It’s been over three months since COVID-19 shook the world into a state we could never have imagined. We saw everything from high income earners claiming welfare, middle income earners with pay slashed to that of low income earners. Low-middle earners who kept their jobs and cut out all expenses probably saw more money than they’d ever seen before, and casual workers who benefited from the Australian government’s $1500 flat rate payment found themselves with disposable income for the first time ever.
It’s shaken up our income hierarchy into a completely new realm, and brought about some unusual spending habits. In a bid to keep the economy running, keep our local baristas in jobs, and stay productive while working at home with pets, husbands, babies and other distractions, we’ve redirected our spending in a multitude of ways.
But what will our spending look like on the other side? As restrictions begin to lift, we’re seeing restaurants, nail salons, facialists, public transport, and bars all reopening. Have we got used to the simple life, or will we be throwing our money at everything we’ve missed at the first chance we get?
I had a think about what our spending could look like in a post-COVID world:
Changed habits: less spending
Women across the globe have probably set the collective world record on the longest time between eyebrow waxes – and while we might feel like we’re carrying two caterpillars around above our eyelids, one thing I’ve noticed is that life is really not that different with a few stray hairs.
The same goes for manicures, eyelash extensions, blow outs, teeth whitening and other little luxuries we previously thought we couldn’t live without. We’ve unexpectedly lived without them with very little real world impact for several months now.
So, do we really need them?
Our forcibly changed habits have seen us turn our hand to at-home manicures, DIY lash extensions, or *gasp*, just going without. Sure, the 1.5m rule helps (admittedly, nobody has been close enough to see the abomination that is my eyebrows lately), but it certainly put things in perspective.
Will we return to regular beauty services, or will we stash the cash and go it alone?
Missed luxuries: more spending
On the contrary, some salons have been bustling since reopening, with women booking in their own personal ‘relaunch date’ – read: the day they get their hair, nails, lashes, brows and other miscellaneous hair removal done after months without.
The same goes for restaurants. Have we got so used to cooking at home or getting take-home meal packs that we’ve simply forgotten how to eat at a restaurant, or will we be banging down the doors of our favourite Thai the second we get the chance?
Will the things we’ve missed the most see a boom on the other side of COVID?
More money: more spending
For those who kept their full incomes during lockdown, the other side of COVID19 could actually look more fruitful. Without childcare expenses, public transport, petrol and social costs, those who earned through the pandemic saw more money in their pockets. In Australia, the Morrison government’s flat rate $1500 fortnightly payment under the JobKeeper scheme saw casual workers previously earning $250 a week see a 200% increase in their earnings. Cars have been bought, investments made, and bank balances among young casual workers with minimal expenses have been seriously topped up.
Some have reported hitting annual savings goals just four months into 2020, at the hands of staying in and working from home.
Will those with extra savings be the ones to spend, or will we get more conservative with our bucks? Will those who have built robust emergency funds feel more able to spend, or less?
Less money: less spending
The flip side of this is those who saw dramatic income losses as a result of COVID-19. Percentage cuts, redundancies, and ineligibilities for stimulus schemes saw thousands without income, or living on substantially less than usual. Combine this with mortgage holidays, rent deferrals and some serious boot strapping, the other side of COVID could look a lot leaner for this cohort.
The habit spending comes into play again here, but in reverse. While some have cut spending due to business closures, others have cut back simply to survive. Will these frugal habits continue even when regular programming continues?
Fear: less spending
COVID-19 has certainly given us a royal kick up the backside. A violent reminder of just how quickly things can change, 2020 will leave a lasting – and unfortunately fearful – imprint in our memories. While the global aspect of the impacts did lend itself to big stimulus packages and bucketloads of goodwill from banks and businesses willing to waive fees and offer payment breaks, it is important to remember that financial crises can happen to anyone, at any time.
Redundancy is an unfortunate possibility for most workers – though it’s something many hadn’t considered until the pandemic. Get made redundant during a pandemic and the government will probably step in. Get made redundant on an ordinary Wednesday, you’re on your own.
Because of this, many will fall into a scarcity mindset when it comes to spending, for fear of what could be around the corner.
In times like these, it’s really important to use the experience to help you grow, rather than fall into a pit of paralysing fear.
What the pandemic has taught us is that preparation is everything. Security is valuable. Emergency funds will be needed when you least expect it. You can use all these things to help you strive for your absolute best, most financially confident self, without slipping into a place of fear.
Embrace 2020. Embrace what we’ve been through – and will continue to go through – and use it to help you heal, grow and evolve. That’s not to say you need to go from being in credit card debt to having a $10,000 emergency fund overnight. But, using the experience to help you change habits for the better, create lasting change to your financial situation, and leverage what you have to move forward will stand you in good stead for whatever the future holds.