With declining Covid cases & rapid vaccination, learn how to revenge spend responsibly and avoid making matters worse.
Meet Ridhi. A 27-year-old Delhi-based product designer who enjoys shopping, travelling, and brunching with her friends.
Since the pandemic began, all she had hoped for was for it to end so she could resume her ‘regular' life.
Despite living close to a shopping centre, she couldn't go shopping for months. Not even on her long-awaited trip to Goa.
So, when the pandemic settled a bit after the second wave, Ridhi went on a shopping spree and a month-long vacation to Goa, blowing her money she had saved just to feel good and make up for lost time and experiences.
Guess what if you can relate to Ridhi? You, too, are a revenge spender.
But don’t worry, you’re not the only one. Many of us have a lot of bottled-up rage, anxiety, or a strong desire to spend our money.
For the most part, the lockdown has been difficult - for all of us. There are numerous issues - ranging from returning to our hometowns to being unemployed.
Add to that a lack of socializing, such as meeting up with friends, family, and relatives.
This has taken away our customary motives for getting dressed up — a simple task that can bring a smile to many people's faces and make us feel productive or energized.
We've been under lockdown for the past two years, confined to our homes and basically surviving in our pajamas and ripped t-shirts.
Initially, our focus was on determining the difference between needs and wants, saving as much as we can for unforeseen circumstances.
However, now that the post-COVID era has arrived, people are eager to open their wallets and partake in the experiences they believe they have been denied over the last two years.
We chose to take a revenge on COVID by buying, dressing, dining, and doing everything else with the kind of rage usually reserved for your manager who denied a leave for your best friend’s wedding or that uncle who refused to wear a mask yet coughed in your face in metro.
What started out as a joyous, if revengeful, relaxing of our purse strings quickly turned bizarre. People were wearing revenge dresses and revenge heels, employees revenge-quitting and travelers revenge-flocking to the hills.
What is Revenge Spending?
Revenge Spending, in simple words, is everything you planned to accomplish but didn't because of COVID.
It is spending a huge amount of money just to make up for the missed time. All of the items on your to-do list that you want to go back and spend that money on, the large vacation you plan to make up for the trips you missed last year, or the new furniture you buy after enduring the pandemic on your old sofa.
We all wish to have fun and forget about the bad times after going through a terrifying and stressful experience caused by the pandemic.
Many of us have started to believe that by living life to the fullest and spending recklessly, we might avenge ourselves for the difficulties we have just faced.
The revenge drama began in China, where on April 7, 2020, the Hermès flagship store in Guangzhou opened its doors to record-breaking sales of $2.7 million (about 17 crore).
A similar phenomenon, known as baofuxing xiaofei, or "revenge buying," was recorded by Gucci, Prada, Louis Vuitton, and Estee Lauder, and it didn't take long for it to spread throughout the world.
Even in Delhi, shoppers were seen queuing for 45 minutes outside an Emporio Mall LV store, while Gucci resorted to giving customers tokens.
Later, for months, the Sarojini, Lajpat, and Gaffar markets were forced to close multiple times due to COVID protocol violations.
According to a report produced by Flipkart in collaboration with Bain, ‘How India Shops Online’ in 2021, the Indian e-commerce business grew by 25% in 2021, while Euromonitor International estimates that India's luxury goods market would be valued at $8.5 billion in 2022, up from $6 billion in 2021.
In 2020, women consumers grew 1.5-2 times faster than males, and tier 2 and small towns accounted for 80% of new customer growth.
If we come to travel, post-COVID, people desire to travel twice of what they did previously, according to a survey report by FICCI and Thrillophillia.
Why do people Revenge Spend?
For the desire for more.
Who or what do you think people seek revenge against? Perhaps the confines of lockdown, living a life of forced austerity, or simply missing the high of good ol' retail therapy are to blame.
We've been locked up indoors saving for a year — surely we can afford to indulge ourselves and spend a bit more to make up for missed time.
It might provide a brief but significant mood lift. On the other hand, the pandemic's trauma can lead to carelessness with money.
