No matter how financially savvy or frugal you are, nobody is immune to the occasional splurge. Whether it’s an outfit that has caught your eye or a sleek, new gadget, we might go against our best judgment and spend more than we ought to. You might’ve been entranced by the thrill of a limited offer, or by the temporary psychological lift from receiving a package in the mail filled with goodies.
But shortly after hitting “buy” we feel it — that intense pang of guilt. You might think to yourself: That money could’ve been better spent. I have bills to tend to, debt to pay off, a future me to consider. What was I thinking?
But we’re only human. We have the need to indulge — even if we can’t always afford to. That said, it’s important to enjoy ourselves in the present, and sometimes that means an occasional splurge.
In fact, accepting the splurge can save your finances. If you accept the truth that it’s okay to go hog-wild and enjoy that Friday night out or buy that jacket that screamed “me want” at first sight, you’ll be far more content. And it’ll be easier to stick to a spending plan in the long run.
You just have to do it responsibly. Here’s how:
Save for Splurges
A few years ago I was talking to a financial therapist and she told me that when it comes to my relationship with money, I fall squarely in the analytical/wary end of the spectrum. I save like there’s no tomorrow, and am worried that I won’t have enough. While there are benefits to being this way, such as having money squirreled away for an emergency fund, I have trouble enjoying my life. The therapist recommended that I allow myself to have frivolous fun, but do so appropriately.
Enter the splurge fund. Just like how you’d save for retirement, a down payment on your home, or your emergency fund, save for indulgences. The easiest way is to auto-save a bit each week or month. Or set aside a portion from a tax refund, or “bonus cash,” such as money you earned working overtime or a cash gift you received for your birthday. If you need to work overtime to meet a big deadline at work, make a pact to save a percentage toward your splurge fund.
Keep a Running List
I keep a 30-day list of stuff I want but don’t need immediately. Once I add something to my list, I try to wait about 30 days and check whether I still want it or not. On my current list: a big green egg-shaped oven (aka kamado grill), a lightweight jacket, and a pair of fancy dark boots.
You can set rules for what to add to this list. Maybe you don’t include things you’ll need down the line, or purchases that fall under $20, or $50. For me, anything over $30 or is a “nice to have” typically goes on the list. I’m known to shop at $4 sample sales and second-hand stores for my housewares, so spending $100 on a pair of shoes is something I’ll add to my “wait” list.
I personally like to keep anywhere from $500 to $1,000 in my splurge fund at any given time. But it’s different for everyone. It’s really about what works for your needs, your budget, and your style of doing things.
Time the Splurge
I like to space out my splurges throughout the year. I know it sounds nerdy, but I keep a spreadsheet of all the big-ticket items I want and when would be a good time to purchase them.
On the flip side, I did buy some expensive leather boots and kitchenware on the fly. I already had the money saved up. So while these were purchases which frugal me hesitated to make, I ultimately felt good about them. Now, if you love spontaneous purchases, then as long as you have some cash allocated in your splurge fund, you should be set.
Free Up Money
Many of my friends point out the fact that it’s hard to enjoy yourself when you have very little left over at the end of the month. How can you save for an emergency fund, let alone a splurge, when you barely have enough to cover your bills? It’s one thing when you’re earning enough to afford creature comforts, but another if you’re constantly stretched thin.
Here’s what I suggest: Try to free up some money each month by slashing your expenses or taking on a side hustle — if you have the bandwidth to do so. Another way you can free up some money each month is by adjusting the withholdings on your earnings. You’ll need to submit a W-4 form and submit it to your point person in your employer’s human resources department.
Financial wellness isn’t just about saving aggressively for our future or diligently paying off our debt. It’s a constant juggling act of balancing our past, present, and future needs. By creating and pumping money into a splurge fund, you can give yourself permission to spend on a whim, or on non-essentials, without the impending post-purchase guilt.
Jackie Lam is a personal finance writer. Her work has appeared in Investopedia, Magnify Money and The Bold Italic, and she’s been featured in Money, Kiplinger, Forbes and Woman’s Day. She runs Cheapsters.org, a blog to help freelancers and artists with their money, and to balance their passion projects and careers.