FRIDAY, MAY 03, 2024
Neetant D Sinai Shirodkar
It feels great to be back writing my column after a gap of almost 2 months, the hibernation was making me itchy to pen my thoughts as the new order of the pandemic COVID-19 takes over our lives. Most of us have little more to do than wait and watch for some good news from the safety of our homes. You are probably dreaming about the vacation you will take the moment air travel is declared safe, or about that long-awaited dinner with friends when the restaurants reopen, but an unplanned splurge can dent your finances. Read on to find out why you might be itching to spend and why you should fight that urge.
Retail therapy
In China, as shops started reopening when the worst of the pandemic seemed to have passed last month, shoppers returned to stores. A new phenomenon termed as ‘revenge shopping’ or ‘revenge spending’ emerged then. Having been deprived of going out to shop due to quarantine, people started making the most of this newfound freedom. According to reports, luxury brand Hermes raked in sales of $2.7 million on the day it reopened its flagship store in Guangzhou. But the trend is likely to be short-lived and mainly in luxury segments. The trend has also been witnessed in other sectors like real estate and travel.
The urge for more
This kind of spending can be related to the psychological concept known as ‘reactance’. Reactance refers to the psychological response people have to something being prohibited or kept away from. As freedom is curtailed or choice is taken away, people are drawn more strongly to what is out of bounds. It is this response that might partially drive the heightened need to indulge in luxuries like shopping, eating out, watching movies, or travelling with a vengeance. But keep in mind that such indulgence can put a dent in your finances in already troubled times.
Fight the urge
To tackle the urge to spend, we must understand where it is coming from. This behaviour is emotion driven. It helps people feel secure while facing the uncertainty of the current situation. Uncertainty creates fear, a negative emotion. People generally behave in a manner that will alleviate negative emotions. The emotional need for security in the present overrides the need for financial security in the future. But while there is nothing wrong with indulging in retail therapy occasionally, if shopping is the way you deal with stress and negative emotions, it can take a toll on both your mental health and finances over time.
Given the uncertainty surrounding how long the crisis will last and to what extent the economy and job market will be hit, it is important to conserve your resources at this juncture. Whatever you have managed to save in these past couple of months because discretionary spends have been cut down, should be added to your emergency fund. Do not commit to any long-term investments, as you might need the liquidity going forward. Do not leave it lying around, or you might end up spending it once the lockdown is lifted.
When the year 2020 began, little did we know the trials we were about to face. But there are many positives as well to be taken if we are prepared to learn from this. For instance we have learnt that the greatest joy is in spending time with our loved ones at home, That your bank balance is immaterial in the lockdown and mother nature alone can provide you with all your necessities for survival at a very meagre cost. That an invisible virus is enough to bring the world to its knees even if you are a so called a nuclear superpower. That our health and freedom are the only pivotal aspects we need to enjoy our lives. That no matter what faith or religion we may be divided in, our survival hinges on our unity to find a common solution to end such evil.
