Since the start of the COVID-19 pandemic, many of us have been saving more than usual. Now, with the economy starting to re-open and post-pandemic life in sight, research suggests we can’t wait to spend again.If you are fortunate enough to have put aside some funds, perhaps you’re planning, as the media coined it, some “revenge spending”2  That is, overcompensating for being shopping-starved during the pandemic by splurging now that the end is in sight. But, before you splash the cash, take stock of your finances. This could be a once-in-a-lifetime chance to build back a better financial future.

Saving, not spending

While the COVID-19 period has been financially tough

for many, a high percentage of those who have remained employed have been able to build up reserves. According to the Bureau of Economic Analysis, in April 2020, the monthly U.S. personal saving rate (that’s the percentage of people’s income left over after taxes and spending) shot up to a record 32.2 percent (it’s usually around 6-8 percent).3 In February 2021, the saving rate was still high, at 13.6 percent.4  That sure adds up. According to Bloomberg, Americans saved a total of $1.7 trillion from the beginning of the pandemic through January 2021 (and that’s not including the third stimulus check).5

Out for revenge!

Not surprisingly, consumer spending over the same period has been lower than usual. In February of this year, it was at -1.0 percent.After a year of lockdowns and closed businesses, those with disposable income have had fewer chances for “discretionary spending” such as eating out and vacations. Remote workers have also saved on everyday expenses, from gas to tolls, dry cleaning suits, to dog sitting.

Today, people with disposable income are ready to release a pent-up urge to splurge. This happened last year in China after their lockdown ended and people flocked back to stores for what became known as “revenge spending.” A bingeing boom looks likely to happen here too, and data indicates that a spending snapback has already started.7

From stress to splurge

After such a stressful time, it’s no surprise that people feel the need to treat themselves. From new outfits to dream vacations, it will be tempting to make up for lost time and spend in “revenge” for everything you’ve missed out on. However, spending too much now could be harmful in the long run. Why not try to keep your good money habits going and stick with your savings plans?

Plan for some controlled splurging: set yourself spending limits or allocate a “revenge budget.” If your friends are going all out – and showing it off on social media – resist trying to keep up with the Joneses. Just as in normal times, find cheaper alternatives. Remember those times in the past year when you said how much more you would appreciate the small things in life “when this is all over?” Do you really need a five-star vacation in Aruba to make you happy?

Budget like it’s 2019

Make a post-pandemic spending plan, but be careful not to base it on your pandemic levels. In other words, budget like it’s 2019. Those basic expenses from the old days, like childcare and car maintenance, will soon become essential again. With a little extra cash, spend on advance expenses such as an annual subway pass, or back-to-the-office outfits. You could pay off some debts or make overpayments on loans (which will also improve your credit score).

Finally, think about upping your retirement funding. If you’re 50 or older, you’re eligible to make catchup contributions to your 401(k) or similar retirement plan. In 2021, you can contribute an additional $6500 per year in catchup contributions. And if you are farther away from retirement age, try playing with retirement calculators to see how much you should be saving. (Try this one from New York Life) If you boost your savings now, you may not need to save as much the closer you get to retirement age!

This challenging period will have shown that the unexpected can happen, so keep a cash cushion for emergencies. And why not use this moment to prepare for the rest of your life? Look beyond splurging this summer and protect your long-term plans and those you love. Having the right life insurance.

 in place can bring you priceless peace of mind.

This is a once-in-a-lifetime opportunity. You deserve to splurge, but plot not revenge but a happier, healthier financial future.


How Has the Pandemic Impacted U.S. Savings Rates? Gailey, Alex. 10 March, 2021. Accessed 16 April, 2021.

2  ‘Revenge spending' by the rich could drive luxury recovery.’ Frank, Robert. 13 May, 2021. Accessed 16 April, 2021.

3 Personal Saving Rate Spending. U.S. Department of Commerce Bureau of Economic Analysis. 26 March, 2021. Accessed 14 April, 2021.

4 ibid

5 Americans Have $1.7 Trillion to Burn in Revenge-Spending Binge. Bhasin, Kim, et al. 17 March, 2021. Accessed 12 April, 2021.

6 Consumer Spending. 26 March, 2021. U.S. Department of Commerce Bureau of Economic Analysis. Accessed 14 April, 2021.

Retail sales burst higher in January as consumers use stimulus checks to spend heavily. Cox, Jeff. 17 February, 2021. Accessed 11 April, 2021.


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Media contact
Kevin Maher
New York Life Insurance Company
(212) 576-6955

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