Saving Be Damned—When It’s Okay to Blow Your Money

When it's ok to splurge

What present will you buy for yourself?

As a financial advisor, I often encourage clients to save money, pay down debts, and think about the future (some people may call me the “Ruiner of Fun”). It’s my job to persuade clients to act responsibly with their hard-earned dollars. Responsibility often means giving up the things you want now in order to save for your future.

In the words of bros everywhere, “work hard, play hard.” We all play (read: spend our money) differently.

You may consider yourself a foodie who eats out seven nights a week or a fashionista who loves purchasing new clothes. It’s possible that you explore the world through travel or take part in hobbies that are closer to home (craft beers and sporting events for me!).

Whatever your vice is, there is always something you want to spend your money on.

So here I come, the lame financial advisor, telling you not to waste money on the things you enjoy. You think it’s my job to encourage you to be responsible, telling you not to click “confirm” on that San Fran trip and advising you to defer that money instead into your 401(k) so you can spend it in ten, twenty, or thirty years’ time.

But wait…I might just surprise you…

I am a firm believer that a good financial plan accounts and allows for so-called “splurging.” Splurging is spending money on the things you like to do, regardless of how much they cost, how useful they are, or how long they will last.

Now, before you get carried away and spend without any thoughts or concerns, there are some restrictions on splurging!

How does one balance the need to save and invest for the future while still enjoying the life they have now? How can you create that “financial cheat day?” Great question!

Do You Mean It’s Okay to Splurge?

The answer to the question is a resounding YES. It’s okay to splurge on something that you want; however, before you do, you should keep a few things in mind:

  1. If you are in debt, don’t splurge. If you have credit card, car, student, and other “bad” debt, it’s probably a terrible idea to splurge on those new Rag & Bone booties you’ve been craving. You’re in debt! You need to pay off the earlier purchases you made that you couldn’t afford, not add to the problem!
  2. If you are living paycheck to paycheck, don’t splurge. If you’re living paycheck to paycheck, there is no room to splurge on that $10,000 trip to the Caribbean you’ve always wanted to take. You can’t afford not to have that money, as you may need it for unexpected expenses. Think new car brakes or a frozen pipe in your basement.
  3. Have you splurged too much lately? Only you know the answer to this question, but here are a few tests. Do you feel instant buyer’s remorse? Do you keep your purchases hidden from your spouse or significant other? Or are you scouring your brain for ways to find money to pay for your purchases? If you answered yes to any of these questions, you’re overspending.

How Much Can I Spend?

There is no blanket answer to this question. Splurging for one person may entail saving up all year to spend $10,000 on a vacation. For others, splurging may consist of buying ten pairs of jeans throughout the year, “because they are all so different!”

The responses you gave above should provide a guideline for answering this question. You should feel fine spending an amount that won’t make you feel guilty (although a little guilt is okay), provided that you don’t have to hide it from someone else and you have the money readily available.

So, What Now?

If your finances are in order, it’s totally fine to splurge.

If they aren’t, then get them in order. Get out of debt, save ten percent or more of your money, and build an emergency fund. Once you have these in order, it’s perfectly normal to cheat on your financial diet and indulge.

Just remember, one taste of the “good things” in life can become a slippery slope. You need to be sure that your splurge is what it’s intended to be—a rare, singular event that follows a lengthy and successful financial period.

So, what form will your next splurge take?

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