How to budget for spontaneity

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How to budget for spontaneity

Budgeting is one of the best ways to save money, and it's so simple — create categories, set aside a certain amount of money for each category, and then only spend what has been designated for that account.

But what do you do when your best friend asks if you're free for dinner, and you open your budgeting app and realize that your "dining" budget only has a few dollars left in it? You don't want to cancel plans with your best friend, so you make the decision to transfer money for dinner from your savings account. Just like that, you've blown your budget.

There will always be last minute dinners with friends, drinks with colleagues, or unexpected celebrations. Unfortunately, spontaneity can often derail your budget. Luckily, there's a simple fix: preparing for spontaneity.

It might sound counterintuitive, but here's how it works.

Cash-back websites

Did you know you can earn money from shopping online? It's true. Websites like Ebates and Topcashback will give you cash back on your online purchases when you shop from their website.

Here's how it works. The websites earn money through affiliate links from the stores that customers use to shop. To encourage customers to use the link, the cash-back websites share a percentage of their profits with the customer (that's you!).

The best way to earn cash back is to pick one cash-back website, install the cash-back button (a reminder to use the website that appears at check-out), and always use it when you shop.

Cash-back credit card rewards

If you've never used cash-back credit cards, you're missing out. The premise is simple: use your credit card to earn points that you can redeem for cash or other perks.

Most credit card rewards range from 1% to 2% of your purchase, and some cards offer rotating categories. But there is a catch. In order to take advantage of the rewards, it's important to pay your card on time and in full every month. If you don't, you'll end up paying more in fees and interest than you could earn in cash-back rewards.

Cold, hard cash

Budgeting for spontaneity doesn't have to be difficult. In fact, it could be as simple as going to the ATM and getting out cash at the beginning of the month.

This money is designated as your "fun" money: It can only be used for an unexpected movie date with friends, celebratory beers, or Sunday brunch. It's spontaneity with a limit, because when the cash is gone, so is that month's fun budget.

Give yourself a tip

You tip for a good haircut and a cocktail from the bar, so why not tip yourself? That's the premise of the app TipYourself. Every time you accomplish a task or goal, you can use the app to send yourself a tip. The goal can be as simple as drinking eight glasses of water per day or as complex as repainting your bedroom wall, and tips can be as small as $1.

The secret to using an app like TipYourself? Setting aside your "tips" for fun. Here's how it works: set your goals, accomplish them and enjoy a spontaneous adventure with someone you love (and yes, that includes yourself).

Image: Youngoldman