When things don’t go as planned, small changes can get you back on track.
Your budget may no longer resemble what you set at the start of the year (you know, the one to fulfill the “prosperous New Year” all your holiday cards wished you). But that prosperity is still in reach. It just may take some retooling to get there.
Start with how your income has changed. Have you taken a pay cut or had to reduce hours? Is there an estimated time frame to return to your expected income levels? Have your bonuses been postponed or otherwise modified? Take a look at this individually and as a couple, and work with your advisor to make a budget that reflects your new reality.
Next, consider how your expenses have shifted. Experts have identified savings and spending trends that may apply to you:
Do it yourself
As people get fed up with being at home, they’re queuing up the DIY projects that have long been on their Pinterest boards. According to a poll of 1,054 Americans about shopping habits during COVID-19, more than 70% decided to take on home improvement projects.
Dinner is served
As restaurants and bars close dining rooms, your grocery bill may increase to account for those extra meals but you’ll save on the markups on martinis. Hello Fresh, a meal kit service, reported an increase in sales in the U.S. and Canada of 122% in the second quarter this year compared to last year.
Work from home
Your office space is set up for you to succeed (and be comfortable doing it). But there’s a cost to replicate this environment at home, never mind the additional cost of all-day utilities.
Back to basics
Reports claim fishing gear and gardening supplies are seeing an increase in sales as people look for entertainment in simpler activities that allow them to unplug and enjoy solo.
Binge watching
According to a study by Deloitte, Americans are subscribing to more video streaming services now than ever. The average consumer reports paying for four different streaming services, which is up from three before COVID-19.
Workouts look different
Gym closures and limited capacities inspired people to find other ways to sweat. Bike sales skyrocketed! According to market research company N.P.D Group, nationwide sales of bicycles, equipment and repair services in March almost doubled compared to the same month last year.
Work together with your financial advisor to determine what adjustments you could make to your budget temporarily or maybe on a more permanent basis. This might mean taking a second look at your swank car that hasn’t left the driveway in six months (should you sell it?) or socking away extra savings for peace of mind. Some may need to leverage their rainy-day savings, which is why they’re there in the first place.
Next steps
Learn from the past:
If your lifestyle has shifted this year, take another look at your budget:
- Determine how your income has changed or will change in the next six months
- Detail which expenses have increased and decreased – and denote which ones are temporary
- Partner with your advisor to make adjustments to your budget so you can stay on track to reach your financial goals
It can be overwhelming to make financial decisions when there are so many fluctuating factors, so consulting a trusted professional can help you stay focused on your financial goals.
Sources: MarketWatch; The New York Times; Washington Post; Variety
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