With the never-ending prospect of a recession looming, it seems the one true certainty is that we all need to make peace with living with uncertainty. But uncertainty breeds anxiety.
At the onset of the pandemic, many of us responded to our anxieties by cutting back on spending. But as time as passed, that restrictive behavior may have swung too far in the other direction, leading to something called “revenge spending.” If you’ve let your compensatory spending go overboard since lockdown ended, here’s what you can do to get your habits back on track.
What is ‘revenge spending’?
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As the name suggests, revenge spending occurs when you throw your money around as a way to “get back” after experiencing a period of financial hardship—whether a job layoff or a global pandemic. As the New York Times explains, this sort of spending behavior can be thought of as a backlash to the scarcity mindset: You’re suddenly spending more money to make up for lost time. It doesn’t sound rational, because it isn’t. It’s like the eating binge that follows a restrictive diet, and soon you find yourself trapped in a cycle of behavioral extremes.
How to quit revenge spending
For any trouble with spending and saving, making a budget is necessary—something like the 50/15/5 rule is a great place to start. Of course, following it easier said than done, especially when there’s an emotional issue at the root of your spending. Here are some more concrete tips to kickstart you sticking to your spending budget.
Try cash stuffing
As we’ve previously covered, and as you’ve probably noticed in your own life, touching money and giving it away can actually hurt on an emotional level. So if you need a mental nudge to stick to your budget, the physicality of being faced with an empty envelope is much more powerful than checking your online bank account.
Here’s where cash stuffing comes in. Label different physical envelopes and fill them with cash earmarked for different expenses. Stuff each envelope with a budgeted amount of cash for that month (or pay period). The key is, you can only spend money in a certain category from the cash in its designated envelope—once the envelope is empty, that’s that for the month.
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Cash stuffing works because it forces you to be more intentional (deciding how much money gets allocated into your envelopes) and more disciplined (you can’t put more money into the envelope once it runs out).
Stick to a “to-buy” list
Another place to start with your specific spending goals is to physically write down the things you want to buy before you buy them. Use those bank statements to inform what items make your official “to-buy list.” When you read over items on this list, you’ll be able to make a more thoughtful decision as to what you really need.
You’re still allowed to treat yourself
Remember, too much restriction is what led to your revenge spending problem in the first place. Forming a healthy relationship money means indulging thoughtfully. Ask yourself, “How do I expect this purchase will make me feel? What do I want it to make me feel? What feelings am I trying to avoid by buying it?”
Only you can determine what is truly valuable in your life, whether that’s the occasional latte from your local coffee shop or saving up for a luxurious vacation every year. Allow yourself to indulge, especially if these indulgences improve your overall relationship with money.
For more, check out how you can curb your unconscious spending here.