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Spending Influences

money

Everyone has their own unique way of spending money. Even people who live in the same house or grew up under the same parental influences can turn out drastically different. Some people are minimalists while others simply like to buy stuff.

A variety of factors can shape our values when it comes to spending and how we approach money. For example, the recession of 2007-2009 taught us a lot about how Americans spend money. Some learned to “tighten the belt” and have never stopped. Others “tightened the belt” for a while, but then eventually went back to their spending ways.

Interestingly, while the former set may use their saving and spending habits to help better prepare them for retirement, it’s the latter that has helped spur our economy back to recovery. However, while retail sales in the first half of 2016 were solid, by midsummer they became unexpectedly flat as Americans cut back on discretionary spending.

This could be attributed to the summer heat and the lack of desire to go out and spend money, but online buying tends to shore up areas that experience seasonal influence. Perhaps it’s the uncertainty of the presidential election and concern that, regardless of who wins, an economic downturn could follow.

Gas prices are down and incomes have gone up this year, but one change in consumer habits has vexed retailers: people are now more inclined to make purchases that enhance their lifestyle and well-being.

For example, more people tend to buy “experiences” facilitated via travel or athletic gear. They also spend less time at the mall and more time at home, where they are investing substantial sums in home renovation and remodeling. Today, the average household spends about $182 a month on home improvements. In July alone, spending on building supplies and gardening equipment rose 6.4 percent and home furnishings grew by 4.2 percent from the year before.

New research has revealed that people are happier when they buy things aligned with their primary personality traits, which psychologists allocate into five different categories: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. For example, an introvert may be happier buying a book, while an extravert would rather buy dinner at a crowded restaurant.

Whether you make purchases based on your personality or simply to meet your everyday needs, it’s important that everyone has a strategy for their long-term retirement goals. As financial professionals, we’re here to help you prepare for what’s down the road as you work toward your desired financial future.

Source: AE Marketing Hub