Many of us want sentiments of contentment following a terrible period. The damages created by the pandemic has led the majority of people to believe that life is short and that you only live once.
An article by Mint states that this kind of spending can be related to the psychological concept known as “reactance".
Reactance refers to the psychological response people have to something being prohibited or kept from them.
People are pulled more strongly to what is out of bounds as their freedom or choice is restricted.
This response may contribute to the increased desire to engage in luxuries such as shopping, eating out, watching movies, or travelling with a vengeance.
In the same article, Ashlesha Swaminathan, behavioural economist and director, Subliminal Ideas, quotes “During the lockdown people could not buy non-essentials or luxury goods for a long period.
If they were in the habit of regularly buying these items before the lockdown, then they may overspend once things open again because they may feel the need to overcompensate the pleasure (positive emotion) of buying that was taken away during the lockdown."
But keep in mind that such indulgence can put a dent in your finances in already troubled times.
Are You Revenge Spending?
Ask yourself these questions:
- Are you going over your budget or demand?
- Are you splurging on discretionary categories like fine dining, high-end apparel, travel, entertainment, and luxury items?
- Are your credit card dues increasing?
- Are your bills stacking up?
- Are you going out for too many brunches with your folks?
- Are you ordering more Amazon orders based on Instagram recommendations?
If the answer to most of these are yes, you must be aware of the fact that your spending has increased dramatically.
Growing credit card debt, running out of money, and spending more than your monthly average are all red flags indicating you're on a revenge spending spree.
What are the Consequences of Revenge Spending?
While spending can give you satisfaction in the short term, it is crucial to not spend all your savings.
Excessive revenge spending that is more than sustainable may lead to long-term financial issues.
On another note, while many are still adjusting to life after the pandemic, many are facing income cuts and job losses.
In the face of such financial difficulties, revenge spending can exacerbate the problem. It is motivated by the "I'll show you" mentality, and it will worsen your financial and relationship problems if left unchecked.
Here are some of the most common hazards associated with revenge spending :
- Reduced Ability to Save
Revenge spending depletes one's ability to save. Losing your savings power causes you to seek unnecessary loans to cover the additional bills, which adds to your stress.
- Getting into Debt
One of the most serious consequences of revenge spending is becoming an impulsive and compulsive shopper.
Some people may start borrowing money on a regular basis for expenses, either through credit cards or personal loans.
Easier access to credit may encourage a chronic spender to violate his or her financial goals as well as slip into a debt trap.
- Compromise on Financial Goals
As financial planners have pointed out, revenge spending frequently leads to compromise on financial goals, which has an impact on an individual's financial independence.
How To Avoid Revenge Spending?
To curb the desire to spend, we must first understand where it comes from.
Revenge Spending is an emotion-driven behaviour. It makes people feel safe in the current unpredictable scenario.
This uncertainty triggers fear, which is a negative emotion. People, on the whole, act in ways that reduce negative emotions.
Now, the emotional demand for security takes over the desire for future financial stability.
While a little splurge after months of cautious saving (or unwilling saving, because there wasn't much to spend on) is reasonable, going overboard as a form of self-comfort or payback for everything you gave up in the previous year might backfire.
Here’s what you can do to control that urge to spend:
- Analyze Everything
Question yourself before you go all out and put that item in your cart - Do you already have one? How frequently will you use it?
Have you compared prices to ensure you're getting the best deal? Are you sure you really need it right now?
Is there another better alternative for this? Is it worth buying? Give a thought before every monetary decision you make.
- Track your Spending
First and foremost, make a budget. You'll be able to organise your expenditures more precisely if you have a budget.
Setting aside a certain amount of money for each sort of expense will assist you avoid making rash purchases.
Furthermore, you will be able to assess where you are overspending. We can track and assess our expenditures with the help of a budget.
It also assists us in determining where all of our funds are being spent.
When you make a purchase, make a note of what you bought and how much it cost.
Keeping a regular track of your spending in real time might help you spot patterns - such as days when you spend, situations that pushed you to spend, and websites where you spent a lot of time.
When we add up our weekly spending, it might have a huge dampening effect on our desire to shop more.
