5 keys to manage spending post-lockdown
Now that things are opening up again, it’s tempting to binge outdoor drinks, food, and social activities after binging shows and chores over the past year. Whether it’s being catered to at restaurants and spas or upgrading our fashion, we’ve all been deprived of things we love to spend on.
For me, that’s a fresh plate of scallops with a nice glass of wine on the patio, or some new outfits from Winners to replace the housebound sweatpants routine and enjoy the summer weather outside with friends.
While it’s important to celebrate after such a mentally and physically taxing year, it’s also important to be smart about our spending so we’re not left with nothing for the next rainy day. Here are five ways I plan to manage my post-lockdown spending in the face of strong urges to splurge.
Space out celebratory spending
After a really rough year, I’m feeling a pent-up desire to do all the things we’ve been missing, all at once. Haircuts, shopping, eating, bring it on! But instead of blowing all my disposable income in one go, I have a better plan.
I’m limiting my spending to one or two indulgences per week. A haircut and a nice meal out one week, followed by a massage and a shopping trip the next. This will allow me the time to actually enjoy each activity individually over a longer period rather than having all the fun over and done with in one shot.
Don’t throw out the regular budget
Just because things are opening up doesn’t mean I’m throwing my regular spending budget out the window. Spacing out my celebrations will help me stick to my budget over time, but there's still room for more fun.
Rather than ignoring the quotas I have for spending, I’m allowing myself a period of a few months to spend a little more than I have been doing recently. This way I can still be conscious of my budget while maintaining the good habit of monitoring my spending each month. It’s always easier to stay in control of discretionary spending when you make a plan for it ahead of time.
Prioritize experiential spending
One of the insights the pandemic has really driven home for me is the value of experiential spending over material spending. This is like the difference between spending on a cottage trip versus spending on a new watch; the cottage trip is an experience, the new watch is an object.
Experiential purchases have been shown to lead to more happiness than material ones. At a time when happiness has been a challenging thing to cultivate for many of us over the past year, the way we choose to spend our money can really have an impact on the positive ways in which we can emerge from our hibernation.
Consider investing rather than spending
While many of us lost our jobs, had hours cut, and struggled in many ways financially due to the pandemic, we also tended to be spending less on things like travel and going out. After over a year of truncated spending, working longer hours to make up for lost time and financial boosters like CERB from the government, some people are finding they have more disposal income than usual.
I’ve chosen to divide my disposable spending into two halves: one for spending and one for investing. Anywhere I am spending more, I am also investing more. I’ve made it a rule of thumb for the summer months (and I’ll probably continue beyond that) that any additional spending gets matched by additional investing. This way I can achieve a healthy balance between enjoying the moment today and having the means to enjoy the moment tomorrow, too.
Be prepared for tax day
This past year has painted a very different financial picture for most of us. From incomes in flux to government assistance programs like CERB, you can be sure your taxes will be a little less routine next year. Don’t forget that much of the government assistance that became available is treated as taxable income, not grants. That means you will have to pay tax on money received from programs like CERB in the same way you pay tax on your regular income.
If you haven’t done so in the past, this year would be a good year to consult a tax specialist to make sure you’re remitting everything you should as well as taking advantage of some extra leeway in filing times and newly introduced work-from-home expense allowances.
With a bit of extra planning I know I can take full advantage of the opportunity to do some much-needed celebrating without burning through every cent in my pocket. Now, time for that plate of scallops!
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