With the weather warming up, case counts coming down in most areas, and provinces releasing their reopening plans, Canadians are eager to break free and have fun.
The pandemic has taken a massive toll on mental health across the country, so we could all use some fun. We just need to be careful not to overspend, and a few strategies can help us have fun without wrecking our finances.
As the mercury rises
Behavioural scientists distinguish between “hot states” and “cold states.” You’ll recognize these by how they feel from the inside. When your boss sends you an irritating e-mail request, and you receive it right away, the way you feel and the way you want to respond is characteristic of a hot state. It’s emotive, charged with frustration; you’re not thinking much about the long-term consequences of your response.
But if that e-mail gets lost and you only find it two weeks later, the reaction there is much more likely to be a cold state. The heat of the moment has passed, both for the request and for your frustration. You keep your cool, decide whether you need to do anything in response before deleting the message. You get on with your day.
Having been pent up for so long, and with deconfinement on the horizon, we’re going to find ourselves in some pretty intense hot states. We don’t tend to make great financial choices at times like that. But there’s hope, and some easy steps we can take to make it easier on ourselves.
Managing your cold, hard cash
Good decisions are hard to make in the heat of the moment, and the best thing to do is decide in advance, when you’re still in a cold state. Then use a pre-commitment device to help you stick to your decisions when the going gets hot. What does that mean, in practical terms?
First, decide on a “deconfinement celebration” budget. Sit down, have a look at your finances, and figure out what you can actually afford to spend on getting together with friends, going out, throwing a barbecue, travelling (to the extent that that’s possible), and other activities that you’ll do to reconnect with the outside world. If you’re in a relationship, this is a great conversation to have with your partner, to make sure you’re on the same page.
Second, once you’ve made your decision, you need to put a bit of friction between yourself and overspending. It’s not a great strategy to just promise yourself that you’ll have the number in mind and keep a running tally of how much remains.
You can make it harder for yourself to overspend by putting a real barrier between you and more money. For example, if you’re going to spend $250, get cash out of the ATM, put it in an envelope marked “Bye Bye COVID,” and then celebration money can only come out of that envelope.
It’ll be easier to keep track of how much is left, and if you want to replenish it, you’ll have to go back to the bank – which hopefully gives you a bit of time to take a few breaths and think about whether spending more is really worth it.
If you prefer digital, get a prepaid credit card with your celebration money and leave your other cards at home when you go out. Worried you might tap to pay with your phone? Deactivate the service for a little while.
Third, enjoy your celebration. The only thing worse than spending money we don’t have is spending money we don’t have and feeling so guilty about it that we don’t even enjoy what we spent it on. If you’ve set a budget that you really can afford, you should throw yourself wholeheartedly into enjoying your celebration.
Ultimately, feeling good, reconnecting with loved ones, having fun and improving our mental health is what this is all about. That’s what this money is for. (Those more philosophical might remind us that living such a good life is the only thing wealth is ever for.)
There’s a financial reason for this, too. If you spend once and don’t get the benefit you’re after, you’re more likely to go and spend again. If you couldn’t afford it the first time, the second time only makes it cost even more.
Sunny days are ahead, and for the first time in a long time we’re seeing real cause for celebration on the horizon. There are some simple strategies we can use to help us enjoy that celebration without breaking the bank. And feeling confident that you won’t break the bank can help you enjoy the celebration even more.
Brooke Struck is the research director of The Decision Lab, a behavioural research and consulting firm located in Montreal. Dr. Struck leads TDL’s personal finance practice.