How to splurge while looking out for your budget

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How to splurge while looking out for your budget

Awhile back I was helping financial therapist Amanda Clayman with some research. She offered an insight. Strange as it sounds, Clayman said I actually have a problem spending money.

Splurging every once in a while can be good. Otherwise, we may suffer from deprivation, bottling up our urge to spend until it reaches a dangerous tipping point.

Whether we fall on the spectrum of spending too much or not enough, how can we do it without hurting our budgets? Here are some tips on how to indulge the right way.

Create a splurge fund

Just like you budget for your monthly expenses and save for vacations, rainy days and retirement, designating a fund for splurges helps protect your money goals. For those who are over-savers and have trouble spending, Clayman recommends being fun and frivolous, but in a safe, contained way. Enter the splurge fund.

After I pay myself my monthly salary as a freelancer, I allocate anywhere from 5% to 10% of any leftover money toward my “Fun Fund” spending account. (Yes, that’s what it’s called.) It’s dorky, I know. But it’s also effective. I’ve tapped into my Fun Fund for weekend trips, sample clothing sale hauls and the occasional Amazon binge.

If you run into a windfall of cash, perhaps from a bonus, job promotion or inheritance, you can ramp up your splurge fund by saving a portion, then allocating the rest toward your long-term goals.

Hit pause

If you’re a compulsive spender, you might want to take a breather and focus on what makes you want to spend.

“You might want to find a way to do it without it costing too much,” said April Lane Benson, psychologist and author of “To Buy or Not to Buy: Why We Overshop and How to Stop.” “This requires a change in the way you see things. After all, it’s more about the joy in the little things, experiences and relationships than actual stuff.”

While you should splurge, not all splurges are created alike. There’s a difference between raiding the home section at Target in an act of retail therapy and going on a vacation for which you've worked hard to save.

"You can never get enough of what you don't really need," said Benson. So if you’re going to splurge, make sure not only that you can afford it, but that it adds value to your life.

Time it appropriately

Make a deal with yourself. Allow yourself to tap into your splurge account to celebrate milestones and achievements and to motivate yourself for tasks you don’t enjoy. For instance, each week you park your lazy self on top of a bike for spin class, treat yourself. If you land a promotion at work, allow yourself to spend a few hundred bucks on whatever you please.

You can also set up a system to pay for your splurges. For instance, I used to “pay myself” five bucks for every 15 minutes I worked on my own creative projects, which I tend to neglect. The money went into a creative retreat fund. When I saved $500, I felt justified in indulging in a weekend getaway.

Make a tit-for-tat pact

If you’re concerned about going wild with splurging, create a tit for tat. For instance, for every $100 you save, save $100 toward retirement. This method acts as a safeguard. You can only spend when you have enough to save for long-term goals.

There’s no harm in splurging if you do it right. After all, you do only live once. By being mindful and doing a bit of planning, you can enjoy yourself and look out for your future self.

Image: Xsandra