How to Improve Your Spending Habits in 2021

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The COVID-19 pandemic has changed almost every aspect of our lives, including the way we spend money. Consumer spending dipped across all industries, especially after restrictive lockdown measures. According to the visual capitalist Katie Jones, global uncertainty has led consumers to develop erratic buying patterns. While it’s clear that people spent less on non-essential products and services, more time spent indoors caused an increase in spending on home entertainment and groceries.

If you found that your spending habits have shifted since the pandemic began, you may find it harder to save more money. As we discussed in ‘How to Meet Your Financial Goals’, true financial independence isn’t just about scrimping and saving, with the occasional indulgence. The key is to set realistic financial goals and develop smarter spending habits. Here are a few tips on how to improve your spending behavior:

Keep it in the cart, then wait

One of the worst habits consumers developed during the pandemic is impulse online shopping. According to a report in the ResearchAndMarkets website, the e-commerce industry is set to grow 16% from 2021 to 2026, thanks to the increasing preference for online shopping. And it makes perfect sense because people enjoy the convenience of pushing a few buttons and getting what they ordered on their doorstep within a few days.

The problem is that most people are purchasing more products because they’ve become a bit less mindful about spending money online. To curb this behavior, wait at least one day before checking out your cart. Spend more time thinking about whether you really want this product or not. It may even go on sale if you decide to wait a bit longer.

Limit the number of credit cards to keep

How many credit cards do you have? On average, cardholders own 2 to 3 credit cards and it’s great if you need more credit. However, more credit cards could also drain your resources without you realizing it. An article on Petal Card notes that having more cards (and a higher spending limit) can trick you into spending more because you don’t consider high-ticket spending as seriously as if you were limited to cash-only funding.

Many cards also charge annual fees. Even if you can earn it back with miles, points, or cash, it can be challenging to pay off those fees if you have several cards. The best thing to do is not to go overboard and keep your credit lines healthy. Prioritize a card you need to spend on to get enough value and avoid additional unnecessary credit cards into the mix.

Set up automatic savings transfers

Regardless of your age, it’s important to start saving for retirement now. Business Insider reports that with each generation, people are starting to save up sooner. In fact, the youngest in Gen Z began to save for retirement at a median age of 19, which can make a big difference when you consider compound interest.

Maybe you want to pad your retirement savings with excess money, but feel like you don’t have the willpower to save more; you can set up a fixed monthly transfer from your checking account to your savings account. Letting your bank automatically set aside your money should be done before the world reopens, and before you get a chance to your old habits.

Review your pandemic purchases

Understanding where you spent most of your money during the pandemic is the best way to cut back expenses as needed. Maybe you’ve been spending on more groceries, home gym equipment, or different streaming services. You should expect these purchasing habits to change once the world slowly begins to open up, and you start going out more.

Plan ahead to cancel streaming subscription services, because you may not spend as much time at home. On the other hand, you may need to cancel your pre-pandemic gym subscription and stick to your home gym. You have some time to prepare your budget, and adjust as you see fit.

Authors Bio

Ashley Kearney is a freelance writer with a strong interest in personal finance. She wants to help people become more responsible for their money. When she’s not doing research on money management, Ashley likes to take walks around her city.


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