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Call it revenge spending. With many parts of the United States reopening, tens of millions of people are expected to make up for lost time by forking out for experiences they have missed in the past 15 months.
More than a year after Covid-19 turned lives around the world, Americans are bracing for a return to a “normal” summer filled with Trip, concerts and a trip (or two) to our favorite boutiques. Financial analysts predict a boom in retail and service spending Therefore.
Of course, not everyone intends to spend lavishly this summer, and many Americans are still out of work. But many people’s finances have actually improved compared to the time before the pandemic: the personal savings rate has skyrocketed, and credit card the sales have gone down generally.
There is going to be a surplus of cash on hand in the months to come – and many Americans are eager to spend it.
I asked financial planners and wealth managers how to make the most of the extra money we might have in the summer. Here is what they advise.
Many experts have given advice that is akin to what can be considered traditional money advice:
These are the rules that everyone knows, even if we don’t always follow them. They’re important – there’s nothing wrong with having a bigger savings account – but they’re not exactly fun, either. After the long period of stress we’ve collectively endured, spending a little bit on new experiences can improve our mental health and overall well-being.
Others have pointed out that this is a one-time reset in most of our lives. It’s worth acknowledging that many of us have skipped vacations, avoided seeing loved ones, and stayed home after concerts and theaters over the past year or so. There is nothing wrong with letting go now and enjoying some normalcy, assuming you can afford it.
“We need to see each other, interact with our loved ones and bond around our favorite things to do,” says Melanie Allen, who operates Partners on fire, a blog on financial independence and lifestyle. “It’s important for people to know that it’s okay to spend money on these things, especially if they bring you joy and enrich your life.”
For me, eating out with friends comes to mind. While traditional financial advice encourages people to cut back on unnecessary spending, I realized how happy it makes me to dress up and have someone who really knows how to cook to cook me a meal.
Ditch the old stuff you don’t need anymore
That said, it’s okay to admit that there are some things or activities you really haven’t missed, says Ted Rossman, Senior Industry Analyst at CreditCards.com. Maybe your life was fine without happy hours after work, or a new wardrobe. Consider this “found” money and direct it to savings or part of your revenge spending.
“Figure out what you value, prioritize them, and eliminate some of the clutter,” says Rossman. “This reset can be liberating in that sense.”
Money can also be found in permanent life changes, says Jody D’Agostini, a certified New Jersey-based financial planner. Your work can shift to a hybrid in-person and remote schedule, which means you could potentially save on things like babysitting, travel, or dry cleaning.
In general, it’s a good time to reflect and take stock of the future, says Rossman. Reassess your financial goals taking into account the past year. Your priorities may have changed, and that’s okay.
“By spending smarter and more in line with your values, you will be happier and your finances will be stronger,” he says.
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