Money 101: Post-pandemic spending tips

Welcome back to Invest in You: Ready. Set. Grow's supplemental Money 101 guide to financial wellness as we emerge from the pandemic. After a year of lockdown, you may be ready to make up for lost time and start going out – and spending more.

VIEW IN BROWSER | SUBSCRIBE   Coronavirus has created chaos worldwide. Read on for tips to help you handle this health and financial crisis. Times are tough! We're here to help.   Welcome back to Invest in You: Ready. Set. Grow's supplemental Money 101 guide to financial wellness as we emerge from the pandemic.   After a year of lockdown, you may be ready to make up for lost time and start going out – and spending more. Just over 50% of U.S. consumers plan to spend extra money treating themselves, according to a May survey by McKinsey & Company.   While many Americans are still trying to recover financially from the pandemic, perhaps due to the loss of a job or income, others were able to actually put some money aside and pay down debt. Either way, it pays to be smart about how you spend.   We'll look at what to do before you start dropping money and how to avoid excessive splurges, as well as how to tackle any debt you may have or take on.    Thank you for already undertaking your journey to financial wellness. We hope these supplementary lessons help pave the way forward.    Sharon Epperson CNBC Senior Personal Finance Correspondent Sharon Epperson @sharon_epperson Post-pandemic spending tips Get a clear picture of your finances Before you start spending, look at your total financial picture. That can help you determine which parts need the most attention and where you have some breathing room. Add up your assets, including the amount you have in checking, savings, investment and retirement accounts, plus the estimated value of your house or any properties you own. Then, add up the value of your liabilities, such as credit card balances, student loans, mortgage, car loans. Where your finances currently stand lies in the answer to this equation: assets - liabilities = net worth. Reassess post-pandemic spending Your immediate financial plan and priorities during the pandemic may have been different than what you would like to do with your money now. Think about what you are going to start spending on again, like dining out or travel, and incorporate it into your budget.    Over the past 15 months, you may have also realized there are certain things you don't really need, and other things you can't live without. Look back at what brings meaning to your life and write it down. Then analyze your expenses and see if there are items you can eliminate.    One thing to try is cutting at least one recurring expense and saving what you would have spent.  You may not need  six streaming services now, so you can reduce it to three. Put that "extra" money in a special account for new splurges or new spending priorities.    Also, reverse any changes you may have made during the pandemic, such as a reduction in contributions to your retirement account. Student loans have also been on pause and are set to resume Oct. 1.   Before you start blowing through your paycheck, make sure you have an emergency fund. Experts suggest having at least three to six months of living expenses set aside. Rework your monthly budget Try using a budgeting strategy called "The 60% Solution." The first 60% of your gross income (all of the money you have coming in for the month) goes to "committed expenses," which includes all taxes, housing costs (rent/mortgage, utilities), credit card, and everything that you must pay each month.     The next 30% goes to savings: 20% to long-term savings and 10% to short-term savings, like your emergency fund and a looming big purchase.    The remaining 10% is "fun money" for you to spend on whatever you want to spend it on. "Your biggest enemies are your bills. The more you owe, the more you stress. The more you stress over bills, the more difficult it is to focus on your goals." — Mark Cuban How to resist the urge to splurge People are experiencing freedom, euphoria and relief post-Covid to varying degrees, said financial therapist and coach Carrie Rattle, CEO and founder of New York-based Behavioral Cents.   It's easy to take that emotional release and translate it into splurging. Before you do, approach your purchase analytically before you put it in your cart. Do you already have one? How often will you be using it?    You can also ask yourself if it will change the way you spend your time. Those who buy experiences tend to be happier, said researcher Elizabeth Dunn, chief science officer for financial technology firm Happy Money and author of "Happy Money: The Science of Happier Spending."   Tracking your spending can also help. When you buy something, write down what you bought and how much it was. Keeping that real-time tally can help you see patterns, such as situations that made you spend and sites you spend a lot of time on. When we see how much we spend per week, it can have a dampening effect on our urge to shop further, Rattle said.    Budgeting apps can also help keep you from overspending, as can a debit card. We spend less when we know it is coming out of our account today.    In addition, try to avoid what Rattle calls the "shopping break" from work or during your day. When you are shifting away from a project on the computer or are tempted to pick up your phone, instead of loading items into your online shopping cart, walk away and do something else to let your emotion subside. Avoiding debt When you spend, try not to accumulate debt. While it may seem like obvious advice, many Americans fall into the trap. A recent survey by CreditCards.com found that 44% of Americans were willing to go into debt to treat themselves.     However, credit card interest rates are creeping higher, with the average card charging over 16%. If you don't have a great credit score, you can easily be paying 20% to 25%.   If you have a rewards card and pay it off every month, it may help you earn cash back or travel points. If you incur debt, it may outweigh the rewards.   If you have to carry debt, get a card with a zero percent interest rate promotion.   "Buy now, pay later" apps are also becoming more popular.  Known as point-of-sale installment loans, they are a type of short-term financing that allow you to divide your purchases into monthly installments. Experts warn to read the fine print. The interest rates can be high, akin to retail credit cards. Even if you get a zero percent interest rate, you may lose it and rack up late fees if you miss a payment. Some loans are due every two weeks, which can also throw you off.  The bottom line It is understandable that people are ready to start spending again. The key is doing it responsibly.    Before you start getting back into old habits, consider how your financial situation may have improved during the pandemic if you were fortunate enough to keep your job.   "We have an opportunity," said Bankrate's senior industry analyst Ted Rossman. "There's a chance to write a different kind of story here." Enjoying this series? Check out CNBC's other newsletters on everything from investing to politics. Subscribe here. Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel Digital Products Feedback Privacy Policy   © 2021 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis. Data also provided by THOMSON REUTERS