Will Covid affect your future spending patterns?

We’ve been through several months of this pandemic and it’s taking its toll on everyone. It’s also causing havoc for the economy. But how is it changing our behaviour?

Just for a bit of clarity, I am GFF and as a family we are moving towards the “work is optional” phase of our lives. My eldest has a year before school starts and we are tied down to school terms and holidays and the Lady and I both have work from home possible jobs. We are privileged to have put in 15 years of saving to end up cocooned during the Covid crisis.

I keep a track of our spending and I’ve done so for years. I do this for a number of reasons – prime amongst them was that I didn’t once and spent all my student loan money at university – after that, I kept weekly (now monthly) records of what I spent money on and in what categories. It allowed me to make observations, predictions and take action.

Bring on 2016 – 2020 and we’ve been through being pregnant, having kids, moving house and setting up home (plus making improvements, changing jobs , paying for childcare and enjoying our lives. It’s marked a significant change from our lives before and even at the time, I realised that kids don’t necessarily end up costing you more.

Pre-2016 we spent a lot on travel – weekends away here there and everywhere as well as longer trips and skiing (maybe £1000 a month on average) and with travel comes eating out (which is not cheap). A lot went on cars (and constant drip of money on fuel costs (£300 a month) as well as everything else. Rent was cheap (£480/m) though.

2016-2020 our spending was actually down as we travelled less (kids and pregnancy) and stayed at home more. Mortgage was cheaper (£200) but housing costs added up and childcare costs when they came were high too! But with less commuting and a fuel card, we were better off. We also consciously or unconsciously bought less rubbish/junk – I for one have not bought a pair of socks in a couple of years.

Post-Covid spending expectations

I think that once we either post-Covid or with-Covid, our family spending should settle down to become lower overall, notwithstanding childcare costs (which are horrendous!) but I expect the following things to play out.

1. We travel internationally less but make fewer and longer trips – slow travel you could say. A family skiing holiday might be a sacrifice we make. More holidays to visit family (cheap but not stress free)
2. We spend less on driving around the country as our commutes are much less (a blessing from working from home vs. a 135 mile round trip for me). We’ll probably scrap the second car saving money in doing so.
3. Housing costs lower as we’ve paid for all the big things and I maybe do more DIY than pay others to do it for me.
4. Since we spend more time at home, we spend less on impulse food, takeaways and ready-made meals. Instead we prepare more from scratch using good quality, healthy ingredients
5. Our spending on clothes for the adults of the family decreases but the kids’ goes up.
6. Costs of things like entertainment (museums, theatre, cinema) etc… ramps up as much as possible as well as eating in cafés with less evening meals out.

This might seem pretty obvious, but the big areas of disposable income spending were for us travel. Our work related costs (cars, commute, costume) will reduce, saving us money.

Where more spending is desirable, I expect we’ll take it. I don’t mind spending £50 for tickets to the theatre, I think it’s well worth it – but where before we’d head to Edinburgh for a night (plus dinner and a few drinks), post-Covid we’ll make it a day trip.

Overall, our outrageous family spending should drop significantly. Lop off childcare, travel, home and work costs and we can live a great life quite frugally.

I’ll still keep a track on the spending – that’s just who I am – and I do expect that our Personal Withdrawal Rate will not drop to less than 4% overnight, we’ll be going in the right direction and when the basis of the 4% rule is that you spend 4% of your nest egg on day one of RE (plus inflation), you can start off at 6% and start spending less and you’ll be ok.

Over to you

What about you? How do you expect your spending to change in the future? Has covid made you feel like you are just bursting to explore the world again, to live life and enjoy yourself by spending? Or are you thinking that a more settled (and cheaper life) is the one for you? Maybe you are thinking of moving to get the type of life you want or maybe you now feel that you appreciate what you have and are content that that.

Thanks, GFF