Have the Urge to Splurge Post-Pandemic? It’s Called Revenge Spending—Here’s How to Avoid It
You, too, can learn to revenge spend responsibly.
In March 2020, it felt like life ground to a halt—and nearly a year later, with a chunk of the U.S. population vaccinated against the coronavirus (and more getting their shots every day), it's finally starting to feel like something close to normal might be within reach. Of course, some people have continued to live their lives as usual, despite business closures and expert recommendations. But those who have dutifully stayed home as much as possible, practiced social distancing, and worn masks may finally be starting to feel like they can return to some of the activities they've missed during the pandemic within the next few months.
And, of course, with the return of those activities comes a return to spending. Pandemic savings trends revealed that some people—those not suffering from unemployment, as millions have—have managed to save more money than ever during the last few months; still more have seen their monthly expenses drop during this time and may face a tough transition to post-pandemic budgeting.
Many experts attribute this drop in spending to a loss of opportunity. There haven't been opportunities to spend money on travel, gatherings, meals out, entertainment, and the other discretionary expenses many people had pre-pandemic at the same scale, so it stands to reason that, when the opportunities return, so will the spending—and with a vengeance. Call it revenge spending.
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Jerry Patterson, senior vice president of retirement and income solutions at Principal, a retirement and investment services company, says he's seeing "revenge spending emerging everywhere."
"To me, it's all that stuff you were going to do, but didn't because of COVID," he says. "All those things that were on the to-do list that you want to go back and almost violently spend that money [on]."
Revenge spending is the money you drop to make up for lost time, so to speak. It's the big vacation you book to make up for the trips you missed last year, or the new furniture you buy after putting up with your getting-on-in-years sofa during the pandemic. And it's already here, even though widespread vaccination is still a ways off.
Kristen Gall, retail expert at online shopping company Rakuten, predicted in an email that customers will revenge spend by purchasing items and experiences they feel they were robbed of last year; in January, retail sales grew by 5.3 percent after predictions had them growing by only 1.2 percent. During the Presidents Day holiday weekend in February, the Transportation Security Administration (TSA) recorded checking more than 1 million passengers per day nationwide for two days of the weekend for the first time since January 4, when post-holiday travel was surging. 2020 travel was twice that, but these numbers still demonstrate a sharp uptick in travel. Spending and travel are up, and they're likely only to grow from here.
During the pandemic, "everybody saved more, spent less," Patterson says. "And now everybody is spending more and saving less."
And while a little splurging after months of careful saving (or unwilling saving, because there wasn't much to spend on) is perfectly understandable, going overboard as a sort of self-comfort or revenge for everything you gave up in the last year can hurt you in the long run.
"Don't revenge spend everything away," Patterson says. Instead, start looking for ways to preserve the money you managed to save and maintain any good savings habits you've developed.
If you had money set aside for a vacation last year that you weren't able to use, go ahead and use that money for a trip later this year (if conditions permit)—but don't double the size and cost of your trip just for the heck of it, and fight the urge to take twice as many vacations this year to make up for what you missed if doing so will dig into your savings. As we've learned, having a cash cushion in case of emergency is essential.
Struggling to resist the urge to book the extravagent summer vacation of your dreams? Lauren Anastasio, CFP, an advisor at financial services site SoFi, has a few tips to help you revenge spend responsibly.
"The fear of missing out (FOMO) can influence how people spend their money and motivate them to buy things they can't afford," she says. "If you feel peer pressure to spend in ways that are beyond your means, try thinking of cheaper alternatives or minimize your social media screen time to avoid overspending."
Slow yourself down, too, especially if dreaming of your out-and-about future has you clicking add to cart with a vengeance.
"If you feel the urge to buy something non-essential, remove yourself from the situation and write the desired item and cost down to revisit for consolidation later," Anastasio says. "For large purchases, you may consider the 30-day rule, where you would give yourself 30 days to decide whether you should purchase the item. After the 30 days are up, you can decide whether you would still like to buy it."
Before you start your revenge spending journey, set limits for yourself. Patterson suggests setting aside a certain amount of money to spend on whatever you wish, and both experts say creating a budget can help you stay away from overspending. Revenge spending isn't necessarily a bad thing (as long as you wait until it's safe to travel and take safety precautions), but it can take over and wreak havoc on your finances: Stop it by planning ahead for some controlled (but still fun) and well-earned splurging.