Persistently high prices are forcing many Americans to get creative with their budgets. However, most Americans may be cutting back on everyday purchases to afford the occasional splurge, as found by the latest report by Harris Poll’s Thought Leadership and Futures Practice and covered by Barron’s.
The Year of Cost-Saving
More than 8 in 10 (81%) Americans have implemented cost-saving measures this year, such as trading down, shopping at less expensive retailers, or substituting cheaper alternatives for name-brand products, and (69%) have cut out more “in-between” spending this year.
Cut Back on Everyday Basics
Nearly 3 in 5 (58%) Americans (and 67% of Millennials) would rather cut back on everyday basics to afford the occasional splurge.
And over half (54%) have splurged already on something in 2023, such as high-quality home items and accessories, a luxury fashion item, and luxury beauty/skincare products, with more younger Americans having splurged (Gen Z: 75%, Millennials: 68%).
Splurging Into Trouble
3 in 10 (30%) Americans say they have splurged on premium experiences or luxury items they couldn’t afford, especially younger consumers (Millennials: 50%, Gen Z: 40%).
This is often called the “the lipstick effect,” as research has shown that lipstick sales tend to pop during recessions, even when consumer spending is otherwise depressed. Consumers spend small amounts of money on small splurges as other spending is tight.
“It is both surprising and fascinating to witness Americans adopting a conscious approach to balancing their expenses, making deliberate choices to cut back on essentials while treating themselves to the luxuries that bring them joy,” says Abbey Lunney, Managing Director of Thought Leadership and Trends at The Harris Poll.
Mindful Spending is spending money on what you need and what brings you joy and acknowledging that. Mindful spending means taking the time to appreciate where your money is going and what your money is doing for you. Mindful spending allows you to have joy and contentment when you spend money wisely.
Brings You Joy
This means that you need to first know what you need and then know what brings you joy.
First needs and then joy. I’m guessing you know that already. Once you have figured out what brings you joy- which is easier said than done, you can decide to spend purposefully on those things. Depriving yourself of things that bring you joy doesn’t help anyone- least of all yourself. Spending on things that don’t bring you joy also doesn’t help anyone and is a waste of money.
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