The current COVID-19 pandemic has caused upheaval across all facets of life. Things that we all normally took for granted, like the kids going to school, summer vacations and freedom to travel wherever we want all were curtailed. Many households were also negatively affected financially. Many people lost their jobs, and many others had their incomes cut.
The change in circumstances also caused changes in spending habits, and not always for the better. In this article, we’ll look at people who shared some of their spending experiences during the pandemic. Listen to their stories and think of your own situation, and then we will also look for ways that we can improve.
Buying the same things everyone else wants
First, it was toilet paper and hand sanitizer — no matter how much money you might have had, in March and April it was just about impossible to get either of those items. As those items came back in stock, then other things became scarce. As gyms closed, purchases of home exercise equipment skyrocketed. Sewing machines for making masks also flew off the shelves. And of course, the laws of supply and demand meant that the prices for these items went up.
Anna Barker, founder of LogicalDollar, shared that “at the start of the lockdown, I joined the hordes of people who decided they were committed to exercising while at home. Unfortunately, the fact that plenty of us had the same thought meant that the price of even basic fitness equipment skyrocketed. I ended up paying almost three times the usual price for a few simple items.”
Not changing the budget to reflect new realities
When your income changes, it’s important to adjust your budget to conform to your new situation. Andy Hill from MarriageKidsandMoney.com states that “during the pandemic, our income decreased significantly. Unfortunately, we did not change our spending enough to line up with the new situation we were facing. Stimulus checks, returned summer camp fees and tax returns during this time period gave us a false reality of our true income.”
Jason Steele, credit card expert for Money.com, said that for him, “it’s easy to go back and look at travel or other expenses that I incurred before the pandemic and say, “I probably should have saved my money for what could be the ultimate rainy day.” I’m generally somewhat frugal, but I had a good year last year, and I probably should have saved even more than I did.”
A lot more time at home also led many people to make purchases they might otherwise not have made. Scarlett McCarthy from Literally Broke shared that she “bought a $450 infrared sauna blanket (somewhat on accident). I’d been eyeing [it] for some time and kept getting targeted ads. I eventually added it to my cart and went through the buying process because I like to pretend shop. I guess they had my credit card info stored because the charge went through. Whoops! I’m keeping it and love it.”
Investing at the top of the market
Unless you have a crystal ball, it’s hard to know where the stock market might go. It’s much better to just invest regularly and not worry about timing the market. Riley Adams, CPA and owner of Young and the Invested shared that he and his wife “chose to open 529 accounts for our son in early February. We deposited money near the top of the market and have only recently started to see green in the account. We don’t regret putting the money in the account but it sure would have been nice to wait a month.”
If you happened to have the bad luck to put your money in on February 20th, near what turned out to be the top of the market, you saw an immediate 34% drop in your investing balances. Hopefully, you followed the advice to “do nothing” — if you kept your money invested in the stock market instead of pulling it out, by August the market had returned to its February highs.
What to do if there is a second stimulus check?
Discussions are still going along in Congress as to whether or not there might be a second stimulus check, and who might be eligible. It’s probably not a great idea to make any concrete plans yet for how you’re going to spend this mythical money until a bill is passed.
But regardless of if there is a second stimulus check, there will be many times in your life where you will get an unexpected windfall. This might be a tax return, a big commission at work or even winning the lottery. Many of the principles remain the same — the first thing that you’ll want to do is make sure that you have a budget in place and an emergency fund.
Finally, consider using some of your windfall to help others. It may be tithing to your church, donating to a charity you support or supporting local businesses. The manner in which you choose to help others is up to you, but doing so has many benefits.