How the Pandemic Has Affected Spending Habits and Budgeting for Millennials
Originally Posted On: https://www.credello.com
It’s the end of 2019 and the Ghost of Christmas Future pays you a visit to let you know you won’t be in a crowded bar or venue for 15 months. You’ll miss holidays and celebrations with family and friends. And you’ll strap a mask across your face when you encounter strangers and even people you know.
You give the ol’ ghost a big LOL and carry on about your life.
Cut to summer of 2021, and you’ve learned your premonition was right. You probably should’ve warned everyone. But alas, you couldn’t have stopped the lab leak or the wet market or however this devastating virus originated.
Now, you’re just trying to adjust to this “new normal.” Or create an improved normal as our old normal wasn’t so great, huh? You’re returning to bars and brunches and music festivals—hopefully safely—and with that means spending those dollar, dollar bills, y’all.
Here’s a closer look at how the pandemic has affected spending habits and budgeting among millennials.
The early days of COVID spending
Early in the pandemic, we were dealing with stay-at-home orders across the U.S. Many people started working from home (and have continued to well into 2021), sending the economy into a weird place.
According to a Clutch survey of 351 Americans conducted last summer, 60% of millennials decreased their overall spending in March and April 2020.
The major spending increases among millennials during that period were on groceries (40%) and alcohol (13%)—no surprise there. Meanwhile, about a third of millennials increased online spending because of COVID-19.
Millennials led the way among generations cutting back on restaurant spending, with 45% of Gen Yers reducing their restaurant spending, presumably to work on their baked feta recipes and sourdough starters. While roughly 50% of millennials ordered out once or twice a week, about 28% of millennials avoided pickup and delivery in the early days of the pandemic.
About 40% of millennials stopped planning future travel plans during the pandemic, and roughly 20% canceled travel plans because of COVID.
Does less spending mean more saving?
Overall, Americans managed to save more and lower their debt during the pandemic. Credit card balances dropped from $927 billion at the end of 2019 to $770 billion in Q1 of 2021, according to the New York Federal Reserve. Personal savings rates hit a record high of 33.7% in April 2020, and stayed just shy of 15% by April 2021, per the St. Louis Federal Reserve.
With spending down, many millennials started to save more during the pandemic. About 18% of millennials started saving more for retirement since last March, according to Wells Fargo’s 2020 Annual Retirement Study.
If you managed to spend less, save more, and pay down more of your debt, you really hit the trifecta of financial goals during a tumultuous time. And if you’re still struggling with repaying your debt, you may be wondering if debt consolidation is a good idea for you. Consolidating your debt can be a good option if you’re looking to streamline your debts into one low monthly payment, save money on interest in the long run, or become debt-free more quickly.
What are the lasting impacts of COVID on spending and budgeting?
Many millennials seem to be taking the Bill O’Reilly “whatever—we’ll do it live!” approach to this whole kinda post-pandemic state we’re in. According to a CreditCards.com survey of more than 2,600 adults conducted in May 2021, about 59% of millennials said they’re willing to take on debt to treat themselves now that we’re out of the woods.
So much for budgeting.
-New York Federal Reserve
-St. Louis Federal Reserve
-Wells Fargo 2020 Annual Retirement Study