At first, I spent little during the pandemic’s early days. With bars and restaurants shuttered and no incentive to buy shoes or clothes, my primary indulgences had been nullified. I paid down my credit card balance and began saving in earnest for the first time in years.
My good habits dissolved in the fall of 2020. I began nesting, buying candles and tchotchkes as antidotes to the stale vibes of my home. When I was vaccinated for Covid-19 the next spring, I started buying crop tops, sneakers and bike shorts, and I went out to bars and restaurants again.
But I didn’t stop nesting, and the money I had saved began trickling away, candle by candle, cocktail by cocktail. I believed my new lust for purchasing would be temporary, my spending stretching thin like a rubber band before quickly retracting to its prepandemic girth once things were “back to normal.” But my “revenge spending” would linger far longer.
Ola Majekodunmi, the founder of All Things Money, a finance site for young adults, explained revenge spending as expenditures meant to make up for “lost time” after an event like the pandemic.
Ms. Majekodunmi recommends using a budgeting framework for your income that splits it into three categories: 50 percent applied to your needs, such as rent; 30 percent spent on your wants; and 20 percent set aside for savings or investing. In the months after I was vaccinated, my percentages were closer to 50 percent spent on my needs, 100 percent set aside for my wants and 0 percent for savings and investing. My credit card made up the difference. Not until November, 20 months after I received a second vaccine dose, did the rubber band finally snap back — or maybe just snap.
I was packing for a friend’s birthday weekend in Marfa, Texas, which would culminate in a $125-per-person dinner with a prix fixe menu that did not include drinks, when contemplating the trip’s expenses caused me to swoon like a delicate Victorian woman after a good leeching. The previous summer, I had left my full-time job at a magazine to do freelance work. It was going OK, but it was not calm-in-the-face-of-a-possible-recession OK.
My spending had ceased to be something I could ignore. I bailed on the birthday trip and initiated spartan austerity measures to get back on track. But in doing so, I noticed that some of the habits I had developed during the pandemic seemed to go beyond making up for lost time. And they have proved hard to break.
I had expected to emerge from the uncertainty of lockdown the way that people from the Silent Generation emerged from the Great Depression: stoic and thrifty. I thought I’d come out of it like Joanna Fowler, 31, of Richmond, Va., who said she had always been a careful spender, but became much more militant about budgeting during the pandemic.
I contacted Chiraag Mittal, an associate professor of commerce at the University of Virginia, to ask where I had gone wrong. Why, I inquired, did so many Americans who had retained their jobs and spending power through the pandemic (and even some of us who either left our jobs or were laid off) emerge with a greater willingness to spend?
Dr. Mittal pointed out that stimulus checks could have skewed how some consumers adapted to the constraints of the pandemic, not necessarily because the amounts were life-changing but because the checks arrived when many Americans were already reflecting on their finances and lifestyles.
“Death and mortality were just so salient that the immediate effects were to say: ‘You know what? I can die anytime. What’s the point of putting everything on the back burner?’” Dr. Mittal said.
That “you only live once” mentality prompted some people to limit spending in order to pursue lifelong goals they had been postponing. Ms. Fowler described how during the pandemic a dream to take a sabbatical motivated her to save more. And Danielle Eads, a 31-year-old from New Jersey who is transitioning to a new career, said that since she had moved in with her sister and her sister’s husband in Brooklyn, N.Y., to help care for their baby, her spending had been “near zero.”
But others, like me, have given themselves over to financial nihilism.
“I’ll use the credit card, because you never know when the world might stop again,” said Tori Mohn, 29, who lives in Austin, Texas. “I’m going to drink the nice wine, go to the nice restaurants, have the cocktails.”
“What I looked forward to the most was getting mail, getting packages,” said Emma Joss, 29, who works at a creative agency in Los Angeles. “That was like a dopamine hit.”
Early in the pandemic, Ms. Joss had begun ordering bottles from her neighborhood wine shop. When restaurants in the area began offering groceries, she bought them. She wanted to support local businesses and was able to justify those indulgences — and some TikTok-inspired spending on clothing and skin care — by telling herself that she was saving money by not going out.
She has since realized that her spending is unsustainable. “First it was because the pandemic is happening, and the world is on fire, and climate change, and family members are sick,” Ms. Joss said. “But it’s, like, things will always be bad.”
Ms. Mohn, who said she had not previously shopped online often, now finds it hard to resist. “All my cards are now saved on everything — on my computer, on my phone,” she said, noting the rise of shopping apps that allow users to purchase items from many brands and to track deliveries. “Oh, I can get that here by tomorrow? Perfect, I’m just going to order it right now. I feel like it’s made me trigger-happy. It’s made it easier for me to pretend it’s Monopoly money.”
Drazen Prelec, a professor of management science and economics at the Massachusetts Institute of Technology, explained that the instrument we used to spend mattered greatly: Merely holding a credit card in your hand creates an expectation that you will spend, just because you have used it to spend before.
“In fact,” he said, “two different credit cards can give you two different cravings.”
“If you use the Amex, let’s say, for luxury dinners and so on, and you use something else for gasoline, they’re not going to create the same craving, because the history is different,” he added.
What happens, then, when you begin regularly using a phone or computer to make purchases? Now that Apple Pay is widely accepted, phones are used during many in-person transactions. A phone itself could very well become a cue to spend. This worries Dr. Prelec.
“I’m actually very, very nervous about technology doing that, generally,” he said. “The fact that the same screen that we use for work is the same screen we use for entertainment is the same screen we use for financial transactions — the fact that we don’t have physical partitioning of activities with different instruments, I think is a real challenge.”
Dr. Prelec also introduced me to the term “pain of payment,” which refers to the mental accounting of a consumer’s finances that undermines the thrill of consumption — “the awareness that an asset is dissolving as you use it,” he said.
Several months ago, I made a budget using a Google spreadsheet and started tracking all my expenses. This added a layer of hassle to every transaction: I was essentially manufacturing a pain of payment.
And to counter how easy it is to spend while using our devices, or what Dr. Prelec called “the unreality of the virtual,” I barred myself from making purchases on my computer or phone, and I unsubscribed from the emails from brands that tempted me.
Ultimately, as was the case in the darkest days of the pandemic, the most useful tool in taming my spending has been my anxiety, only now its source is not a deadly virus but the specter of a recession. My spending has not corrected as abruptly as it worsened two years ago, but month by month, I’m flattening the curve.
Source: Read Full Article