After two years of lockdowns and restrictions due to the COVID-19 pandemic, consumers are indulging in what experts are calling “revenge spending” – making up for lost time by spending more than usual.

Urban Dictionary defines revenge spending as: “A shopping spree wherein one member of a romantic partnership whose finances are intertwined spends extravagantly and beyond the couple’s means in order to exact vengeance on the other member.

Such sprees are generally motivated by jealousy, rage, spite, etc., and come about in relation to specific instances where one member of a couple feels him or herself to have been excluded from the other’s experience of pleasure.”  

The Corporate Finance Institute defines it as: “Revenge spending, also known as revenge buying, is used to characterize the incremental increase in consumer spending (versus normal levels) after an unprecedented adverse economic event (for example, the COVID-19 pandemic). In simpler terms, revenge spending is the urge to spend money to make up for lost time.”

Revenge spending often occurs after a period of economic hardship or forced frugality. With pandemic restrictions lifting, people have more opportunities to go out, travel and shop. And many are doing so with gusto.

This phenomenon was first observed in China, where strict lockdowns were imposed early in the pandemic. Once restrictions began lifting in 2020, luxury spending surged as consumers unleashed pent-up demand. Tiffany & Co. reported a 30% and 90% jump in sales, while LVMH, the luxury goods conglomerate, saw record sales growth.  

Now revenge spending appears to be taking hold in the U.S. and other Western countries as well. Airline bookings are climbing, concerts and sporting events are selling out months in advance, and many retailers are reporting surging sales.

Financial experts caution that the urge to splurge can wreak havoc on personal budgets. To indulge responsibly, they advise:

– Review monthly spending goals and set fun money budgets.

– Start a separate “splurge” fund for special treats.

– Avoid using credit cards to revenge spend.

– Track emotions around spending in a journal.

“Revenge spending is understandable, but it’s important not to go overboard,” financial advisor Elwis Johnson suggested. “A little indulgence is fine, but you want to make sure it doesn’t turn into a spending hangover down the road.”

Consumer psychologist Anne Baker says, “Forced frugality builds desire for luxuries and experiences people felt denied. Indulging those desires releases dopamine and gives a rush. But beware slippery slopes. Set limits before the spree to keep it healthy.”  

With pandemic conditions improving, revenge spending may continue for some time. But experts say the thrill of splurging will eventually wear off as consumers settle back into more normal spending habits.