Did the pandemic change your financial situation? Did you have to adjust your spending habits since this all first began?
Without a doubt, COVID has disrupted our lives. From the abrupt shutdown of most businesses in 2020 to the uncertainly that followed, it became clear that most household finances would be compromised. This is was especially true for those who were temporarily out of work or lost their jobs entirely.
According to a Pew Research Center survey, about half of non-retired adults say the economic impact of the coronavirus outbreak will make it harder for them to achieve their long-term financial goals. And of those in this group, 44 percent think it will take them three years or more to get back to where they were a year ago.
We here at Buxfer wanted to take a deep dive into just how this has affected the way we, the consumers, spend money now as a result of COVID. That’s why we analyzed data from our users from January 2019 to August 2021 (before and after the pandemic started) to get a better look at how things have changed. Among the top categories, here’s what we found.
Food can be defined as anything we bought to eat at a grocery store or non-restaurant establishment.
As a baseline, users spent $931 in January of 2019. By January 2020, that number rose sharply to $2,329. This is right around the time that COVID first started making headlines in the news, and it most likely inspired a lot of people to “stock up” while they can.
If they did, that’s a good thing because in the months that followed many people were forced into a state of lock-down. Even when they could go out to their local grocery stores, they would often only find empty shelves of select products (such as toilet paper and hand sanitizer).
As businesses started to open back up in mid-2020 and vaccine progress was pushing along, spending on food seemed to return to its pre-COVID level. In January 2021, the average user spent $1,134. When compared to the 2019 value, it’s important to remember that many people are still quarantining at home or leaving their house less frequently than they used to. Also, inflation has started to creep into consumer goods like groceries.
Shopping at the malls or buying things online is something many of us are guilty of doing. Whether it’s for things we need or just a little retail therapy, it can be fun to get new things.
This was a sector that was hit hard during the pandemic. In pre-COVID times, users spent an average of $3,971 in July 2019. You might have expected that during that same time the following year in 2020 that with everyone home, online shopping probably was through the roof. However, the average user only spent $433 in July 2020.
This is most likely the result of two factors. The first is that many stores only opened on a limited basis by the summer of 2020. The other is that many people probably prioritized saving their discretionary income as a precaution against potential job loss.
Eating at a restaurant was an experience that many of us never probably thought twice about before the pandemic. However, following the initial COVID outbreak, this industry was slow to reopen for plenty of reasons:
- Capacity restrictions
- Social distancing restrictions
- Labor shortages
To compare numbers, users spent an average of $2,136 in January 2020 versus $421 in January 2021. Again, between the challenges to the restaurants themselves, lack of discretionary income, and overall fear of eating in public, this explains why spending in this category was so low.
One of the hardest-hit areas of our economy during the pandemic was the travel industry. With the threat of a highly contagious airborne virus, almost no one wanted to fly or stay in a hotel.
To make matters worse, the U.S. and many other countries instituted travel bans as a safety precaution. Even if you could travel, most places required you to quarantine for 2 weeks making it very inconvenient to go anywhere.
For those reasons, it may come as no surprise how much of a drop there was in spending on travel. In May 2019, users spent an average of $1,166. By the same time that next year, they only spent a meager $145.
By May 2021, spending did increase to an average of $781 per person. However, the industry is now dealing with new challenges such as mask mandates, labor shortages, rising fuel costs, and some travel bans which are still in effect.
Are You Ready to Spend Again?
If you’d like to read the entire report on spending from Buxfer, please click here.
The pandemic may be far from over. But for many people, life has somewhat returned to a somewhat normal cadence. Financially, the question remains: Have we learned anything from all of this?
In the State of Personal Finance Study by Ramsey Solutions, they found that nearly 6 in 10 respondents feel they are returning to pre-pandemic norms and are ready to spend money on something other than essentials. This is certainly true as we see purchases across most major categories slowly inching their way back to pre-COVID levels.
However, with the onset of inflation caused by the major stimulus bills and supply shortages, consumers may be forced to spend more than they’d like and receive less in return. For months now, the Federal Reserve has said these are challenges that would be short-lived. However, their position has since changed and they believe it will take much longer to reverse than previously thought.
Now more than ever, it’s important to establish a budget and track your spending habits. That may sound like a lot of work, but it’s an effort that can be seamlessly automated using an app like Buxfer. Buxfer can connect to over 20,000 different financial institutions ranging from banks to credit cards and brokerages. By doing this, you’ll always be in the know about how your budget and if any changes are necessary to stay on track and hit your financial goals.
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