Have the Urge to Splurge? You May Be "Revenge Spending"
The coronavirus (COVID-19) pandemic has managed to be a time of both excruciating stress and unprecedented boredom, as the virus swept through cities and states undetected. In just a year and a half, over 30 million people in the U.S. tested positive, people lost businesses, and life as we knew it was put on pause—including our spending habits.
According to a consumer tracker by Deloitte, a company that provides auditing, tax, and advisory services, Americans saved 14.2% more in 2020 than they did in 2019 because travel and events were shut down due to COVID-19. But when restaurants, cinemas, and sports venues re-opened their doors in the middle of this year, most of America launched themselves back into the mindset of going, doing, and buying to feel a sense of "normalcy" again—this new behavior is called revenge spending.
What is revenge spending?
"Revenge spending is a term used to explain the urge people have to spend money in order to essentially make up for 'lost time.' This trend usually takes place after an unprecedented event, such as a global pandemic," Ola Majekodunmi, founder of All Things Money, tells HelloGiggles. "We do it because we want to enjoy ourselves after a tough year of nearly being able to do nothing."
According to Majekodunmi, the past year has created the perfect condition for revenge spending. "COVID has affected everyone in many different ways," she says. On one hand, people feel that their spending is justified: "We've been cooped up inside saving for a year—surely we can afford to spend a little extra to make up for lost time and treat ourselves." On the other hand, the trauma of the pandemic can create a sort of carelessness with money. "We have seen the devastation that the pandemic has caused," Majekodunmi says, "Which I think has resulted in the majority of people adopting a 'life is too short' stance."
Plus, spending money can result in a temporary but significant mood boost. After a traumatic period, such as, let's say, a year-long pandemic and lockdown, many of us crave feelings of contentment. According to Psychology Today, shopping dramatically lights up the dopamine centers in our brains. It feels really good to shop, so it's not exactly surprising that we are a little more willing to part with our cash after such a long and difficult year.
How to know if you're "revenge spending":
While spending a little extra money after the pandemic is natural and important to help America's economy, as most businesses have been affected by the pandemic, for consumers, it's important to understand the difference between spending a "little extra," and forgoing all the money in your bank account (however, if this is okay for you, then go for it!). But if you're concerned about your recent spending habits, Majekodunmi recommends looking at your comparative spending from year to year. "You may be able to tell if you have fallen victim to revenge spending if your spending has drastically increased compared to what your usual spending habits were like in a pre-pandemic world," she says.
Another sign of a developing revenge spending habit is that you're spending money on unnecessary things that you've never purchased before. "Are you going out for one too many brunches to catch up with friends, or are you placing more orders on Amazon following the TikTok recommendations you have watched?" Majekodunmi says.
How to keep track of your personal finances:
If you're worried that you've become a revenge spender, there are a few ways you can curb your spending habits and regulate your cash flow.
Make a budget.
"My number one tip is to draw up a budget," Majekodunmi says. With a budget, you'll be able to plan your spending with more precision. Giving yourself a set budget for each type of expenditure will help you to minimize your impulsive purchases. Plus, you'll be able to take stock of where you're spending too excessively. "A budget allows us to track and review our spending," she says. "And also helps us identify where all of our money is going."
Try the "30-day rule."
Majekodunmi also suggests trying something called the "30-day rule." "This is where you spot an item, a trip out, or a bargain holiday, but resist the urge to make the purchase until 30 days have passed," she explains. "If you still have a desire to make the purchase after 30 days, then you know it's a purchase you really, really want." This is a great way to curb impulsive spending and make purchases that you feel good about in the long run.
Learn to say "no."
As things open up and opportunities to spend become more frequent, it can also become harder to avoid increased spending. "It's important to make sure you're not falling victim to peer pressure—it's okay to say 'no,' too," Majekodunmi says. Before you spend, decide which social events are important to you and say no when you and your bank account need a break.
Over-spending is never more tempting than after a long period of saving and self-restraint. If you find yourself falling into a pattern of revenge spending, you aren't alone, however, with a few simple steps, it is possible to resist the urge.