At the time of writing this post I have been fully vaccinated for nearly three weeks. During this three week period I have dined outdoors in restaurants twice, I have attended two small indoor family events, and I have begun an outdoor exercise class. With the exception of the grocery store and neighborhood walks, I think that is more outings than I had during the entire previous year.
As we begin to emerge from the pandemic we will all be experiencing substantial changes in a short period of time. A lot of us will be seeing friends and loved ones, returning to offices, taking vacations, and resuming sports, hobbies and other activities. There is a temptation to fit in all of the things that we have missed during the 15 months of social distancing.
There are a lot of factors to consider as be step into our post pandemic lives. Are you being socially responsible? Do you feel physically safe? What activities do you want to resume and which should be left in the past?
This is not a post to talk about the health concerns of re-engaging in in-person activities. There are plenty of qualified medical personnel and policymakers (and less qualified commentators) you can seek out for that information.
I am here to caution you to keep an eye on your spending as you step back into the world.
Personally, in the past month I have spent more on clothes than I had in the entire 18 months prior. I have also been out to dinner for the first time in over a year. I have booked two trips. While has increased my expenses from prior periods I don’t feel guilt nor do I think am spending irresponsibly. My clothing size (along with some fashions) changed during COVID. I value spending time with people I care for and have been unable to see.
I am not looking to shame anyone or tell you not to spend money. Instead, I am advising you to spend intentionally. It is easy to rationalize our spending to ourselves in ways that do not take into account the full picture.
For example, many of us are planning trips to make up for the travel they have been denied recently. It is tempting to look at our budgets and say “I can afford to spend more because I didn’t travel last year.” That is certainly true for some people (I’m looking at you, Mom!) But I know many others who did expensive home projects last year in lieu of travel. If those individuals now spend twice as much on travel this year they have spent their 2020 travel budget twice over.
I see this re-emergence as a great opportunity for us to reassess our spending. It is often hard to make isolated changes when everything else remains the same. We feel deprived when we try to cut down on certain expenses. Re-entering into society after extended social distancing provides us with an opportunity to start fresh. Our spending patterns drastically changed at the onset of COVID and will change again as we exit pandemic life.
There are a lot of ways that people have saved money throughout the pandemic. Lack of travel, entertainment, socialization, and a change to remote work led to reduced spending. But we should also consider how our expenses may have increased throughout COVID. As we move into a post pandemic period, take time to reassess any expenses you are adding now along with any expenses you added in 2020. Are you taking virtual classes? Eating take-out regularly? Supporting a newly adopted puppy? For me, the low hanging fruit is digital subscriptions. Maybe I should consider canceling Disney+ to fund soccer lessons.
Overall we are in a period of substantial change and transition periods are the perfect time to assess your spending habits.
I also want to acknowledge that a lot of people lost jobs and had substantial wage cuts due to the pandemic. The focus of this post is excess spending, but it would be insensitive and tone deaf not to recognize how many people are struggle financially due to the pandemic. For those individuals it is not a question of what you spent or saved. Rather, it is a question of how you get back on your feet again. Are there things that you can cut temporarily? Are there things you have already cut that you can not reinstate to continue saving money?
Whether you are emerging from the pandemic with extra savings or with a cash flow shortage, my message about spending is the same. Be thoughtful and deliberate in how you spend your money. Spending can be good. It is good for the economy. It may benefit your physical and mental well being. It may help or bring joy to your loved ones. But that does not mean all spending is good. Try to consider whether your spending aligns with your values and your goals. Is it a need, a want, or a wish? Will it further a specific goal? Will it move money into the hands of marginalized people? Will it bring joy?
So many of us are using this unique moment in time to reflect upon what we want a post pandemic world to look like. This is not only a philosophical or sociological question. It is also a financial concern, so spend accordingly.
Maura Madden is a registered investment adviser in the State of Washington. The Adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.