The economic impacts of the COVID-19 pandemic and the resulting lockdowns dealt a financial blow to many Americans.
Those who were affected by job losses, furloughs or reduced work hours related to the lockdowns had no choice but to cut back on spending. However, the business closures and lockdown orders offered the opportunity for others to reduce their spending. A survey of 2,000 Americans by Travis Credit Union found that half said they spent less last year than in previous years.
Of those, more than half (52%) cited financial uncertainty due to COVID-19 as the reason they spent less, 28% said they simply had fewer opportunities to spend money and 15% said job loss caused them to re-evaluate their spending. Fifty-five percent said they spent less on dining out or ordering delivery, and 54% said they spent less on entertainment. Travel (39%), clothing (32%) and shopping (29%) were other areas where people said they reduced spending last year.
However, not everyone used the opportunity to spend less. One-third of respondents reported spending more in 2020 than they did in previous years. Nearly half (46%) said they were doing so because of stress or anxiety, 29% indicated they did so out of boredom and one-quarter said they were unconsciously doing it.
Half said they increased their spending on household supplies—understandable with the increased need for cleaning and sanitizing products and with many people spending more time at home. About one-third each cited entertainment, dining out or ordering delivery, groceries, shopping and personal care products as areas in which spending increased for them.
Travis Credit Union noted that spending more money due to stress or anxiety was given a nickname during the pandemic: “doom spending.” Half of respondents admitted to doom spending, and 58% of doom spenders said they did it once per week.
While the spending in 2020 could be a setback for Americans’ future finances, survey respondents indicated it’s not affecting them negatively. More than half are satisfied with their current financial situation, and 86% were optimistic about it moving into this year. A majority plan to change their approach to spending, with half planning to spend less and three in five planning to save more next year.
Retirement industry sources recently shared ways plan sponsors can help workers rebuild their retirement savings after the effects of the pandemic.
The survey was fielded on November 9 and 10 among 2,018 people. More information is available here.
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