This has been a year of unprecedented changes. Postponed vacations, remote work, and virtual happy hours are now the new norm. These unique times are prompting people to rethink and reinvent their lives, their spending and savings habits being no exception.
Recent savings trends revealed in our new CIT survey are worth noting. Over half of consumers are saving more, in particular Generation Z and millennials, who reported an uptick in saving between the months of March and June.
Overall, three-quarters of consumers say they are somewhat likely or very likely to stash away more cash in the future than they usually do each month.
These results are encouraging. But no matter what you’re doing, there’s always room to improve. Consider these useful tips to refocus your savings strategy and reinforce your objectives.
Re-evaluate your goals. Think about how your lifestyle has changed since you’ve been social distancing and spending more time at home and focus on what you’d like to accomplish. Do you want to invest in a new remote workspace? Have a home improvement project to save for? Or do your kids need new computers for remote learning? Set a goal that aligns with your needs, say, $100 a month for a new savings fund, and commit. You can always take on an additional goal or increase the dollar amount once you’ve mastered the basics.
Adopt new healthy habits. Our survey reveals that 4 in 10 of consumers are making fewer impulse purchases. That’s certainly a great start. To be even more deliberate about managing expenses, layer in a handful of small but effective changes. Set spending limits on your debit or credit cards, meal prep at least one day a week, or cancel a subscription service that you don’t use frequently. Soon enough these choices will become innate habits that require little thought and no sacrifice.
Automate your savings. To save more effectively, automate your savings. Establishing a repeatable process that doesn’t require a large time commitment will make the process more manageable. The good news is 49% of consumers are somewhat or very likely to automate contributions to a savings account in the future according to our survey. Join them! Make your $100 a month goal effortless by setting up an automatic transfer. You likely won’t miss it or notice it’s gone.
Choose an account that simplifies saving. Mobile and online banking has surged in the last few months and banks are investing in account features that maximize your convenience. Seamless money transfer tools, 24-7 account access, and robust security measures can make the task of setting aside money more straightforward. Choose an account that is digitally convenient and allows you to save more effectively.
Each of us can create healthier and more rewarding financial habits that help us reach important goals. Whether you’re looking to invest in your home, save for an upcoming purchase or simply prepare more for the future, it’s important to be realistic about how to achieve your financial goals through tangible, measurable milestones.
Editor’s note: This article was first published in September 2019.
A school break changed 66-year-old Martin Farber’s life forever.
In 2007, his daughter — who at the time was attending Illinois State University — decided she wanted to spend a college holiday volunteering in Costa Rica and staying with a local family, he explains. She came home raving about the experience, so, in 2008, Farber — who at the time was living in Evanston, Ill., just outside Chicago, and selling cars — took his first trip there.
“It was a big surprise to me — bumpy roads, dogs barking in the streets,” he says. “I wasn’t enamored at first.”
But as his daughter began traveling there more and eventually moved there for a year, he took additional trips to Costa Rica. It quickly grew on him — in particular, the people. “The Costa Rican people are warm, open and friendly. I felt less invisible in a strange country in a strange town where I didn’t speak the language than I did in Evanston.”
And the more time he spent there, the more it impacted him: “On one of my trips there, I thought: My daughter’s life makes more sense than mine,” he says. “There was nothing wrong with my life, but I felt that my life was out of context with who I’d become. … I would have bills and make money to pay them, but that had ceased to be satisfying,” he recalls. “I knew I needed to change my life — there was no more joy in what I was doing.”
What’s more, when he’d return from his Costa Rica trips, people noticed. “I would come back, and my friends and therapist would say: You seem better after you go,” he says with a laugh.
Here’s what his life is like, from costs to health care to residency to everyday life:
The cost: While many expats spend way more living in Costa Rica, Farber says: “I could live on my Social Security and still save money.” He says “a person can live on $1,200 per month, two people on $2,000.” The key, he says, is to live more like he does and as the Costa Ricans do — in a modest home, eating local food and purchasing local goods.
Indeed, Farber himself spends just $300 a month for rent (he rents a home from a friend who moved recently and gave him a good deal), roughly $225 a month on groceries and just $50 a month total on water and electricity (the temperate climate in Orosi means you rarely need heat or air conditioning). The veteran Volkswagen VOW, +0.96%
salesman saves money by not owning a car (those over 65 ride municipal buses for free), which can be a significant expense in Costa Rica; for his cellphone, “I pay as I go … roughly $10 may last me a couple weeks or more,” he says, adding that “many people handle there their cellphones this way. You can get them recharged anywhere.”
His major expense is travel: He goes back to the U.S. to visit his mother in Florida several times a year and lately has spent part of the summer in Chicago helping out a friend with a dealership there. He also spends a good amount of money on health care. He says that while flights can be had for as little as $350 roundtrip during offseasons, the cost can be much higher the rest of the year.
When he developed a detached retina, though, he paid for the procedure out of pocket so that he didn’t have to wait for the required surgery, he says — adding that the entire procedure cost him about $5,000. “I would have had to have waited four days,” he says, if he had not paid to expedite matters. “That might have been fine, but it might not.” And he adds that the quality of care depends on where you get it in the country.
Lifestyle: Though Farber says that he “moved here with no goals and no agenda,” he’s found plenty to do. “I take Spanish lessons two days a week for two hours a day. It’s been great. I never thought I would acquire a usable language in my 60s,” he says. He also rides his bike all around the area, does some writing and belongs to a community group that undertakes projects to improve the area.
And he often simply takes in nature, which he says has been an essential part of why he feels calmer and more relaxed in Costa Rica than in the U.S. “I live at 3,000 feet but in a valley surrounded by coffee fields and lime trees and water. At night, if I open the windows, I can hear the river rushing by,” he says. “It is very calming … hundreds of trees everywhere … you know the Earth is alive.”
Cons: “I don’t want to overglorify. It’s not without its problems,” Farber says of Costa Rica. “There are social problems and downsides.” He notes that crime and petty theft can be a problem (“I am cautious,” he says of his approach) and seem to have increased since he moved there, and adds that he misses out on some cultural things because of where he lives. And, he says with a laugh, “I can’t order Thai food at 9 at night.” But, he adds: “These are trade-offs — in the afternoon, I get to walk in the coffee fields and see flocks of parrots.”
Residency: To qualify for Costa Rica’s pensionado visa, expats must prove that they have a pension of at least $1,000 coming in each month. (Here are the details of that program.) Once you have lived in Costa Rica for three years, you can apply for permanent residency. Farber used a lawyer to help him figure out the ins and outs of residency options; his entire path to permanent residency took about a year, he says.
The bottom line: “After five years I am still amazed and surprised that I made the decision to lead a life I never thought I would,” he says. And while he may not stay in Orosi forever — “the town doesn’t have an ambulance, [and] I don’t know what it will be like to be 80 there,” he says — he does plan to stay in Costa Rica in no small part because of the people and sense of community. “I have the feeling that life is good here,” he says. “It’s hard sometimes, but we are all in it together.”