When it comes to sticking to a budget, there’s something to be said for balance. A smart budget will take care of all your needs while satisfying some wants, and will prepare you for the future while helping you live it up a little today.
“No matter how aggressive your savings goals are, make sure to keep a small portion for yourself to spend ‘guilt free,'” said Misty Lynch, a certified financial planner (CFP) who is a lead financial consultant at John Hancock. “This will help keep you from getting burned out and ruining all of your progress.”
Lynch and four other money experts talked about how you can make your budget fit in a few luxuries without overspending. Here are their tips for splurging wisely.
1. Tailor your budget for safe spending
“To budget for luxury items, the most important thing is to manage how to spend, save, and splurge within your means,” said Natasha Rachel Smith, a shopping expert for rebate site TopCashback.
One of the simplest ways to do so is to follow the 50/30/20 rule, she suggested. With this strategy, you spend 50% of your income on needs and living expenses, 20% on savings and debt repayment, and the remaining 30% on wants and other discretionary expenses. That could be on tickets to see a live concert or sporting event, or on self-care treats such as a massage or pedicure.
2. Save up for big-ticket items
It can be easy to make sure lower-cost luxuries fit into your monthly budget. However, “if there are big splurges, save for them each month,” said Lori Atwood, a CFP and the founder of financial platform Fearless Finance.
If you want to spend money on travel, for example, figure out how much a trip will cost. Then start saving up each month until you’re able to splurge on a getaway without sacrificing other financial goals. “Vacations are more relaxing when you are not stressed about how much you spent to get there,” Atwood pointed out.
3. Separate your spending money from savings
You also can prevent overspending by creating separate bank accounts for day-to-day spending and savings. “When money sits in a general account, it is easier to use it for other expenses,” Lynch said.
“Taking money out of your ‘Trip to Italy’ account is harder to do than your checking account,” she added. “It forces you to realize that you are sacrificing progress towards your goal for something less important that you want right now.”
4. Wait for a sale before you splurge
Because your luxury purchases are, by definition, not necessities, you can always delay your spending until you find the best deal.
“Avoid paying full price as much as you can,” said financial coach Cornelius Davis Jr. “There are reward programs, internet discounts, coupons, and other things that you can find to save yourself some money.”
And you’ll save even more if you can stack discounts on top of other deals. Smith suggested searching for buy-one-get-one sales, freebies, or discounts on clearance items. Look for deals you can bundle with online coupons or other promotions. You also can make your online purchases through cash-back sites, such as Ebates or Swagbucks, to get back a percentage of the amount you spend.
5. Borrow, rent, or buy used items when you can
Consider ways to reduce your spending on luxury items by borrowing, renting, or buying them secondhand instead, Smith advised. Here are some tips to save money.
Consignment and thrift stores can be a good place to find a deal on fashion or home goods, if you have a discerning eye.
Check if you can rent a luxury item instead of buying it. By using companies such as Rent the Runway, Smith said, “you can rent clothes and accessories and return them for free.”
Borrow what you want for free. Head to the library to enjoy books, movies, and music. For other bigger items, check with people in your social circle to see what you can borrow.
6. Pay for splurges with a side hustle
“If you want to treat yourself and can’t seem to find a place for it in your budget, try to obtain a side hustle,” said Alayna Pehrson, a digital marketing strategist who manages financial blogs at Best Company. “Find ways to make [or] save money without having to dedicate a significant amount of time or energy.”
With the right side hustle, you can earn more money for guilt-free spending without having to cut back in other areas of your budget.
7. Know when to stop spending
Making room for luxuries in your budget is an important way to stay balanced in your spending, but beware of taking it too far.
“Splurging too much can, in fact, lead you towards a financial pitfall,” Pehrson warned. “Know your limits and set boundaries for yourself.” Develop the self-control to stop spending on nonessential items when you reach the limit on what you can afford.
The key to smart splurging is planning ahead and staying disciplined. By following these tips, you can make room in your budget for some luxuries without impacting your bigger financial goals.
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|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
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