Are you worried that you can’t lower household spending to make ends meet? Why not pay attention to what the pandemic taught you about spending? As awful as things have been since the COVID-19 happened early in 2020, there are important lessons that you can take from it. In fact, reports revealed that more than 6 out of 10 Americans noticed how their spending habits changed since the pandemic started. If you dig deeper into this, you’ll find that a noticeable change is in the way consumers have started to save more money.
What does this mean? If people saved more money, that is a strong indication that they now have lower household spending. Despite the recession that happened alongside the pandemic, people were saving more.
How is that possible? Well, this just proved that it’s possible to make immediate and significant changes in how you use your finances. Especially when you are thrust into a difficult situation. And even if you are in the midst of very unfortunate circumstances, that doesn’t mean this change is for the worse. It can be a positive change for your current finances.
The key is to look around you and find the lessons out there that’ll help you improve these habits. No matter how bad the situation may seem, you can still use it to improve your specific situation. Although bad events like the pandemic can end up crippling your finances or source of income, if you look closely, you can get valuable insights from it.
A perfect example is how the COVID-19 pandemic affected the average household spending.
How the pandemic taught us to lower household spending
Although it can be said that the pandemic caused a lot of changes in our lives, a huge part of that is in our finances. In fact, both high-income and low-income households have reported that they had lower household spending last year.
What exactly caused this to happen? For one, the lockdowns that the government implemented caused a lot of damage to the economy. Businesses had to close operations. Some did it temporarily while others were forced to close permanently. This resulted in people losing their jobs. Some lucky ones kept their jobs but with businesses unable to open, they weren’t getting any income or profit.
With the lack of income, American households were forced to change their spending habits. What did they do to lower household spending?
DIY home repairs
A lot of people were forced to DIY a lot of stuff in their homes. In case something broke, they would try to fix it themselves instead of getting someone else to do it. All the professional services that used to be done around the house had to stop.
Why? Because they wanted to avoid having people come into their homes. With the COVID-19 virus being as contagious, people had to be careful with those they choose to surround themselves with. So things like fixing broken cabinets or mowing our own lawn – if you used to hire someone to do these, you now learned to do these yourself.
Because of this, guess what? You learned to do more things around the house. Since you no longer have to pay someone else to do it, you have effectively lowered your household spending.
Lower utility bills
This is another lesson that we got from the pandemic. We were forced to lower our utility bills because of our limited income.
As mentioned earlier, a lot of people lost their jobs or were forced to close their businesses because of the lockdowns triggered by the pandemic. Even those who did not lose their jobs realized that they had to start saving money. They have to lower household spending so that if they happen to lose their job as well, it won’t be hard to adjust. They’re already living based on the lowest household budget.
But how can your lower your utility bills? You can opt to follow energy-efficient means. The simple rules apply – like turning off the lights or the faucet when not in use. Even learning how to use your HVAC to keep your consumption low. If you get used to these habits, you’ll continue to live below your means even when your income starts to pick up. This will help you save a lot of money – something that you can use to improve your financial situation further.
Eat at home
This is probably where a lot of people were able to save the most amount of money. Their food budget definitely went down when the community-wide lockdowns happened. Businesses weren’t allowed to open. And people weren’t supposed to go outside unless it’s necessary. Since eating out is not considered as one, a lot of restaurants and dine-in facilities had to close.
This is why a lot of American households were forced to eat every meal at home. This turned out to be a good thing because preparing your meals from scratch is always cheaper than its take-out or dine-in alternatives. This helped lower household spending significantly.
Planning how we spend
Finally, the pandemic taught us to be smart with how we did our shopping errands. Since this virus is highly transmissible, we want to make sure that any outdoor errand will be done as quickly as possible. That means planning our trips outside and being strict with exactly where we want to go.
It’s not just the “where” that we have to plan. We should also be very careful about the “what” in our shopping list. We want to go out as rarely as possible. That means we have to make sure we will get everything that we need on just one trip.
Do you know what all of this planning will lead to? It’ll make you a smart spender. You’ll get used to having to think about every expense that you make. With all of your spending done in one day, you’ll have a better understanding of how much you really spend each month. It’ll make you more cautious and that leads you to make better spending choices.
How to spend the money saved from lowering home expenses
Now that you have gotten used to lower household spending, what’s next? If you can lower your monthly spending and your income is not compromised, that leaves you with some extra money at the end of the month. How can you use that to improve your financial situation?
There are two things that you can do.
If you have debts, you can use the extra money to pay it all off. There’s no sense in making it last longer. If you can pay it off as fast as you can, that’s what you should aim for. The longer it takes for you to pay off your debts completely, the more it’ll cost you in terms of the interest payments.
Besides, when you get rid of your debts you’ll be free to use your extra money any way you want. All that you saved through the lower household spending can be used to reach your other financial goals.
Increase emergency fund
Another thing that you should do with the extra money is to save up for your emergency fund. That way, you’ll have the cash to use for unexpected expenses. This is better than using credit cards to pay for emergencies. Using credit will make you pay for more than what is necessary – thanks to the interest rate. So to keep yourself from debt, just make sure you have enough emergency funds.