While the lockdown has helped many Brits focus on saving more, it’s also led to overspending online for many households. This is a direct result of isolation and boredom for many, who have turned to spending as a way to fill their time.
According to global financial institution ING, staying at home can either save you or cost you a lot of money, depending on the choices you make.
Consumers’ behaviour has changed significantly in the past year, and so have spending patterns. Research and analysis by the IFS (Institute of Fiscal Studies) has shown that many households have been forced to spend less because of financial problems, but overspending is still up in a few key areas.
Where and how Brits are overspending during the lockdown
IFS research identified two main categories in which Brits are overspending during the lockdown.
Groceries
Perhaps not surprisingly, Brits are spending more on groceries and less on takeaway food. Food spending is higher than it was a year ago, as many households are cooking more now that restaurants are closed.
Online shopping
There’s been an overall shift from in-store to online shopping during the lockdown. This remained true even when stores briefly reopened before a new lockdown went into effect.
With fewer shops open and travel being more difficult, online shopping for common goods (the kind people usually get in shops in person) went up almost 25%.
Shopping for fun
With more time spent at home and fewer places to visit, it’s no surprise people are overspending online. According to Business Live, a number of online businesses saw a significant increase in sales in 2020.
For example, Amazon sales grew 26% to £13.73 billion during lockdown restrictions. Home furnishing retailer Dunelm saw online sales double during the lockdown and LEGO’s website received over 100 million website visitors in the first six months of 2020 – double what they usually see.
How to cut back on unnecessary purchases
To trim your overspending, look at ways to eliminate unnecessary expenses from your budget.
Find other ways to have fun online
Shopping isn’t the only way to have virtual fun. You can find all kinds of concerts, music and film festivals, streamed shows, online classes and workshops, and museum and gallery virtual tours to keep you entertained without overspending.
Sites like VisitLondon offer plenty of ideas, but you should also check your favourite haunts to see if they are running virtual events.
Track your online spending for a week
Every time you spend money online, write down how much you spend, the time of the day and how you were feeling. At the end of the week, analyse your habits.
Are you shopping out of boredom for things you don’t really need? Are you saving any money by shopping online? If you’re overspending by purchasing things that are mostly wants rather than needs, it’s time to cut back.
Set a savings goal
Having a reason NOT to spend could help you curb the urge. So if you’re dreaming of an exotic holiday once the pandemic is over, or you want to remodel your home or buy a new car, start saving now.
Write down how much money you need for your goal and post that number where you can see it easily. Every time you beat the urge to spend, transfer some money to your savings account as a reward.
