5 Money Experts Reveal How to Spend Wisely on Luxuries

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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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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
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4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.