Look at the picture below in this article … a place like Manali has no hotel rooms and parking space to park the cars. The Prime Minister of the country has to come out, hold hands and advise people to behave properly. Classic case of Revenge Spending by a nation!

Many Indian’s consider COVID as a long-term vacation that will not end! They do not recognize that each wave is more and more severe in terms of the number of lives lost & economic recession.

How can you behave like a tossed coke bottle? The moment cork is gone and you spill!

Do not support or be a victim of Revenge Spending.

You have it (money) … consider it grace. Many children & families have lost their breadwinners in this pandemic and the situation still is not under control. Be empathetic!

What is Revenge Spending?

It is a term recently coined to highlight the sudden pent-up demand after the pandemic.

The opportunities to spend money on travel, gatherings, meals out, entertainment, and gadgets, and other discretionary expenses have been less. It creates a feeling that you are not doing ok in terms of lifestyle.

It is an economic term signifying demand going up. E.g. we are witnessing demand going up in automobiles. As pandemic brought closures on vehicle showrooms, people were not certain of their finances, automobile being a discretionary expense was postponed by a majority.

Now, when lockdowns are lifted, customers are looking to change their vehicles and compromising on likes, features & even the color of the vehicle. No one wants to wait.

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So Revenge Spending is wasting money to get the satisfaction that everything will be normal.

This type of spending is witnessed in the financial sector also.

By 30 June 2021 since the first wave, 15 lakh plus demats got opened.

MF per month SIP crossed 9000 crores for the first time.

One NFO (ICICI Pru Flexible Fund) garnered 10000 Cr. Highest for any New Fund in India to date.

Zomato IPO got around 40 Times of IPO ask. 16 MFs in categories like Tech Sector Fund, Gennext (consumption) Funds & Retirement funds applied as anchor investors.

Some positive we witnessed due to Revenge Spending

We should witness pent-up demand across categories. At the same time, Covid has also ignited a deeper realization on managing financial affairs and should have positive implications on long-term savings.

Revenge consumption along with a renewed focus on financial planning was also visible in terms of queries received.

I also saw people first time discussing Mediclaim Benefits and asking for comparisons and wanted to make better choices.

While the psychological scars after the second wave are deep, social interactions and consumption will also be part of the healing process.

But it never means we should not worry about future.

We are flocking on hill stations. Will it not expose us to another wave when we know vaccination is slow in progress?

The new DEMAT accounts and suddenly discovering the “magic of equity” … will it not end sometime. Most new investors have started at a bottom (April – June 2020) and only saw a recovery phase… What when markets again go 40 -50% down?

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In the book “Masterclass with Super Investors” the Authors ask Mr Ramesh Damani – We youngsters have never seen a serious bear market.. it has been in 30-40% and then it bounces back.. What do have to say about this?

Mr Damani: Bear Markets are for real in India & global markets. They can be very prolonged & painful.

Do you think investing in schemes or stocks you do not understand is a good way to start your investing journey?

Many investors have made a mockery of Asset Allocation by shifting Bank FDs to Balanced Advantage funds and Balanced Advantage funds to Pure Equity Schemes.

God knows where it will hit them back!

How to avoid Revenge Spending Mentality

When it comes to spending, take it slow. Do not risk your life and others. Vacations, Weekend gateways can wait.
Create & stick to budget. Keep a check where your money is going. See if you behaving irresponsibly and towards the environment.
Pay in cash to ensure that you spend what you can afford. Do not look for loans or breaking investments to derive material pleasure.
If you have saved money due to lockdown benefits, steer them to future goals, such as a house, a big vacation, and financial freedom.
Create (or replenish) the emergency savings fund.
Use the money to uplift someone who has faced a challenge due to this pandemic.
Avoid Debt.
If you have disturbed your long-term investments or savings start working on replenishing them.

Let’s not Revenge our Own SELF…