Despite lacking confidence in the economy, many people are still indulging in experiences such as sporting events, concert tickets, and fireworks, particularly during this time of year as indicated by data. This phenomenon, referred to as “funflation” by financial experts, is similar to the “lipstick effect” where people tend to continue spending on enjoyable experiences even during tough economic times.
Senior analyst Ted Rossman from Bankrate explains that even in difficult economic situations, people tend to increase their spending on leisure activities. The American Pyrotechnics Association predicts record-high fireworks sales in 2024, while AAA forecasts a 5% increase in travel this Fourth of July compared to the previous year. Despite concerns about finances, many are still willing to invest in experiences like boat trips or cookouts.
While Rossman initially thought 2022 would be a year of splurging on experiences, 2024 is also proving to be a prosperous year for such indulgences. July 3 is considered the busiest day of the year for fireworks suppliers, further emphasizing the trend of increased spending on leisure activities. Financial planner Mike Proctor from Leading Edge Financial Planning in Wichita acknowledges the reality of “funflation” but advises caution in spending. Setting a budget and sticking to it can help manage indulgences while ensuring financial stability.