Episode Summary:
In this week’s episode, we discuss the emerging trend of revenge-spending. As vaccinations increase and our year of the world being in quarantine starts to show signs of opening up, consumers have a pent-up need to do things and buy things. People feel like their opportunity to live life and spend money was taken from them, and now they are out for “revenge.” But don’t let this hurt your finances too hard. We encourage you to be thoughtful about where to “revenge spend” and don’t lose the momentum you’ve built this past year saving, budgeting, and tracking your net worth.
Episode Notes:
There are two types of revenge-spending we’ll talk about today:
- Post-pandemic revenge spending is a concept of spending money on the things that the pandemic prevented you from spending on or took from you. It’s spending money to make up for lost time. This could be on vacations (aka “revenge travel”), clothing, restaurants, parties, or home projects.
- A related kind of revenge spend that’s constant is stress-induced. You work so hard you get burnt out and then take revenge on the stressor by spending money.
Many people saved more and spent less during the pandemic, and now they are going to start spending more and saving less. Don’t get caught in this trend; instead, buck the trend! Avoid going overboard on spending and preserve some of the long-term benefits of the good this past year has brought.
Tips for recognizing + avoiding revenge-spending:
- Recognize and appreciate that some people don’t have the privilege of revenge-spending as they are unemployed or still suffering from other negative impacts from covid. This perspective sometimes helps me to put my own desires in check. Perhaps consider donating to a local charity or non-profit and helping those less privileged than you during what is still a difficult time for many people.
- Some level of post-pandemic spending is great. As with all spending, ensure it’s focused on your priorities.
- Did your work wardrobe work for you last year? What’s wrong with your clothes from 2020? Remember that and give yourself some time to get reacquainted with the clothes you already have and wear them to work before filling any gaps in your wardrobe. Listen to episode 95 “stop caring about what other people think” episode for some inspiration to not buy new clothes.
- If you put on some quarantine weight and now your work clothes don’t fit, consider focusing on getting back to the weight you were at pre-covid. It’s healthier and will save you money!
- Take the learnings from the last year and incorporate them into your “new normal.” You learned to cook and eat at home and that this could be enjoyable, so do more of that.
- Take your time and think about purchases before you just jump on things.
- If you saved extra money during the past year, then bank it instead of spending it. Do the math of what all the money you saved over the last year will be worth with a few years of compound interest, or better yet, a couple of decades.
- Splurge, but choose where you splurge. It’s not splurging if you do it on everything.
- Create a budget.
- Force a waiting period to spend money. Take your time. Think about things first.
- Find other ways to reduce your stress without spending lots of money. We did a whole episode on self-care on a budget or for free. Check it out for some inspiration!
- Revenge-spend on travel, but keep your splurges in check with your other financial priorities and goals.
Top 3 takeaways:
- Be aware of what revenge-spending is, so you can recognize what is happening.
- Agree on your spending priorities and where you’re going to allow yourself to splurge.
- Commit to putting in place a waiting period on new purchases to avoid impulse-revenge-spending.