The Rise of Revenge Saving: A Shift in Personal Finance After the Pandemic

As the economic uncertainty continues, people are shifting their focus from spending to saving aggressively, a trend known as "revenge saving." Revenge savers are determined to outdo themselves and save more than they ever have before, often after a period of overspending or financial uncertainty. According to Martin Lynch, president of the Financial Counseling Association of America, revenge saving is not a new concept, but rather a common reaction to economic downturns.

Key Takeaways:

• Revenge saving refers to saving aggressively, often after a period of overspending or financial uncertainty.
• This trend is not new, but rather a common reaction to economic downturns, says Martin Lynch, president of the Financial Counseling Association of America.
• Lev Mandel, a financial life strategist, notes that revenge saving brings back a feeling of control when inflation is high and the economy is uncertain.
• Marcel Miu, a certified financial planner, suggests that revenge saving may be a reversal of the trend of revenge spending, where people splurged on experiences and travel after years of feeling restricted.
• People are also reacting to news of layoffs and economic uncertainty, leading them to stockpile cash as much as they can.
• Saving money is good, but it's a balancing act - saving too much can leave you with little cash on hand for emergencies, says Lynch.
• Trimming the budget to the bone can lead to savings burnout, and priorities should be made to ensure a balanced and thoughtful financial strategy.

Statistics:

• 48% of Madison Hayes' income is saved each year, which she attributes to her "full-blown revenge saving era."
• Americans typically start saving in advance of and during periods of recession and increasing unemployment, says Lynch.
• Revenge saving may be a reversal of the trend of revenge spending, where people splurged on experiences and travel after years of feeling restricted.
• Revenge saving can be a reaction to economic uncertainty, where people stockpile cash as much as they can.

Sources:

• NerdWallet
• Madison Hayes, realtor and owner of Gateway Realty Group in St. Louis, Missouri
• Martin Lynch, president of the Financial Counseling Association of America
• Lev Mandel, financial life strategist in Walnut Creek, California
• Marcel Miu, certified financial planner in Austin, Texas
• kashford@nerdwallet.com, author at NerdWallet