(BPT) - By Mary Hines Droesch, Head of Consumer, Small Business & Wealth Management Banking and Lending Products
If you've been grocery shopping lately, you've probably cursed inflation under your breath. With rising food prices, it's no wonder why Bank of America's recent publication, Bank of America Spend Scape: Decoding 2023's Consumer Credit and Debit Card Spending Frontiers and the Road Ahead, shows that groceries were Americans' biggest expenditure last year. But rising prices on necessities didn't stop consumers from seeking experiences to enjoy.
As consumers continued to be resilient in 2023, they made time for fun. From vacations across Europe to catching iconic pop stars on stage to going all-out in pink to see their favorite childhood toy come to life on the big screen, travel and entertainment spending increased by 7% year-over-year (YoY). Travel and entertainment weren't the only experiences consumers prioritized last year: restaurants (2%) and fitness and grooming services (3%) spending also increased YoY.
Compared to 2022, spending on many material goods dropped - consumers spent less on electronics, furnishings and appliances (9%) and sporting and fitness goods (4%). Last year's spending patterns clearly showed that consumers prioritized making memories over splurging on nonessential items - but what will 2024 bring?
This year, consumers may pull back slightly on experiential spending to pursue stronger financial stability. In a recent survey, Bank of America asked Americans to share their financial resolutions for 2024. Many respondents plan to continue seeking out travel (29% have resolutions to take vacations), but maintaining financial wellness is a top goal as well (45% want to increase their savings, and 30% want to pay off credit cards).
If these resolutions sound familiar, and you're hoping to spend responsibly without compromising on fun, you're in luck. We've got some tips for how you may be able to stretch your money further - so you can spend with intention, practice self-care and make memories to last a lifetime.
1. Don't leave fun out of your budget. The new year is the perfect time to refresh your budget. Start by evaluating how much money you expect to come in and go out each month. Then make a list of all the things you plan to regularly spend on. For example, some Americans plan to prioritize their spending on groceries (51%) and personal wellness (35%) this year. Next, make a list of all of your anticipated 'wants' - whether it's a beach vacation or a new pair of shoes. Getting your needs and wants on paper can help you identify areas you may need to cut back on to afford your basics, and if you're like 42% of Americans, you may deprioritize dining out and ordering takeout this year. Lastly, with your needs and wants in mind, utilize the 50/30/20 rule. Take 50% of your after-tax income to cover your needs, 30% to cover your wants and take 20% to put toward your savings. Just like how prices of basic needs fluctuate, your budget will, too - so make sure you take a look at it monthly and adjust as needed.
2. Keep an eye out for deals. Make extra room in your budget by utilizing deals not only for your wants, but also for your needs. Make sure you sign up for newsletters and rewards programs at all of your favorite places like grocery stores, airlines, movie theaters and more. Finding deals for basic goods and activities you already have carved out in your budget will allow you to save more in the long run. Even check to see what perks your bank may offer you such as loyalty and cash back programs as well as free activities to take advantage of around your city.
3. Use a rewards card to make your money work for you. As you spend throughout 2024, consider using a flexible rewards credit card like the Bank of America® Customized Cash Rewards card, which allows cardholders to earn 3% cash back in one of six spending categories of their choice each month, 2% cash back at grocery stores and wholesale clubs (on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter), and 1% cash back on all other purchases. With this card in your wallet, you can easily adapt to shifts in your lifestyle and routine so that no matter what you're prioritizing this year, you can still maximize rewards earnings - all without needing to change cards. Whether your category of choice is online shopping, travel or simply purchases at drug stores, you can choose to use your redeemed cash back to offset future purchases - like expenses during a trip or treating yourself at your favorite coffee shop. In 2023, Customized Cash Rewards cardholders earned an average of $250 cash back per account!
If you're looking to get a solid financial footing in 2024 but don't want to miss out on memory-making, the tips above and some careful planning can help you get the best of both worlds.
