Thursday, June 18th, 2020
The end of COVID-19 lockdown restrictions in several Asian countries saw a massive surge in consumer "revenge spending."
Revenge spending is an extreme form of retail therapy: Where people overindulge in buying luxury goods after a long period of pent up demand.
As Canada begins to loosen COVID-19 restrictions and open businesses, we may face these temptations, too. After months of self-isolation, social distancing and reining in our spending, what's the harm in a few little indulgences like a spa day, dinner at a posh restaurant or some swanky new bling to celebrate?
Spending on something fun and frivolous can be fine when done carefully, strategically and with a plan. Here are some tips on how to indulge in a little revenge spending, while staying on track to meet your financial goals:
1. Set a Budget
Think through how much money you'll allow yourself to revenge spend and whether it's within your current financial means—especially if your finances took a hit during the isolation period. Having a budget before you set out to shop will help you avoid overspending.
2. Have a Prize in Mind
Don't go aimlessly wandering around the mall, department store or boutique and impulse buy. Apply the same tactics and skills you learned during the lockdown when shopping for essentials like groceries. Know what you're shopping for, have a plan for getting it and stick with it.
3. Shop Around (Safely)
Can you get those goods or services cheaper somewhere else, or maybe wait until they go on sale? If so, you can save some money. Money saved—even if it's on a want rather than a need—is money that you can put towards some savings, investing or debt repayment. Window shop online before visiting a store to save you a trip.
4. Consider Whether the Purchase is Worth the Expense
Think through how badly you want this revenge purchase item and whether the joy you expect to get with it justifies the cost. If you expect to get just a momentary thrill, maybe you'd be better off doing something else with that money—like saving, investing or paying off debt.
5. Think About Shopping Locally
You can help some of your local businesses revive and thrive by including them in your revenge spending plan. Not only are you doing something nice for yourself, you're supporting your local economy—a win-win!
6. Keep Working Toward Your Long-Term Savings Goals
With everything on pause for a few months, market volatility and many of us dealing with lost earnings, long-term financial planning may have been put on the back burner. Now's a good time to revisit our long-term savings and investment goals and see what adjustments may be needed in order to achieve them. As you go about your revenge spending, try to do a little revenge saving and investing, too.
If you're going to spend, then do so without guilt, shame or remorse. After all, the idea of saving and planning is to afford the things in life that bring us joy. We could all use a bit of that right now!
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