Recently, I came across the term “revenge spending” and grew curious, especially with how scandalous it can sound.
Essentially, revenge spending describes the behaviour of consumers emerging from isolation to spend more than they normally did before the pandemic.
More popular reasons suggest that this pattern may have been driven by the resentment of being kept at home involuntary - eating home-cooked meals and having the same clothes and bags.
I took the opportunity to reflect on my expenses. And oh no! I noticed I may have engaged in some ‘revenge spending’ too!
For instance, I find reasons to get out of the house and make multiple trips to places like supermarkets, filling up my basket with things I think I want, rather than what I need.
I also found myself splurging a little more when it comes to food - often justifying the need to treat myself since I’m now based at home most of the time. So, instead of eating out 2 to 3 meals a day, I spend a little more on that one meal outside since I’m eating at home for the other two.
But there’s also revenge spending on another level.
And this happens with luxury goods.
Did you know?
Maison Hermès Guangzhou flagship store made at least 19 million yuan (US$2.69 million) in sales when it reopened in April 2020 after the initial lockdown in China.
Sales at LVMH Moet Hennessy Louis Vuitton's fashion and leather goods division rose 12 percent, in Q3 2020
Many of the biggest brands in China — including Louis Vuitton, Hermes, Gucci and Prada — are seeing rapid bounce-backs in sales as stores reopen in China.
And here I am, debating on what I should order in for lunch. 😂
This article from InsideRetailer sums up why this is happening well: "the pent-up desire for consumption is leading to an increase in purchases of luxury goods to display wealth".
However, no matter what the motivations are, before breaking open your wallet, you may want to take a moment to assess the situation. If the pandemic taught us one thing, it’s the importance of having an emergency fund.
Despite everything, I make sure I still adhere to the monthly budget I set for myself. That has helped to keep my expenses in check and my emergency fund unscathed.
So if you ever feel the desire to ‘revenge spend’, try these:
Create a budget. No matter how big or small, know where your money is going and how much extra you will have leftover.
Before you pay, consider how many items you really need versus how many you want.
Also, let’s not forget the money lessons learned during the pandemic:
Create (or replenish) an emergency savings fund before indulging in a buying spree.
Pay down any high-interest credit card debt that may have been run up during the pandemic.
If you had to dip into your retirement savings, work on replenishing them.
Because we’re not out of the woods for COVID-19.
While some nations are seeing progress, others are seeing recurrent waves. Not to mention the natural disasters more vulnerable countries are facing.
Let’s continue staying safe and take care.
p.s. While luxury products ain't my cup of tea, their stocks are!
ℹ️ Need any help or advice on your finances? Feel free to email me.