How to Spend Again After Saving
Katharine Hepburn famously said, “Without discipline, there is no life at all.” It’s certainly true with money: when people save, it brings life rewards. But sometimes after being on your best money behavior for a long time, you want to cut loose and spend. It can happen whether you’ve been saving to buy a home, rejoined the workforce or survived a global pandemic.
Experts call this desire to make up for lost time “revenge spending.”1 Like other acts of revenge, this kind of spending may feel cathartic in the moment, but it can lead to a hangover of remorse. Instead, use these simple ideas to spend again on life’s pleasures while staying grounded in your hard-earned discipline.
Make a Plan
Before you begin spending, take honest stock of your finances. What are your assets? Liabilities? Write down your long-term goals and consider what it will take to achieve them. Once you do so, you might find that basic protections, like a six-month emergency fund, a diversified portfolio, and income protection, end up taking precedence. If you’re not sure how to make a financial plan, consider meeting with a financial professional — they can help you get started.
Review Your Budget
Once your long-term plan is in place, review your current spending habits. Know your numbers: housing, childcare, car payments, groceries, services, subscriptions — everything you spend money on. If these expenses are covered, start thinking about what you want from your spending. Are you aching for an adventure? Is it time for new living room furniture? Do you just want to see friends in person at new restaurants and live shows?
Include a Splurge Fund
Budgeting a set amount toward specific spending can help make your “revenge” into a “reward.” You’ll still get the joy of earning a new experience or product, but be less likely to overdo it. Create a “splurge fund” as a gift to yourself for the hard work of saving. Whether it’s $50 or $15,000, just make sure it’s money you can spend without getting into trouble. (Try these tips for spending for maximum happiness.)
Slow Down Your Spending
Remember the mind-money connection. Almost everyone has spending triggers, and it’s easy to get carried away after not spending for a while. To short circuit your triggers, build delays into your spending. For example, if you want to buy something outside of your spending plan, set a rule that you have to wait 48-hours before making the purchase. For mobile and online shopping, remove your card from one-click payment features. If you have to physically get up to get your card, you’ll have time to consider your spending priorities.
Honor Your New Spending Priorities
When you feel ready to spend again after a long period of discipline, start by acknowledging how you’ve changed. If your old spending habits were stressful, this can be a new beginning. For example, maybe after a year of not traveling to weddings, you realize that you don’t want to attend every event. Or perhaps you don’t need to make trips to the hair salon as often as you used to. If the practice of saving money led to new insights about how you want to spend, embrace them.
Now is the time to reset your savings priorities, so you can spend responsibility now and build your long-term future.
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2021-123085 Exp. 6/2023
1Americans look forward to ‘revenge spending’ after a year inside—here’s how to make the most of it, CNBC, June 2, 2021