The first time I sat down to eat at a restaurant since the beginning of the pandemic was after I got vaccinated a few months ago. The world reopening and the opportunity to travel and dine out left me with an urge to spend money.
I suddenly felt freer to move around, and my desire to enjoy life after mainly being home for a long time led to a spending increase and an unpleasant spending report at the end of the month.
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My family was also planning to travel for two months during our kids’ summer break with the world reopening. So we created a plan that would allow us to make up for lost time without going broke.
As we still fight the urge to spend more, here’s how we are staying away from revenge spending and managing our budget for an optimal post-pandemic spending experience.
Assess pandemic spending habits
We were fortunate to be part of the category of people who saved more money during the pandemic. With our three kids home and no places to go, we put a good amount of money away during that period.
We had to take a close look at our expenses and decide which ones would go away temporarily or indefinitely. We realized during the pandemic that we could spend less on dining out, grooming costs without affecting our quality of life. Our kids also didn’t need to be in every activity and appreciated a little more downtime. Those savings alone helped contribute to our post-pandemic splurge fund.
Automate saving and investing
Once you set a specific target for the year, you can calculate the monthly contributions necessary to hit your target. Then you can automate the process so that you continue to build wealth every month and don’t sacrifice your future to compensate for the hardships of the pandemic lockdown.
Every two weeks, set amounts are automatically transferred to our investment accounts before we even realize it’s available.
It’s comforting to know that even though we might be spending a little more at the moment, we’re still hitting our long-term goals.
If you’re one of the families who qualifies to get a child tax credit, and if you can afford to, consider investing some of it as well and automate the process to curb post-pandemic panic spending.
Create a budget and track your expenses
Whether you are planning to travel more, shop more, or spend more money practicing your hobbies, creating a budget can help you forge a healthy financial path to make those things happen.
For my family of 5, budgeting is a tradition. The Personal Capital free financial tools have been a lifesaver as we plan and monitor our spending.
To achieve our post-pandemic plans, we had to spend more on travel this year, so we used a travel sinking fund. Every month, we set some of the pandemic savings aside for that purpose only. As we wanted to travel for an extended period, we incorporated work into our travel plans and a summer activities budget for our kids for when we had to work during the day. After spending a year being restricted in terms of what we could do or where we could go, the temptation to spend more might not disappear overnight.
Having a budget that includes discretionary line items will give you more flexibility. Reviewing your expenses every week or month will help you stay on target.
Adopt a value-based spending approach
It can be tempting to fall into old spending habits, to make up for lost time, or simply because you can afford to. For example, I shopped more when things reopened because I was excited to go places. To avoid buyer’s remorse, here are a few systems you can put in place for your discretionary spending line item.
- Decide on the top 3 things you enjoy spending your money on the most and value.
- Set an amount above which you will wait 24 hours or more before making a nonessential purchase.
- Ask yourself, “Is this expense aligned with my values?”
For me, value-based spending is also about improving quality of life.
Pre-pandemic, laundry for my family of 5 was part of my weekly activities. Over recent months, I took the time to assess how much it would cost to get those hours back.
We decided that paying for a laundry service of a few hundred dollars each month was worth it, as it would allow us to get 20 hours a month back.
But I was unwilling to give up the thousands of dollars a year we are already using to save or invest.
Instead, I decided to focus on how much more I needed to earn to cover that extra amount every month. It turns out 2-3 hours of additional time spent freelancing a month suffices to pay for laundry service.
Is there a side hustle or freelance work that you can do to pay for some of the upcoming plans you have so you don’t end up overspending?
The Bottom Line
The post-pandemic spending urge is something that many people struggle with. After being limited in terms of spending for a year, it’s normal to want to indulge. However, keeping your expenses under control will help you avoid buyer’s remorse and keep you on track toward your financial goals.
Personal Capital compensates Anne-Lyse Wealth (“Author”) for providing the content contained in this blog post. Compensation not to exceed $500. Author is not a client of Personal Capital Advisors Corporation. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.