In a roller-coaster-type fashion, consumer saving and spending have seen their ups and downs during the Covid-19 pandemic.
First, when the pandemic started, not only did spending on travel come to a screeching halt, but entertainment rapidly declined, as did in-person shopping. In general, people were spending less of their money, preferring to hold onto their cash partly or fully due to the unknown.
Then, as the pandemic continued, government stimulus payments started hitting consumers’ accounts, and many people decided to safeguard these payments too. This scenario resulted in a rise in consumer savings.
However, that shift in consumer saving over spending is starting to reverse course as a result of a few key drivers, making it harder to maintain the savings you built.
Causes for Decrease in Savings
- No more stimulus payments. While many people relied on government stimulus payments, others were able to maintain their current jobs and simply stashed the money away in their savings. However, there are no more stimulus payments in the foreseeable future to continue padding members’ savings balances.
- Learning to live with Covid. As the pandemic drags on, more and more people are starting to accept the new environment and are venturing out more often. People are traveling again, spending on entertainment, eating in restaurants, and overall retail spending is beginning to trend upwards.
- Increased inflation. As prices continue to rise due to inflation, buying power is declining for the typical consumer. As a result, people need to dip into their savings more often to make ends meet. Rising inflation rates are especially bad for consumers because while prices for utilities, groceries, and retail items increase, wages tend to remain stagnant.
Ways to Boost Your Savings
With everything that’s going on in the current environment, it’s crucial that members keep their savings intact and growing. As everyone learned throughout the pandemic, it’s much better to be prepared for whatever the future holds.
Therefore, you must take steps to protect and bolster your savings, which you can do in the following ways:
- Revisit your budget. Take time to review your budget or past account statements thoroughly to identify areas you can cut back. You don’t necessarily have to make dramatic changes – every little bit helps. For example, you may still be paying for subscriptions that you no longer use. Be sure to go through every expense and evaluate whether you need it or not.
- Automate your savings. The best way to keep your savings up is by constantly adding to it. Think of adding more money to your savings just as you would any other monthly bill. Then automate the process with payroll deduction or automatic transfers so that you never have to think about it.
Payroll deduction allows you to set up a predetermined amount to transfer from your paycheck into a separate account each time you get paid. Automatic transfers are very similar. However, instead of timing the deposit to your paycheck, you pick a date each month for the transfer to take place. Both options are excellent solutions to grow your savings without being tempted to spend the money on other things.
- Consolidate credit card debt. If you currently have high-interest credit cards, consider consolidating them into one lower-rate credit card or personal loan. Doing so will help reduce the amount of money you’re spending on interest each month – freeing up extra funds to pay down more debt or add to your savings.
- Refinance your loans. Record-low loan rates won’t be around much longer. If you currently have loans financed elsewhere, consider refinancing them at the credit union. By taking advantage of lower interest rates, you’ll free up money that you can transfer into your savings each month.
We’re Here to Help!
Developing good saving strategies is essential to ensuring that your future is secure and worry-free. With a combination of cutting back on frivolous spending and considering options of lowering your current loan payments, you may be able to free up a significant amount of money, giving you a head start on your savings plan.
If you’re looking to automate your savings or would like to consolidate your debt or refinance your loans, we’re ready to help. We will work with you one-on-one to find opportunities for you to save. Please give us a call at 202-479-2270 or email us at firstname.lastname@example.org.