With 391 million people fully vaccinated for COVID-19 worldwide (as of May 24, 2021), the light at the end of the pandemic tunnel is no longer attached to an oncoming train. People are emerging and testing their environment as herd immunity progresses. Americans lucky enough to remain employed have collectively saved about $1.7 trillion from the beginning of the pandemic through January 2021. The savings are mostly by default because they couldn’t spend it on travel, in-restaurant dining, and concert/sports/show tickets.
You not only saved up your money, but also your desire to spend it. The flood gates on both are about to open as COVID restrictions lift. Scarcity created FOMO and with freedom returning, you’re tempted to spend those savings on extravagances. For example, a year ago you didn’t realize how badly you wanted Crisp Morning Air scented hand sanitizer until it was sold out. Now, when you’re thumbing through Instagram and up pop photos of a friend posing in the middle of Times Square, you want to fly first class to New York and stay at The Ritz-Carlton. The phenomenon of spending money with abandon in an attempt to make up for lost opportunities during the lock down has a name: Revenge Spending.
All the money you would’ve spent in 2020 and couldn’t (thanks, COVID) is now burning a hole in your pocket. All the activities you wanted to do but couldn’t (thanks, COVID) now make you feel you have a lot of catching up to do. You want to take the trips you missed, replace the sofa you inherited from your parents’ downsizing six years ago, buy new work clothes to wear back to the office because your old work clothes no longer fit (thanks, COVID). You feel like you’ve been robbed of a year’s worth of experiences and are in a frenzy to make up for lost time. If you have a job, very little debt, and a stimulus check, you’re very tempted to spend. A little splurge is understandable, but letting “treat yo self” get out of control can quickly empty your bank account.
The point of Revenge Spending is to make yourself feel better mentally and emotionally; a little retail therapy for all the isolation you had to endure last year. But if you blow all the money 2020 saved you, you defeat the purpose of Revenge Spending by mortgaging your future. Haven’t you suffered enough? To keep yourself in check:
Control the Splurge – Set a limit (maybe a stimulus check or two) and try to spend it locally. Use a local travel agent, go to local restaurants, jewelry stores, concert venues, etc.
Use Your Points – If you have a credit card that accumulates points and you’ve racked them up buying gas, groceries, and take-out during the pandemic, use them where possible to pay for upgrades. For example, fly business class instead of economy, book a 5-star hotel instead of a 3-star, fine-dining instead of casual. Using the points gives you the experience you want while making your fun fund last longer.
Tap the Brakes – It’s easy to go online and immediately start booking and buying. When you’re about to purchase something you can’t live without, bookmark the site and revisit it in 48 hours. If the feeling is still as strong and you can afford it, go for it.
Walk Away – When you see social media posts of your friends Revenge Spending, put down your device.
Keep Going – Maintain the good savings habits you were forced to adopt in 2020, like retaining an emergency fund.
Party Like It’s 2019 – What did you plan to spend your discretionary income on in 2019? If you stick to that budget, the odds you’ll keep your 2020 savings increase.
Have you done any Revenge Spending yet? What is the first thing you bought? Please share in the comments.