The Legacy of the Pandemic: 5 Lasting Financial Habits

There are very few aspects of our lives that remain untouched by the pandemic. Times are strange, where FOMO (Fear of Missing Out) has been replaced with FOGO (Fear of Going Out) and when wearing a mask to the grocery may seem less strange than wearing a speedo at the beach. Along with the global shutdown, most of us have found a new way of living, some differences welcomed and some we hope will soon be a memory. As we emerge from a quarantine state of mind many of us will continue to embrace our new era of frugality and continue with newly developed habits. From how we do our grocery shopping, to affordable entertainment here are five financial habits we should continue to carry out even after the lockdowns are lifted.

1. Curbside Pick-up and Ordering Online

Before the stay at home orders, 13% of U.S. consumers used online ordering and curbside pick-up or delivery to get their weekly grocery list. This percentage jumped up 19% since the survey was completed in the fall of 2019, this spike is attributed to the current circumstances. A lot of grocery stores are offering curbside pickup/delivery and consumers seem to be enjoying the convenience. When consumers were asked about continuing the use of online grocery services after the coronavirus, 43% said they were extremely or very likely to continue use. I think as a consumer the biggest concern with using online grocery services is trusting someone else to select your fresh produce. However, aside from being a time-saver, online grocery shopping can be a money saver. Consumers tend to cut back on impulse buys and stick to the grocery list, and their budget. Not only does online shopping allow you to check your pantry as you shop so you’re not buying cereal just in case you’re out at home, but the online cart keeps a running total. And all the prices in the cart are accurate, no more getting to the register to find out your pop-tarts aren’t on sale after all. Continuing to save money at the grocery store can free up funds for other expenses.

2. Saving for a Rainy Day

At least 30% of Americans have tapped into their emergency funds during this pandemic, but 1 in 5 Americans didn’t have an emergency fund, to begin with. Emergency funds are supposed to carry us through when we experience a job loss or unexpected change like COVID-19 just showing up. If you have the savings, don’t be afraid to use this set-aside money to help you get through this time. Dipping into savings is a far better choice than taking on debt through a credit card or a similar source. The government implemented lockdowns will help you reduce spending on entertainment and reducing your necessary spending can help conserve your available funds. For necessities like over-the-counter medicine and feminine products, the CARES Act has implemented a change allowing these essentials to be purchased using funds from an HSA (Health Savings Account).  If you are still able to save during this pandemic, you’ll want to continue doing so. For some folks, it may be worthwhile to pick up extra hours, if still working, or look for companies that are hiring during this time. Regardless of your current situation, you should prepare to safeguard your finances as the financial implications connected to COVID-19 will continue for months to come.

3. Eating at Home

It’s expected that 75% of independent restaurants nationwide won’t survive the pandemic shutdown.  Some food industry business owners are afraid the CARES Act Paycheck Protection Plan won’t reach them, or the owners will experience difficulty applying due to language barriers and lack of ability to navigate the application. Some restaurants are holding on by relying on take-out orders and preselling holiday meals or gift cards. Consumers can safely order take-out and food delivery during the pandemic, and soon, while following social distancing guidelines, some folks will be able to go inside and sit down. On average, restaurants charge about a 300 percent markup on the items they serve, but that doesn’t keep us from occasionally splurging to combat the onset of cabin fever. There are many ways to support your favorite restaurant and still save while ordering take out. Most restaurants have reduced their menu for optimized take-out, but still, continue to offer daily specials. You can find deals and gift cards on to-go and carry-out orders on Groupon. Getting take-out may cost more than cooking at home, but you can still save money by getting your drink at home and you’ll save on the dining tax by not eating inside at the restaurant. Also, it seems that tipping on take-out orders is optional, 51% of Twitter users responded “No” to tipping for take-out. If you have a simple order and aren’t asking for over and beyond effort, you may not feel inclined to tip or tip a lesser amount like 10% compared to dine-in, 18-20% is the standard. Although take-out is more expensive, there are times when the convenience is worth it and if you plan for your weekly pizza night you won’t lose out on grocery food going uneaten.

4. Retail Shopping

E-commerce spending is up 30% as of mid-April and due to mandatory store closures, retail is suffering a record decline in sales. At first, people were stockpiling household and grocery items and home office supplies. More recently sales have drifted towards books, entertainment games and outdoor sporting equipment, including fitness supplies. It seems like the coronavirus has accelerated a structural change that’s been occurring in retail over the last decade. Just like social distancing has created new office atmospheres and remote work, online shopping habits formed during this period may persist far beyond the crisis. The average retail store can last about 30 days without money coming in the door, about 65% of the businesses that were forced to close during the pandemic, will not reopen. Fewer entrepreneurs will start businesses and the most important step any business can take will be to ensure their ability to make sales online. For consumers, we may experience unexpected consequences from all our online consumerism. If you’ve tried to return or exchange a purchase during this pandemic you may experience a little more difficulty or longer process. Some stores are not processing exchanges, asking consumers to place a new order, and separately request a return. Roughly one in five clothing items purchased online is returned. If sanitation and spread continue to be a concern stores may restrict their return policy or implement restocking fees as retailers increase measures to sanitize taken back items more thoroughly before reselling. Through this pandemic experience, consumers are purchasing more consciously, showing loyalty to brands that give them confidence and patronizing local stores. 68% of consumers who have shopped locally have tipped more than their usual, and research shows that the pandemic is likely to produce a more sustainable, healthier era of consumption over the next 10 years.

5. Just Plain Frugality - Save More

From virtual game nights to outdoor hikes, Americans have found new ways to have fun and curb boredom. Many Americans expect that we will have to wait several months or longer before routines will normalize and many expect their income to be negatively impacted for a long time. During the Great Depression, families relied on kitchen gardens and community thrift gardens for food sources, it’s not far off that Americans will return to growing their own food, space permitting, or consider moving somewhere that it is possible. As we begin to socialize again, it will be common for friends to gather at a potluck, play board games, or share a drink on the patio instead of going out to the movies and restaurants. Consumers have said they will continue to allocate money to emergency funds and paying off debt before rebooking travel and planning excursions. During the pandemic, Americans have cut spending to save money by buying only the essentials and revising their budget. Consumer’s confidence has dropped 30% since February, and many Americans have run out of what they did have in their savings. Coming out of this pandemic, Millennials especially, are saying they will be saving more. This may create a very risk-averse generation of super savers. For almost everyone, not just millennials, this is a first in a lifetime experience to learn from.

As we continue to wade through the uncertainty it can be jarring to think our current situation could be closer to the new definition of normal that we expect. We are all looking for insight as to when businesses can safely invite all their customers back and when gathering in large groups will be fully approved. We must remember how resilient we can be and know that perseverance is universal. We all should have hope, as this too shall pass.