Smart Buying

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).

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, 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.

The power of social media. Nearly three-fourths of millennials say social media impacts their buying choices, according to a recent CreditCards.com survey. 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, 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, 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.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked
stocks

The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked

The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Wa…
November 16, 2021
Should You Take an Extra Big RMD This Year?
required minimum distributions (RMDs)

Should You Take an Extra Big RMD This Year?

Sometimes only taking the minimum IRA distribution can be a costly mistake. When deciding how much to withdraw this year, you need to consider the big…
November 23, 2021

Recommended

TOD Accounts Versus Revocable Trusts – Which Is Better?
savings

TOD Accounts Versus Revocable Trusts – Which Is Better?

Both help you pass down assets while avoiding the time and expense of probate, but one comes with a lot more flexibility than the other.
December 2, 2021
Earn 7.12% With Series I Bonds
Basics

Earn 7.12% With Series I Bonds

A savings or money market deposit account is best for quick cash, but I bonds can fit into a longer-term savings plan.
November 29, 2021
12 Best Costco Cyber Monday Deals
Costco

12 Best Costco Cyber Monday Deals

The warehouse club giant’s holiday shopping deals don’t stop with Black Friday. It has plenty of hot deals for Cyber Monday, too, and some of them inc…
November 29, 2021
Honey, We Need to Talk About Money
Women & Money

Honey, We Need to Talk About Money

Instead of focusing on the numbers, couples might have more success discussing their goals.
November 24, 2021