Most people have an issue with spending far too much money – sometimes even more than they make. However, for people trying to be mindful of their budget it can be easy to occasionally underspend as well.
Moderation Is Key
To be clear, spending less than you make is a great thing, and should be the norm. Unfortunately, some people take it so far that they neglect important expenses like healthcare, home & car maintenance, or even basic toiletries.
Beyond that, experiences and expenses that help you stay happy over the long-term help prevent burnout or quitting the pursuit of your financial goals. Usually when individuals try to live too frugally for a long time, they either give up altogether or play “catch-up” and have large splurges where their spending gets out of control. Making sure you spend some money on things that bring you joy helps you not only have a better quality of life, but it helps you be consistent when working towards your financial goals.
Think of it like dieting. You may count calories and avoid or limit certain kinds of food in order to lose weight. Perhaps you went a bit overboard and basically limited yourself to eating the same 1 or 2 bland foods, day after day. Most people probably keep that up for a week, some for a few. Hardly anyone can keep that type of diet up for a long time. Generally, people end up cracking and eating junk for several days straight – resetting all of their progress. Your personal finances and spending can be a bit like that.
Fortunately, in my experience, there are many good ways to help you stay on track!
1. Create A Budget & Stick To It
This should go without saying, but creating a budget is great for keeping yourself aware of where your money is going. Creating one shouldn’t be scary, it can even be fun, but if you’re intimidated start by seeing what you spent your money on over the last 1-3 months. You should be able to identify any problem areas and can keep a closer eye on them in the future. For example, if your spending seems mostly reasonable but you notice you spend hundreds of dollars on eating out, you can easily give yourself a head-start by creating a hard budget for that specific expense. Additionally, automating debt repayments and savings/investments can help make sure you don’t overspend without realizing it.
2. Remember To Invest In You
As I mentioned previously, experiences can be a good expense. More specifically, experiences are a good expense when it’s an investment in yourself – whether it is by increasing your happiness, health, or knowledge. In other words, buy that book, go to that concert or movie you’ve been waiting all year for, take your spouse for a night out, take that course, and do it guilt free. Looking at certain purchases as an investment instead of an unnecessary expense can help you be more at ease, but make sure you are realistic about what is truly an investment in yourself.
I understand feeling guilty when you purchase something that is specifically for you, even if it is an investment, but that’s not a good mindset. You probably spend a pretty penny on things like gifts, high-speed internet, and even subscription services. Spending $10-20 on something that genuinely makes you happy or helps you become better is a small price to pay – just eat out one or two fewer times a month or cut one of your subscription services.
3. Don’t Wait Until All Debt Is Paid Off
Yes, taking care of credit card debt and student loans is clearly a priority, but don’t let that stop you from having fun or bettering yourself now. Focus on the debt but allow some room for yourself as well. When people are drowning in debt they may try to only spend money on the “must-haves” – don’t fall into that trap. Spending just a small amount on yourself will keep you from having massive splurges that set you back. It seems counter-intuitive, but it happens more frequently than most like to admit.
4. Mix Goals With Fun
Is it REALLY okay to learn something new, have some fun, or try out new things even if it costs you money? Yes, of course it is!
The pursuit of your financial goals is important, but if you’re so focused on where you want to be that you forget to enjoy the process of getting there, you’ll just end up hurting yourself.
I’m not saying to overdo it and buy things you can’t afford, go into debt just for a good time, or spend lavishly just because you can. All I mean is that spending a little money on yourself can be good for your happiness as well as give you the motivation to stay consistent enough to reach your goals.
I recommend setting aside a some cash each month to spoil yourself a little. Not a lot, but just enough for you to keep growing and having fun. If you have a budget, add it in!
It’s easy to remember to save money for a rainy day or to invest for your retirement – but don’t forget about investing in yourself too. It’s a balancing act, budgeting and hitting your financial goals aren’t about depriving yourself, it’s about keeping you consistently responsible so that your future can be even better.
5. Figure Out The System That Works Best For You
I know all of that is easier said than done. If your current budget or spending arrangements are making you feel a little lackluster, try cutting back in one area so you can spend a little extra on something that helps fulfill you – even if it’s as simple as a cup of coffee from your local spot or a new book.
Another tactic I like is saving up for a larger expense, whether it is a somewhat large – but mandatory – purchase (e.g. phone, laptop, tools) or a vacation. Unlike your long-term goals, saving for short-term expenses can help you dial back on spending because you know when you’ll see your return, that it’s soon, and exactly what it is. Everyone needs a break and some time for a mental reprieve, so make sure you find a way to work some time off into your schedule and budget.
Money is a tool, a way to improve your life – not run it. Don’t let the pursuit of it damage your health, joy, or personal growth. In fact, those are some of the best uses for your money!
Conclusion
Being able and willing to spend some of your money on yourself is part of being financially healthy and having a balanced life. However, spending so much on yourself that you go into debt or miss your financial goals is never a good thing. Hit your goals, spend some money on yourself regularly (but not excessively), and you’ll get to taste the fruits of your labor while still setting yourself up for financial success.
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