How to Get Your Revenge Spending Under Control
June 3, 2021 by Chevron Federal Credit Union
Savings soared and spending shrank as the pandemic took hold, but there is plenty of evidence that people are ready to open their wallets again. In fact,
as vaccinations rise and restrictions ease, proof of pent-up demand is everywhere. For example:
Retail sales are surging. According to advance estimates from the U.S. Census Bureau, U.S. retail sales in April were 46.1%
above the same time last year. Spending at clothing and accessories stores last month were up a whopping 726.8% from April 2020, while sales at restaurants and bars shot up 116.8%.
Travel’s back on the calendar. More than seven in 10 Americans (72%) are now planning a summer vacation or getaway—up
from 37% in 2020, according to the U.S. Travel Association’s April 2021 Monthly Travel Recovery Data Report.
Home improvement activity is brisk. After spending nearly $420 billion on home renovations last year, U.S. homeowners are eyeing even bigger remodeling projects this year and into 2022. That’s according to the most recent Leading Indicator of Remodeling Activity (LIRA) report by the Joint Center for Housing Studies of Harvard University.
Taming the revenge spend trend
Predicting a post-lockdown rebound, many economists expect some measure of so-called “revenge spending”—a buying spree to make up for what we all had to postpone or forgo during the last year.
Wondering how to tame the temptation and keep your prudent spending patterns going? Here are some tips to stay on track with the good financial habits you strengthened during the pandemic—while also giving yourself some room to enjoy spending wisely.
Prioritize an emergency fund. The pandemic highlighted the importance of having a cash buffer on hand to cover unanticipated costs. If you had to tap yours, do what you can to replenish it now. A common recommendation is to stash at least
three to six months of living expenses in an interest-bearing, accessible savings account.
Refresh the budget. Sticking to a budget helps everyone avoid overspending. But the pandemic’s economic impact may have changed your plan. Take stock of current income and essential and discretionary expenses and use that information
to update your household budget as needed. Then, you’ll more clearly see how much flexibility you have to cover the necessities and allocate some splurge money to reward yourself.
Plan purchases deliberately. Make one financial decision at a time and step back and wait before you buy. Allowing some time to pass (whether it’s a week or a few months) can help focus on a need vs. a want. And that lets you gauge
whether the purchase decision really fits into your new budget now, later or maybe next year. In this way, spending becomes more intentional—and less impulsive.
Put saving on auto-pilot. Setting up a recurring transfer on payday in an amount you choose from a checking account into a savings account can help keep savings targets on track automatically. And you also can save for something special by taking advantage of Chevron FCU’s free Sub-Savings accounts. Balances are kept separate from your Primary Share Savings account, letting you earmark money for specific goals—like maybe a family vacation or a home office makeover.
Finding your saving-spending balance
After a year of interrupted plans, it’s understandable to want to indulge in some well-earned splurging. But revenge spending doesn’t have to turn into reckless spending. Setting some limits and defining the purpose behind your purchases can help achieve the healthy financial balance you’re after.