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Spending habits in 2020’s changing economy

The ongoing pandemic has accelerated the adoption of a digital first economy where both businesses and the consumers they serve, have little option but to adapt quickly. Besides the obvious shift to an online world, consumer behaviour over the last months have ranged greatly from toilet paper hoarding to round-the-clock content consumption.

As governments and stakeholders made the necessary interventions to ensure supply chain resilience and that essentials remain available, the fear of shortage subsided. Consequently, consumers made a shift from panic mode to either of two broad categories - “utilitarian” motivations (an urge to purchase only the bare necessities) or “hedonistic” fulfilment (the need for instant gratification).

Utilitarian motivation is somewhat driven by a pessimistic stance. Consumers in this category are worried about the economic impact of the health crises and are likely to save as much as they can; choosing only to spend on the absolutely necessities such as rent, education, utilities, healthcare, sanitizers, and grocery (including household cleaning items and canned food).

Hedonistic fulfilment, on the other hand, arises from a more optimistic outlook. Consumers in this category, though somewhat worried about the economic prospects, still choose to consume nonessentials such as entertainment, books, electronics, and home improvement. With lockdowns imposed and work from home encouraged, a lot have also started investing in bread makers and fitness equipment as ways to maintain their physical and mental fitness. Interestingly, Amazon reported that the most searched item these days is jigsaw puzzles for adults.

Irrespective of the category you fall into, only purchasing essential items out of fear can cause further anxiety while spending frivolously is not always prudent. We can agree that there is a need to find a balance. So, how can you ensure that you are money wise during this uncertain time?


Creating a budget and sticking to it is now more important than ever. You should be re-evaluating your spending habits. Use this opportunity to identify the absolute necessities, the nice to haves, and the unnecessary. Because these are unpredictable times, it is particularly advisable to store up a huge cash reserve. You can build this either by saving in a high interest savings account or fixed deposit. There are plenty of apps available that can make this process less tedious and help you stay on track to meet your financial goals.


There are many conversations regarding money markets and questions around the measures that people can take to ensure their investments are secure. These are times unlike what most people have experienced in their lifetimes and the future turn of events is difficult to foresee. If you are worried about your investment portfolio, you should certainly seek professional advice. Talk to financial advisory experts and let them take care of your financial needs so you can focus on your mental and physical health.

Discretionary Expenses

These are challenging times, particularly from a mental well-being perspective, so it is understandable that you may feel the need to splurge on purchases that offer some form of comfort. Nevertheless, you should think beyond material goods and mindless shopping and instead, consider seizing the moment to do things that you’ve always wanted to do but never had the time. These could be activities such as painting, learning to play an instrument or a new language. In choosing a vendor, you should consider purchasing from small local businesses. By doing so, you can contribute towards the longevity of these businesses which may not survive otherwise. Make your spend count by contributing to the local economy, which will in turn give you a sense of purpose and control.

In conclusion, we continue to evolve as the ongoing pandemic unfolds. In order to find the right balance that supports your well-being, it is important to evaluate your spending habits. Assess your own situation and determine what would work best for you. You may need to decide whether saving is a priority or if this is your opportunity to consider investing. You may also choose to focus on your mental well-being and spend on activities that bring you a sense of purpose, or you may have completely different plans. No matter what route you consider best for you, it is important to remember that this pandemic will eventually end, and we will slowly venture back into “business as usual”. Let’s ensure that we are being wise, financially and mentally, and ready to face new beginnings.

Investment products: Not a Bank deposit. Not Government insured. No Bank guarantee. May lose value.

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Bahar Al Awadhi is a full time working mom in the field of Talent Management and is also a columnist for Sail e-Magazine writing on a range of topics including education, mental health, business, and other issues prevalent in the community.

This article is intended to provide general information about finance and investments and does not replace or should be taken as professional financial advice. The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article except information on Citibank N.A. – UAE products referenced herein.
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