Last month, while my peers dashed to Winners and patios, the only thing on my mind as Ontario announced we were in stage 2 of reopening, was my eyebrow specialist, Jyotika. I was the first person to sit in her chair. When I lay my head back to get my brows done after a year in lockdown, I almost cried. Since then, while I've gone ham on more personal care spending, including a gel mani-pedi, eyelash install, waxing, and hair appointments; I've also been cautious to not splurge on other things, like new summer clothes. Despite my — sometimes overwhelming — desire for entirely new outfits, I'm aware that I am at risk of overspending. I haven't done the math, but if I didn't stop myself, I'm pretty sure I'd have spent hundreds of dollars by the time you finish reading this. And I’m not alone.
COVID-19 has tested every aspect of our health and well-being, including our finances. And now that businesses are finally reopen across the country, financial experts anticipate that most Canadians are ready to spend with a vengeance. (That goes double for us folks in Toronto, aka the lockdown capital of North America.) According to RBC experts, spending last month was up 13% from pre-pandemic levels in the same time frame. Retail sales also rose substantially in June, particularly in hospitality and entertainment. Experiences, trips, malls, restaurants, you name it — there's a huge appetite to spend, spend, spend as we adjust to our new normal.
This is called revenge spending, or revenge buying. It’s a frenzy of spending that occurs after a traumatic occurrence, as people want to restore control and a sense of normalcy. The impulse might have you purchasing items and experiences you feel you were robbed of last year. "For us, in the finance world, it's nothing new," says Chantel Chapman, the co-founder of Trauma of Money Method and mindful money teacher based in Vancouver. "And we know that it doesn't always end well." In fact, revenge spending can lead to vicious cycle of bad money habits. Here's how to have fun, but not let spending take over.
*Why* Am I Revenge Spending?
We are all likely to be traumatized in some way from the pandemic, and this trauma has the potential to change your perceptions of yourself and money. While we were in lockdown I was constantly talking about the things I would do once “outside was open” and how I’d make up for lost time. But, as we've learned, that YOLO energy can be a bad influence on some of our impulses. After over a year inside, you may also catch a serious case of FOMO when you see everyone else posting about going out all the time.
Remember, "the urge to splurge right now is entirely normal," says Morgan Blackman, a holistic money coach based in Toronto. "It's not a bad thing to want to spend. With the right budget, you can spend your money on whatever you choose in a way that has no negative consequences."
Create a budget with the “why” in mind
A common misconception about budgeting is that you have to have a ton of money to do it. In my experience, rather than focusing on fixed percentages to allocate to different spending categories, it’s best to focus on the money that you do have coming in, and allocating that. After paying your expenses like housing, phone bill, and loan payments, make sure to set aside part of it (even $50!) for things that bring you joy (more on that below). There’s no set percentage that works for everybody — it should be based on your income, goals, and living expenses. The Financial Consumer Agency of Canada has a lot of resources you can start with. I also recommend following You Need a Budget, The Financial Diet, and Money after Graduation for more.
I prefer to budget using a Zero Based Budget, in which your income less your expenses equals zero. All you need to do is write down all your income in one column and all of your expenses (even the fun ones) in the other. Make sure your expenses match your income during the month so that every penny is allocated. With this method, you shouldn't have money left over.
Before you run the numbers, Blackman recommends looking into your "why" as the first step toward developing more mindful spending habits. Maybe it’s not a fancy dinner out with your girlfriends that you’re craving, but rather simple quality times with friends you haven’t seen in forever. "Think about why you want to do things. How are you going to get to them without resorting to risky spending behaviour?"
This all may sound daunting, and I get it, budgeting might be a pain in the neck and bring up some intense feelings, but I can assure you that it will help you feel more in control. It's like when you're avoiding cleaning up the house. At first, it seems like such an overwhelming task, but it starts to feel pretty good the moment you start doing it.
"It's not always about the money," adds Blackman. Rather than focusing on the math, reframe how you can make budgeting a fun and safe environment to process all the emotions that can come with it. "If you start creating your budget from a place of comparison or shame, it's going to feel awful no matter how much money you have in your account," says Chapman.
Another pro tip: Create a warm and welcoming environment. Grab a cup of tea or play some music, and settle down to do it where your nervous system is as calm as possible, rather than from a place of stress.
Budgeting doesn’t mean you can’t go out anymore
That’s the other thing to keep in mind. Your. Budget. Should. Include. Fun. Stuff. Too. When financial experts warn us to avoid revenge spending at all costs, it's not always helpful. Yes, it's critical to build (or replenish) an emergency savings account or pay off any high-interest credit card debt accumulated during the pandemic before going on another shopping spree. But it's unrealistic to expect people not to prioritize spending for joy after everything we’ve been through. Plus, when we have this all-or-nothing approach to spending it can have the opposite effect — denying ourselves leads to the inevitable blowing your budget, which fuels the cycle of guilt. So instead, consider a more mindful approach.
Personally, I make room for spontaneity by having a Whatever You Want Fund. (Doesn’t that sound better than Rainy Day?) Whether you can contribute $10 or that’s $100 or $1,000 it’s important you need to set aside money for fun, pandemic or not, for your overall financial health and happiness.
If you have to, spread out your "fun" expenses
In preparation for the hot girl summer I feel we all deserve, my nails are done, wig is laid, dinner reservations — and a long-awaited trip to the West Coast — are booked, all things I factored into my budget. The good news is you don’t have to do these all at once.
I hear you: What if the area of spending you're concerned about feels like a need, but you have other priorities that make it more of a luxury at the moment? Like, do I need to be spending money on a fancy blowout right now, or should I save that money since I also need a haircut, and want to touch up my highlights?
Don’t cancel altogether. Budget for, and book the haircut for this month. And then next month, if it fits in your budget, book the blowout and additional services, so you know that it's on the calendar, it's getting done, but you're just not taking one massive hit in one month. Strategies like these can be applied to all aspects of your budget. For example, suggests Chapman, if patios are your thing, maybe you don't go and get five rounds of drinks. "Maybe you go for happy hour where there's discounted pricing," she says. "Even if you're on a tight budget, you don't have to say no to everything."
Personally, I’m reminding myself that just because the economy is opening up doesn’t mean my wallet needs to all the time. Since I’ve planned a few activities over the next few weeks, I’m taking my own advice and sticking to saying no to the things that no longer align with my current beliefs and values, and spreading things out.