Revenge spending (verb): to overindulge after a period of restriction. Sound familiar?
After the great recession of 2007-2009, Americans tended to save on average between 7% and 8% of their income. Then came the global pandemic, and our savings rates soared as we had fewer opportunities to spend. In March 2020, the average personal savings rate hit 13.1%. In April 2020, it was a startling 33.1%. Average personal savings rates have come down, but they consistently stayed above 10% until just a few months ago, dropping to 9.8% in May 2021.
The drop in saving and surge in consumer spending that we’ve seen this summer coincided with the vaccine rollout, economies reopening, and the ability to once again congregate in large groups. One survey found the average American spent $765 more per month in the summer of 2021 compared with 2020. Millennials and Gen Z averaged $1,016 more per month, with the top two categories being dining out and travel.
This was good news for businesses’ bottom line, but all of a sudden the concept of “revenge spending” became a hot topic of conversation. The swarm of personal finance advice to preserve savings and avoid this post-pandemic behavior wasn’t far behind.
I’m not so sure that’s the right advice.
This pandemic has put us through a collective trauma. Lives were and still are being lost, businesses have permanently shuttered, careers were indefinitely disrupted and household dynamics upended. The act of getting through a day in lockdown felt like a success in itself. There has to be a release valve after a drawn-out state of deprivation.
Too often, personal finance rhetoric fixates on tactics for abstaining — for instance, don’t spend on “wants” until you have a fully funded emergency savings account and have paid off all debt. But asking folks to continue depriving themselves before even having a taste of normalcy and fun, even if it’s to rebuild their financial safety nets, just won’t work. It doesn’t account for human emotions and frankly feels borderline cruel to demand even more sacrifice after such a painfully trying time.
Revenge spending also supports local economies and is bringing back industries that have been closed for over a year. Going to shows and live events, eating at local (especially non-chain) restaurants, tipping generously and shopping at locally owned stores can help stimulate your community. I myself, usually fairly tight-fisted even in pre-pandemic times, became a convert to impulse purchases and bought tickets to multiple Broadway shows, a much-missed casualty of the pandemic.
Revenge spending isn’t just about traditional consumerism, either. It can also help us reconnect after many months of being forced to stay apart. Being mindful of safety, it’s easier now to travel to visit a loved one you haven’t been able to see in over a year or to just indulge in being able to travel outside of your hometown. Such freedoms might not last if new variants like delta and mu bring back restrictions.
The key is to balance spending alongside efforts to stabilize a financial life disrupted by the pandemic. This is important for those who want to keep some of the extra cash they saved during lockdowns.
One way to find this balance is to analyze your purchasing. Is the revenge spending a true missed pleasure or a “FOMO” (millennial-speak for fear of missing out) knee-jerk reaction?
Personally, I’ve indulged in both versions. Watching local businesses close permanently in the pandemic pushed me toward a “just do the things you want to do when you can” mentality. Restaurants that had been on my New York City bucket list won’t return and I both mourned the lost opportunity and chastised myself for thinking “you can do that anytime.”
On the other hand, the deprivation from over a year without live events also led me to one uncharacteristic purchase: a ticket to a music festival. Looking at the RFID-enabled wristband that eventually arrived in the mail, I grimaced before thinking, “Well, it’s an experience.” Would I prefer the $159 to be in my savings account? Maybe. Would I have preferred it be spent on an event I value more? Definitely.
There is a level of critical thinking we must bring to our impulsive revenge spending. Quite a conundrum, I know. But it’s important to remember to spend in alignment with your values. Make sure you’re prioritizing what you personally value, not what your friends or family want or what you simply haven’t had access to for nearly two years. That might mean some hard conversations.
At the bare minimum, set aside a sum of money you feel comfortable “revenge spending” that doesn’t drastically impact your other financial goals. Allow yourself a nice dinner out or go to the movies and splurge on overpriced snacks or book a flight to visit someone.
Ultimately, we’re all going to have different emotional approaches to what it means to emerge from a loss of time and extended lockdown. What we don’t need is nitpicking and judgment if that includes the occasional stretching of the budget.
Bloomberg News provided this article. For more articles like this please visit
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