Spending Like It’s 2019

Setting spending targets and using budgeting apps can help tame the urge to live it up (now that we can again).

photo illustration of woman looking at phone
(Image credit: Getty Images)

For the introverted and the frugal, the pandemic has offered a welcome reprieve from the social pressures to go out and spend money. Although I am grateful for the vaccine, easing travel restrictions and the renewed freedom to safely gather with friends and family, I’ll admit that the return to social life at first was a bit of a shock, not in the least to my wallet.

During the pandemic, the savings rate soared. But after hitting a 45-year high in April 2020, the rate began to decline in 2021 and will likely settle near its historic average in 2022, says Elizabeth Renter, data analyst for NerdWallet.com (opens in new tab), a consumer website.

If you find yourself ready to save a little less and spend a little more, consider what’s influencing your buying decisions.

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The power of social media. Nearly three-fourths of millennials say social media impacts their buying choices, according to a recent CreditCards.com survey (opens in new tab). Generation Z is not far behind, with 66% admitting that their buying decisions are influenced by social media. “It’s a bit of the ‘keeping up with the Joneses’ mentality—we want to put our best foot forward to our friends and family,” says Ted Rossman, senior industry analyst for CreditCards.com. Ultimately, our social media feeds end up inundating us with highlight reels from the lives of our friends and family members, which can make it seem like everyone is on vacation all the time, eating well, dressing fashionably and spending liberally.

Social media may also contribute to our willingness to go into debt, Rossman says. As coronavirus pandemic restrictions ease, 44% of U.S. adults say they will take on debt to “treat themselves,” according to another recent CreditCards.com poll.

Even if you’re still working at home, it’s not too early to start thinking about how going back to the office will affect your budget. Otherwise, you could see a sharp increase in spending on your wardrobe, commuting and eating out. Make sure you’re taking full advantage of any benefits your company offers to help cover commuting costs, such as subsidies for public transportation, free or discounted parking, or benefits for employees who walk or bike to work.

There is more than one line of defense to resist the pressures to spend. I’ve found that setting spending targets and tracking my finances with budgeting apps are convenient ways to stay on top of my cash flow. Mint (opens in new tab), which is free and available in most mobile-app stores, links with your credit and debit cards and categorizes your transactions while alerting you when you exceed your budget. Simplifi (opens in new tab), available in most mobile-app stores for $3.99 a month ($2.99 a month with an annual subscription), will help you identify changes in spending and income and help you set financial goals.

While you can find a lot of conflicting advice about responsible spending, some evergreen budgeting rules still hold up. For example, “the 50-20-30 rule” suggests allocating 50% of your after-tax income to needs, 20% to wants and 30% to savings. This helps you view budgeting as an exercise in goal-setting that will help you afford to buy things you really want, such as a car or a new couch.

Bottom line: Be prepared. Take a look at your social calendar and save accordingly. Consider marking birthdays, weddings and other occasions that will cost you money so that when the date rolls around, you’ll be ready.

Emma Patch
Staff Writer, Kiplinger's Personal Finance

Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.