment.
When it comes to finance, the danger of Covid and its threat on both personal wealth and the economy remains clear. But much less is said about the opportunity. At some point – soon we hope – things will go back to normal (whatever that means) but will our saving and spending habits bounce back? Should they?
It would be wrong not to acknowledge that for many, Covid has had a devastating financial impact. The unemployment rate is up and the furlough scheme has been extended yet again. However, for others, the pandemic has meant a surprisingly welcome change in spending habits. Let’s take a look at what these are and how we can keep them going in 2021 and beyond.
Covid cash habits to keep
‘Forced’ saving
Some people are enjoying a mini windfall as lower spending has translated into increased saving. From repurposing unused holiday funds, to redirecting that daily spend on coffee, transport and other stuff we can’t buy during lockdowns, there has been a significant bump in savings rates. For some.
Doing things ourselves
With more time on our hands and lots of businesses closed, many of us have resorted to cutting our own hair, cultivating a green thumb, dabbling in renovations, and taking up all sorts of DIY hobbies. While it’s also important to support small and local businesses when they’re able to open, can you continue to do some of the things you’d usually outsource and save the cash?
Spending time in the kitchen
Remember lockdown 1.0, when everyone became a banana bread wielding, ‘Great British Bake Off’ contestant and the supermarkets sold out of eggs and flour? Baking, cooking and generally getting your apron dirty is not just healthier but it also boosts our mental health. Cooking together is also a great way to encourage kids to think about health, as well as money!
Being more charitable
In August, DKMS, a cancer charity, released a survey that found 1 in 3 people (33%) have given more than usual to charity during the Covid-19 pandemic. While 44% are feeling more inclined to engage in charitable acts. There’s nothing quite like seeing the horror around us to raise our feelings of gratitude and blessing.
Learning more
1.2 billion children may be out of the classroom and engaged in e-learning, but at the same time tens of millions of adults have embraced online learning as a way to address the widening ‘skills gap’, retrain and stay current for a post-Covid economy.
Things to leave in 2020
Shopping with online giants
Not that they needed it, but Amazon became a pandemic giant – arguably to the detriment of smaller companies. People locked in their homes, with time on their hands and Zoom fatigue, spent $88.9bn with Amazon last year – 40% more than the same period in 2019. All this helped Amazon record a $5.2bn profit.
Now it’s not our place to tell you where, or how to spend your money, but we will say this – shopping locally and being more mindful of where and on what you spend your money could support your high street, your community and local jobs.
Using BNPL schemes
‘Buy now, pay later’ (BNPL) services have boomed in recent times. Credit Karma research found that 25% of shoppers used a buy now, pay later scheme in the run up to Christmas. Collectively those shoppers now owe £2.3bn – that’s a lot of buy to pay for!
The rule with using any kind of credit – and that’s exactly what this is – is to not buy anything on credit that you couldn’t buy for cash (unless it’s a property). In fact, it can be helpful to think that you can’t afford something unless you can buy it twice.
Trading for trading’s sake
An increase in investing during a pandemic is great, but an increase in short-term manic trading is not. Apps like Robinhood have seen a massive spike in first-time users as many (young people in particular) found themselves home, alone and seduced by gamified trading platforms.
Signing up for more subscriptions
Since March, many of us have been marooned at home binge-watching Netflix, shopping on Amazon Prime, ordering food on Deliveroo and perhaps even cheering ourselves up with a delivery of Bloom & Wild flowers.
Subscription services have taken the country by storm. But the convenience often comes at a price; subscription boxes are now so ubiquitous that 27.4% of Brits are signed up to a monthly letterbox service.
When stranded at home, unable to go out for dinner, shop or be entertained, this is to be expected, but at an average of £60 per year it’s worth considering whether the convenience is worth it. Ask yourself: does your household really need Netflix, Amazon Prime, Now TV, Sky AND Disney+?
Balancing the good and the not so good
So there you have it, Covid has meant both clear opportunities and dangers for our spending habits.
The bottom line is, while there’s value in treating yourself – particularly amidst current frustration, stress and worry – these suggestions will hopefully help you balance the good with the not so good. Don’t forget to share them with friends, colleagues and students who could also benefit.
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