How to Control the Temptation for Revenge Spending

How to Control the Temptation for Revenge Spending

June 08, 2021
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With many parts of the U.S. re-opening, tens of millions are expected to make up for lost time by shelling out for experiences they’ve been missing over the past 15 months.

More than a year after COVID-19 completely altered lives around the world, Americans are preparing for a return to a “normal” summer, filled with travel, concerts and a trip (or two) to your favorite boutiques. Call it "Revenge Spending."

What Is Revenge Spending?

Revenge spending is the phenomenon of consumers making purchases now to ‘make up for lost time’ during the pandemic, when so many opportunities for spending were curbed because of health restrictions or financial duress.

If you haven’t heard of the term before, think of it like a dam that’s about to burst. All of the water pent up inside is consumer demand. The dam itself is the pandemic, which has been holding back spending. As the end of the pandemic looms near, cracks in the dam are appearing—and growing wider.

How to Control Revenge Spending

It’s tempting to want to celebrate after such a difficult year. But for some, the celebration can take the form of purchasing a surplus of things they want, but don’t necessarily need. This can be classified as emotional spending, which means you’re buying habits are dictated by how you feel. The purpose of each purchase is simply make you "feel" better at that moment. It has also been referred to as "retail therapy."

Emotional spending can be a slippery slope, and it’s important to reach out to friends or professionals if you are overwhelmed by feelings of sorrow, depression or stress. Also, consider turning to similar outlets of emotional relief, such as reading, working out or starting a creative project, instead of shopping.

You may feel this return of the economy is a once-in-a-lifetime event, and it may be. Regardless, it’s important to set a budget for discretionary spending. This will help control your personal spending and limit impulse buys. A sound budget, along with a few other tactics, can prevent a spending-spree hangover that rivals the stress of the pandemic.

This is a part of basic budgeting, so it may be something you’ve heard of before. When figuring out how much you spend in a month, take a look at the things you want vs the things that you need.

Needs are things such as food, shelter, electricity, transportation, hot water, and clothing; These are your basic necessities in order to sustain life. Wants, on the other hand, are those extra things that would be nice to have but you can still live without. Going out to dinner, buying a brand new luxury car, and splurging on a new dress are all considered wants.
If you budget monthly, split your expenses into needs and wants, and make sure you have enough money for basic essentials. That way, you can use whatever is left over for the wants you’ve had your eyes on.

While it’s completely OK to buy items or experiences in the "wants" category sometimes—especially now, when we’ve been craving experiences—it’s key to be cautious and take a hard look at the funds you have available right now.

How many of us have had to cancel a vacation due to COVID-19? How many of us are itching to get back on the road now that countries are opening up? If you have the resources for your vacation, that’s fine, enjoy. However, if you’ve already spent the money you have been refunded, or don’t have the savings right now, don’t let the impulse to spend create debt.

Switch to Cash

If you’re having trouble keeping up with all your spending, it may be time to drop the cards. Credit cards can offer a line of credit far greater than you can actually pay. Debit cards, while less dangerous, still can provide access to an overdraft line that will let you spend more than you have. To solve this, turn off your overdraft feature, or, even better, switch to cash. Take only what you think you’ll need for the day and nothing more.

Minimize Online Shopping

Companies do their best to get you to buy things. It is, after all, how they stay in business. In fact, they utilize a whole host of features to get you to impulse buy. These vary from rewards-program discounts and sales, to product reviews and return policies. While brick-and-mortar stores feature some of the same tools, too, many studies show that online retailers put a heightened focus on impulse purchases. Interactive displays, for example, tend to increase a shopper’s desire to impulse buy.

Rather than browsing digitally, consider traveling to an actual store to shop in person. If you need to shop online, search for the specific item you need and nothing more.

Make Yourself Wait to Make a Purchase

To avoid splurging while shopping, it’s important to do a self-check and ask yourself if the item in front of you is something that will add value. When shopping online for example, it’s sometimes too easy to immediately log onto your favorite website and purchase a new pair of shoes that were just listed. Instead of making a decision and buying those shoes then and there, write the name of the item down. If, in a few days, you’re still dreaming of them, or any item that’s on that list, make the purchase.

As with any purchase, make sure you have the budget to afford to splurge before putting your funds toward it.

Other Financial Goals to Keep in Mind

It may feel good to buy those new shoes, or whatever else you’ve been wanting to splurge on, but if you already have half a dozen others in your closet, your money may be put to better use elsewhere. If you’ve got enough cash for all your needs as well as some discretionary spending, consider using those funds for something bigger. The following are some ideas for alternative uses of that money:

  • Saving for a down payment on a home.
  • Putting your money in a retirement account, such as a traditional or Roth IRA.
  • Investing it in the stock market.
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Gowdy Financial Group, LLC., is a Fee-Only, Financial Advisory firm dedicated to helping women, from all backgrounds and income levels, get out of debt, save toward your goals and enjoy the freedom that comes with being in control of your money. We don't sell products; we provide solutions. "Your Goals. Our Solutions." Serving Clients Nationwide.