Americans save money on childcare, spend more on groceries
Sarah Co ole, who got divorced earlier this year, was just finding her financial footing for a one-income household with two children. Then the pandemic hit, leaving her worried about whether f our months of emergency savings would be enough of a cushion.
Luckily, the 42- year- old, who serves as a communication director at the State Bar of Georgia, has been able to work from home during the outbreak.
Although she's saved about $1,000 a month by not having to pay for aftercare and filling up on gas, her savings are still being chipped away by other expenses since she's spent more on groceries and food delivery with her daughters, 8 and 11, stuck at home. She also purchased a new pet and replaced a television to keep her kids preoccupied.
“I feel guilty that I'm still spending money when I should be saving it and putting it toward the future ,” Coole says .“Even though we' re saving money by being home, we're still somehow finding other ways to spend it. My kids eat all the time!”
Coole, like other Americans, has seen her spending habits change drastically during the pandemic. Consumers have saved money on childcare and not dining out, but they are spending more on groceries and cleaning products, a new study shows.
Four in 10 Americans (45%) say t he pandemic has cost them money, according to a TD Ameritrade survey that was given to USA TODAY exclusively. While they have saved more in quarantine by not going to restaurants (78%), going on vacation (75%) or buying clothes (73%), they have doled out more on groceries (57%), cleaning
products (53%), take out food (33%) and streaming services (32%), the study showed, which surveyed 1,008 Americans, aged 24 and older, from April 24 to May 4.
Separate data showed grocery bills jumped in April for Americans, marking the biggest monthly increase in nearly 50 years, according to the U.S. Bureau of Labor Statistic's monthly Consumer Price Index report. Although overall consumer prices fell 0.8% in April, households on average paid 2.6% more for groceries, the largest monthly increase since February 1974.
Before the pandemic, more than two-thirds of Americans ( 71%) contributed regularly to a savings account and 70% had an emergency fund. Now sixty percent of millennials and 54% of Gen Xers say their emergency fund will only cover three months or less of day- to- day expenses while Boomers have enough to last six months or more, the data showed.
Parents may have saved money on childcare, but 57% say work and homeschooling children was too much to manage. While 62% of parents saved ($366 on average) in quarantine not paying for childcare, 47% spent more on entertainment ($104 on average) for their kids and 41% spent more on educational resources ($147 on average).
Still, about 20% of millennials have more money as a result of the crisis by cooking at home more and tracking their spending, the study showed. About 74% of them have started a more substantial emergency fund.
“Many millennials might be in a stage of life where they don't have a family yet, or are just starting to build one,” says Keith Denerstein, director of guidance product management at TD Ameritrade. “Some of the older generations are dealing with the realities of homeschooling and entertaining their children at a time when they might not have the capability to be supported by childcare during the pandemic.”
But for some, big-ticket savings came from not going on vacation ($1,411 on average) and putting off major purchases on things like a car ($5,693 on average). Extra spending on groceries and cleaning products cost them an average of $282 and $92, respectively.
To be sure, Americans say the pandemic has helped them discover new ways to cut back on spending and that their future budgeting habits won't be the same, according to the survey. Moving forward, roughly 72% say they will buy U.S. products in the future and 67% say they will tip service workers more money and more often.
The majority of Americans say the pandemic taught them some valuable money lessons, with about 82% of them saying they realized they don't have to spend money to have a good time. They can instead go for a walk (71% of boomers), play games (54% of millennials) or work out (56% of millennials). And 63% feel they got more in touch with their finances, particularly millennials at 74%.