With the pandemic creating financial challenges for many, consumers are restructuring their budgets to ensure they can meet their day-to-day expenses as well as the costs they prioritize most — and it seems dining out is where the biggest cutbacks are happening.
On the whole, more than 6 in 10 consumers — 63% — have slowed their spending since the COVID-19 crisis began, according to a recent survey by digital products manufacturer Highland.
While Americans have lowered their priority on eating out as they reassess their expenses, they have increased spending in other categories, such as home improvements and hobbies.
Multiple factors contributing to smaller budgets
While some consumers are spending less because they simply have less money to spend, others are opting to take a more prudent approach. The largest percentage of respondents — 60% — said they felt the need to be more cautious with their money during the ongoing financial crisis. Other reasons consumers gave for scaling back their spending included:
- Experiencing a reduction in income (49%)
- Staying home more often (40%)
The main area where consumers are cutting back is dining out, with 64% saying they now spend less on food that isn’t prepared in their households. Other areas where consumers have slashed spending are:
- Entertainment, such as movies and concerts (61%)
- Clothing (55%)
- Travel (52%)
- Recreation (43%)
- Haircuts (37%)
- Gym memberships (30%)
Transportation is another area where consumers are cutting back, with nearly half — 49% — reporting spending less in that category this year. One reason is because so many people are now working from home. In fact, a ValuePenguin survey found that approximately 61 million Americans have stopped commuting due to the pandemic.
Some spending categories can’t be cut
Unfortunately for those on a tight budget, there are some areas where consumers are finding it more difficult to eliminate costs. With so many consumers staying home and preparing their own meals, 51% of respondents said they have been buying more food and groceries than they did in the past. Making matters worse, some consumers are finding that the actual prices of groceries are on the rise.
In addition to spending more on groceries, 50% of respondents to the Highland survey said they are spending more on household supplies. Additionally, some consumers are spending more money in a bid to make it easier to cope during the pandemic. For example, 37% have spent more money by starting a new hobby and 33% said they are spending more on retail therapy.
Others are shelling out to improve their homes, perhaps because they are spending more time in them. More than 1 in 3 respondents — 36% — said they have spent more on home improvements and renovations since the start of the pandemic.
Methodology: Highland surveyed 2,002 consumers between Oct. 26-30, 2020. The breakdown among survey respondents by annual household income is as follows: 15% earned less than $20,000; 24% earned between $20,000 and $40,000; 27% earned between $40,000 and $60,000; 17% earned between $60,000 and $80,000; 8% earned between $80,000 and 100,000; and 9% earned more than $100,000.