Pattie Lovett-Reid: How coronavirus has turned Canadians from spenders into savers
(AlenaPaulus / iStock)
TORONTO -- We have changed, financially, for the better.
That is a key finding of Credit Karma's recent survey in June 2020, when they asked over 1,000 Canadians if the pandemic was impacting the way they were spending their money.
The response was exactly what I was hoping for. As a financial planner, I have worried about Canadians spending beyond their means over the past decade. However, it appears this pandemic has given at least a third of those surveyed the opportunity to save more now, than they were before the coronavirus.
It won't surprise you that driving the savings success was the inability to go out and spend.
You have to wonder, though, if the trend will continue post-pandemic. While still dealing with physical distancing, it is easy to say you will continue to save and won't succumb to the pressure to spend on social gatherings. It is the stickiness of the trend I will be watching.
And, of course, what about FOMO -- fear of missing out?
I have to believe FOMO is just not going to survive the pandemic and will be replaced with JOMO -- joy of missing out.
Social activities with large groups are not likely to happen widely until at least the pandemic is under control or a vaccine is found. The lack of large gatherings at concerts, travelling and even weddings are going to result in a lot of people saving a lot of money.
Here is where Canadians plan to spend less and by what percentage:
- Experiences like movies, concerts and sporting events (41%)
- Travel (40%)
- Less spending on social events like weddings, birthdays, happy hour, and fitness (38%)
- Shopping for clothes or shoes (34%)
- Transportation costs (29%)
- Subscription services like Amazon Prime, Spotify or Netflix (26%)
- Food, drink including restaurants, groceries, meal delivery and alcohol (25%)
You may find these cost reductions aggressive, however, the fact that a third of Canadians recognize spending patterns of the past weren't sustainable and are more willing to be more selective in their discretionary spending, is a great thing.
As you become more honest with family and friends about your financial situation, it is, in my opinion, a huge leap in the right direction. I'm not naive, there will be financial speed bumps along the way and spending on things you hadn't planned on. However, I'm convinced more Canadians will be financially aware of the financial decisions they will make and take ownership of their actions, even if they deviate from their plan and intentions.
The pandemic started as a health crisis that morphed into an economic crisis and now has become a personal financial crisis for many. As our health and our economy start trending in the right direction, I'm encouraged by reports like this. On the personal level, our financial situation will turn for the better as well.