What You Should Do Before Spending Money on Travel and Other Expenses in the Post-Pandemic Period
While it’s easy to say “don’t spend too much” in the aftermath of the pandemic, the truth is that just under half of all Americans will indulge in travel or shopping, even if they have to go into debt to do so, according to a recent report from Creditcards.com . With that in mind, here are some tips on how to contain those spending so you don’t run into too much debt.
Reassess your finances before shopping
Your personal financial situation has likely changed since the start of the pandemic, whether it is deferred student loan payments or the number of TV streaming subscriptions you may have accumulated. Simply listing your income and expenses (by month and year) and recording your financial goals can go a long way in helping you minimize overspending.
After all, if your new spending priority is a couple thousand dollars per trip, you might find it more achievable if you cancel or cut other expenses that suddenly seem less important after the pandemic. This is why we recommend auditing the subscription as part of your revaluation, as there may be some recurring costs that you forgot about (like a Peloton app subscription that you never use).
And if you don’t have a budget? This Lifehacker post will walk you through it.
Make sure to take care of your emergency fund first
An emergency fund is a pantry of money that will cover unforeseen expenses related to job loss or health care costs. Ideally, you want at least three months (if not six) of your running costs to be covered by the emergency fund. If this fund has been depleted by a pandemic, consider replenishing it before planning for any large discretionary spending, if you can.
Think about spending on self-improvement
There is a difference between “treating yourself” and celebrating a return to normalcy. For example, I was pondering the idea of buying a new gaming laptop as a “reward” for less expense during a pandemic. But then I realized that really motivates my desire to spend money, so is the need to disrupt your daily routine, and that in fact I prefer to communicate more, go to the non-digital world and really do something. As a result, I signed up for a sports league instead.
Everyone has different priorities, of course, but consider investing in self-improvement – classes, book clubs, signing up for a personal trainer – as these activities can be both cheaper and more rewarding in the long run than traveling or shopping.
Track your post-pandemic spending
Similar to food tracking apps, sometimes keeping track of your spending can help you identify bad habits, such as making unfortunate online purchases out of boredom because it’s 10:00 PM and you’ve had a couple of glasses of wine.
Ideally, your monthly budget should include some option for discretionary spending. By tracking your daily expenses, you can realize that you are spending more than budgeted, allowing you to adjust your spending accordingly. Also consider the 24-hour rule for discretionary spending: if you really want something, it doesn’t hurt to wait a day.
Plan for overpriced travel
As we discussed earlier , supply problems and increased demand have pushed the prices of many goods, especially those related to travel (cars, hotels, gasoline and restaurants). Before you go on your big trip, make a short list of destinations and compare the estimated cost first, as the difference in prices may surprise you.
For example, rental cars booked at airports will cost double or triple what they used to. Flexibility is best in this case: you will want to plan your trip around the rental car (and where you pick it up) to ensure you get the lowest price, or maybe even avoid car rentals altogether. This also applies to hotels and airline tickets. A little planning goes a long way.