If you feel like the COVID-19 pandemic robbed you of your ability to live a normal life, you’re not alone. Restrictions on travel, entertainment and other social gatherings put an abrupt halt to daily activities around the globe.
Now, after years of being cooped up and a return to the workforce, it’s natural to want to splurge on vacations, consumer items and experiences that the pandemic stole from you. While revenge spending to get back at COVID-19 could provide temporary satisfaction, it might also hurt your finances.
Here are some tips for splurging a bit while still managing your budget.
The rush to spend is almost as intense as your desire to get back to normal. It’s easier to justify a budget-busting spend when you’re in the moment. But, commit to giving yourself at least 30 days to consider purchasing a single, non-essential item costing more than $100.00. If you decide to spend it on day 31, enjoy! If not, deposit those funds into your savings account.
Set a spending limit.
It’s possible to treat yourself without hurting financial goals. Put a cap on spending before you indulge. While waiting for some regions of the country to open to 100% capacity so you can travel or attend sporting events, use that time to build your “revenge fund.” Setting aside money now can help you prepare you for added expenses. You don’t want to trade revenge spending for financial guilt in the next few months.
Create a budget.
If you have not done so already, create a budget to help keep you on track. Think about your long-term goals, such as building up your emergency fund, or saving for retirement or your kids’ college education. How will spending affect your ability to achieve them? If a job loss or other financial setbacks caused you to put a hold on your savings strategies, plan for an eventual restart. If you have accumulated debt, create an action plan to pay it down. Read 5 Tips to Get Out of Debt to help you get started. If you need more help, we partner with GreenPath Financial Wellness1 where you can receive confidential counseling services to help you create a budget, manage debt, prepare for homeownership and more.
Review your investments.
A review of your investment holdings should be done on an annual basis and whenever there are major events like the pandemic. Changes to your goals and other assumptions may necessitate reallocations to your investments to stay on track.
Cash in credit card rewards.
While you likely limited airline travel and hotel stays during the pandemic, you may have used your rewards credit card for food delivery, grocery shopping, and online retail orders. These smaller purchases add up over time and so do the points you accrued on your rewards card. Use them to pay for your financial splurge or boost your revenge fund. For example, if your summer plans include airline travel, use the points to pay for a free trip or an upgrade to first class.
What if I spent too much?
Recovering from a spending spree can be emotionally exhausting. You might even feel guilty, especially if you racked up charges on your credit card or depleted your emergency savings account. The quickest way to bounce back is to start by assessing the financial damage.
Tally your expenses and create a plan to get back on track. You might need to make temporary budget cuts or return some items from your shopping spree. Read 5 Money Moves to Make Now to help you streamline your budget and start saving smart.
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