Many Americans enjoyed a few years of increased spending after the pandemic because they missed going out and traveling, but now the spending has turned to revenge savings‡. Revenge savings is a social savings trend when instead of spending because of what you missed during the pandemic, people are saving more to withstand challenging economic cycles. Below, discover three tips to help you start saving if you are ready to join this trend.
Understanding revenge savings
Revenge savings is a new trend taking Gen Z by storm. Instead of spending their money, they are stockpiling response to an uncertain economy and the job market cooling. In the past year, several trends have spiked in popularity that champion low or no monthly spending, heavy savings, and avoiding certain retail outlets that encourage aimless shopping.
On social media, videos of people talking about their budgets or how they are paying off debt with their savings are going viral. The core principle of the “revenge savings” movement is to save as much as you can – sometimes ruthlessly reducing your fun and discretionary spending.
To start saving, first you need a goal in mind.
Start with your goal
A strong savings account has a goal in mind. The goal could be concrete like a bathroom remodel, or it could be abstract like a rainy day fund. Either way, you should know the purpose of your savings account and stay focused on how you want to use that money you’re saving. Once you establish your goal, you can start implementing a savings strategy that works best for you.
Savings strategies
The important part of a saving strategy is to choose one that works for you and is something you can stick to.
The 50/30/20 strategy
The first strategy to explore is the 50/30/20 rule. There are multiple ways to split up your funds and it can be challenging to do with the growing cost of housing and groceries. However, you still want to be mindful that your spending in each category is proportional to your income. For example, 50 percent of your income is spent on needs, 30 percent is spent on wants and then 20 percent is saved. Creating a budget can be very helpful here as you separate your categories.
Track your spending with a budget
Tracking your spending against a budget can be a helpful way to stay on track. There are many different apps and online tools you can use, or you can just use pen and paper. The important part of using a budget is checking it frequently. Some like a weekly approach while others prefer a monthly check-in to make sure you are staying within your set limits. The frequency is up to your time and what will work so you stick with it.
Remember: nothing about your budget is bad. Every category is OK if that is how you like to spend your resources. It is just important for you to know which categories are the bulk of your budget. For example, a monthly dance class is a high category for you while subscriptions might be a lesser category. Using your budget can also be a great tool so you can see if any of your spending needs to change. Maybe you are spending more than you thought on events or groceries. Or possibly you have unused or unnecessary subscriptions that you can cancel to save a few dollars.
Automate savings
Online banking is a great tool for people to use. You can automate your savings based on your budget and not think about it again. The funds will just automatically be transferred to your savings account and each month you’ll be a little closer to your goal. Now the trick with automation is you need to leave it alone and not touch the funds until you need them. This is easier said than done but leaving your savings untouched means your funds will grow faster.
At the end of the day, it is important to save however works best for you. Revenge savings can be a great trend to help you jump start your saving goals. The key to remember is creating a savings fund is never a bad idea regardless of economic conditions.
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