Using smartphone apps that automatically categorise expenses is one approach to keep track of your spending.
Many credit card companies keep track of your expenditures. Check to see what expenses aren't necessary and can be avoided.
- Go Window Shopping
When visiting a mall or supermarket for the first time post pandemic, try window shopping.
It's a good idea to leave your credit cards at home and go shopping with only a small amount of cash.
You will be relieved of the need to spend if you go window shopping or browse without any money.
You will not spend money on unnecessary things at the same time.
However, you can now pay using your phone. Give your phone to family members if you aren't going alone.
You'll have to ask for your phone every time you want to buy something, and this one extra step may assist you to avoid making impulsive purchases.
- Don’t go Overboard
Don’t blow your savings just because you think you deserve it. If you had money set aside for a vacation last year that you weren't able to take, use it for a trip later this year (if conditions allow) — but don't double the size and cost of your trip just to make up for what you missed, and resist the urge to take twice as many vacations this year to make up for what you missed if doing so will deplete your savings.
As we've seen, keeping a cash reserve in the event of an emergency is critical.
- Keep your Finances in Order
If you have credit card debt that you aren't paying off, have refinanced credit card debt into your mortgage and accumulated more, are falling short on savings goals, and spend more time shopping than interacting with friends and family, you are most likely overspending to the detriment of your personal or financial health.
Purchasing things or experiences that give value to your life is what smart spending includes.
You may buy these items and experiences without going into debt if you spend sensibly, while simultaneously saving for those life goals that are important to you.
If you don't know what those objectives are, you're probably squandering your money.
- Set Boundaries
Limits on credit and debit cards are now simple to set. If you think you'll go crazy with your spending, lower that restriction.
Prepaid cards are another option that removes the decision-making process from your hands.
Many people may find it difficult to maintain financial discipline in a lockdown situation.
If self-help doesn't work, competent financial advisors can help you stay away from revenge spending, which is nothing but pleasure today and pain tomorrow.
- Tweak the Activity
When you are released from a lockdown, you may be tempted to simply get in your car and drive to a market.
When you get there, it's almost certain that you'll start spending.
It's an activity you've been missing, and human nature dictates that you'll explain your overindulgence by claiming that you've been living frugally for the past two months.
Give it time. Try something different for the first couple days, like physical activities - walking, running or cycling are a better way to spend your leisure time on a day out.
For the time being, this will keep you away from the retailers. When you finally go, the temptation will be less intense, and you'll be in a better position to make spending decisions.
- Increase your Financial Commitments
During the lockdown, you were able to survive by purchasing only the necessities and necessities.
This would have aided in the accumulation of your money as well as the realisation that many of your previous needless expenditures may have been avoided.
Keep investing in a systematic way. If you have a huge sum of money sitting in your savings account, make an investment as soon as possible.
That way, you won't have the temptation to overeat.
- Fight the FOMO
Fear of missing out (FOMO) can have an impact on how you spend their money and push you to buy goods you can't afford. Check out these 5 tips to deal with Financial FOMO.
To avoid overspending, think of cheaper alternatives or limit your social media screen time if you feel peer pressure to spend in ways that are above your means.
- Give a shot to the ‘30-day rule’
The rule is simple: if you see something you like, wait 30 days before purchasing it. If you still want to purchase the item after 30 days, go ahead and do so.
You will save money if you forget about it or realise you don't need it. Money saved is money not spent.
If you make impulse purchases, the 30-Day Rule can teach you about delayed gratification and help you make wise financial decisions.
- Learn to say ‘No’
When things open up and opportunities to spend become more frequent, it can be difficult to refrain from increasing spending.
It is important to avoid succumbing to peer pressure — and it is perfectly acceptable to say "No."
Decide which social activities are important to you before spending money on them, and say no when both your bank account and you need a break.
After a lengthy period of saving and self-control, over-spending is more tempting than ever.
While revenge spending isn't always a bad thing, it can quickly spiral out of control, wreaking havoc on your finances.
Avoid this by preparing ahead for some well-deserved (but still fun) overspending.