How to be Financially Responsible While Splurging on The Things you love

A few years ago, I heard Ramit Sethi, author of I will teach you to be rich say this and I thought it was sound advice, “Spend extravagantly on what you love and cut costs mercilessly on things you don’t.” I think about this a lot when I am splurging and treating myself to things I love and coughs spending recklessly, especially on clothes.

One big mistake I have made in the past is splurging/spending excessively on one too many things at time; I’m not sure that is what he meant. Another common mistake people make is not planning towards splurging and letting their impulses or emotions take over when they splurge- in some cases this can affect your finances and financial goals.

Here are some ways to splurge without negatively affecting your finances or financial habits:

  • Pick one thing you will shamelessly spend on in a month or a period: This could be good food, skin care, a designer bag, clothes, perfume or family. Picking too many things at once could confuse you and you may not know where to stop which might affect your finances negatively. If you decide you love too many things and would like to splurge on all of them, you can rank them by how much you love them i.e Good food, clothes, skin care or in whatever order you love them. Picking just one or a few things could help a lot when you see things you don’t love as much. Imagine if you saw LED lights on sale but have decided you only want to spend on good food that month- it is easier to walk away when you realize you are only shamelessly spending on good food.
  • Set an amount you are comfortable spending monthly or in a period and incorporate it in your budget: In the past I have what I termed ‘play money’ for the things I love and have included it in my monthly budget- yes, there’s a row on my spreadsheet called play money. I put a dollar figure beside all the things I love to spend shamelessly on (getting my nails done or eating out or buying clothes etc). Once that money is finished, so is the splurging.
  • Make sure you save, invest and have paid for all your necessities FIRST before you splurge: There’s nothing worse than splurging and having bills to pay or having not met your financial target when you have a $1,000 watch staring at you. That watch can’t pay your bills!
  • Cut down aggressively on all other things you don’t love: Cut down on things you don’t need. The truth is something has got to give and you can’t always have it all. If you want to shamelessly spend money on eating out or travel, but don’t care much about clothes or skin care or perfumes, cut down on those. The beauty of life and owning your personal finances is that the things you love now could always change. You can splurge on what you love, you just have to cut down on other things you don’t.
  • Save towards splurging on things you love: Sometimes what you love to splurge on costs a lot of money so you could consider saving to splurge. Also, if you like clothes or skin care, instead of setting down a set amount you want to spend monthly you could consider saving the amount you would have spent monthly so you can splurge later. So instead of spending a $100 you can set to save $500 by June to splurge on skin care. Not only does it give you time to research, you also get to narrow down your list to make sure you have really thought about what you want to splurge on and get the things you absolutely love. At the end of the saving period, you might realize you aren’t even that interested in getting that anymore and could put the money towards your investment portfolio or whatever it is you might currently loving without feeling guilty.
  • Plan a good time to splurge on the things you love: National splurge day is June 18th. However you can also plan your splurging sprees around periods you know there might be a sale for whatever it is you want to get. For example, clothing stores typically have sales in the summer and winter so if you decide to splurge on clothes, that may be a good time to splurge since you would be getting them at a discount.
  • Reward yourself for reaching your financial goals by splurging: You can reward yourself for meeting your financial goals by getting things you absolutely love. Remember, it has to be AFTER you meet your financial goals and it helps to budget for it. For example you can say that you will buy a $100 pair of shoes if you save $1000 this month. PS: If you’ve met all your financial goals and want to splurge, make sure it is something you really want to get and will not regret afterwards.
  • Get excited about what you splurge and make sure you enjoy it!

Hope you enjoyed this post and picked up a thing or to you help you on your financial journey? What is one thing you splurge on and how do you make sure you are financially responsible while splurging; please share your tips.

Talk Soon,

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