How to Budget for Splurges

We’ve talked about budgeting extensively, and how to budget for splurges is a common question. I’ll be the first to say this– its OKAY to splurge once in a while! 😉  You have a few different factions in finances that tell you splurges shouldn’t be in your budget.

However, we realize how important it is to account for those little (and sometimes big) things that make your life better.  When paying off debt you will want to eliminate the bulk if not all of your splurge expenses, but you still need to remember that you are human and a few dollars here and there are okay to spend.

Be Realistic About What Your Budget Will Allow

Get real with what your needs are, and what your budget is.  You probably already know if you have some wiggle room, or if every dime of your paycheck already has a bill attached to it.  This is where you have to make the tough decisions. If you are simply cutting back to make more money available for debt repayment – then you can allow yourself a monthly splurge allowance.  $5-$50 a month is nothing to sneeze at. Look at your goals, and allow yourself what you can. If your budget only has $5 wiggle room, then accept that splurges may not happen every month, but that you can save that $5 up and have one nicer splurge every few months.

Understand What a Splurge Actually Is

A splurge is something that isn’t necessary to life, but does make life better.  When you are looking at a super tight budget, that splurge could be a specialty coffee, bottle of new nail polish or a special scented lotion.  These items are $5-$10 and could be a once a week or once a month treat. It all depends on what your financial life looks like. When you are living paycheck to paycheck, it may be a once a month $5-$10 treat.  For a little bit larger splurge budget it could be $50 set aside to update an item in your wardrobe, or take your spouse out for a special date night.

Stop the Nickel and Dime Game

One thing that we get into the habit of as frugal women is not allowing any extra expenses.  We stop ourselves from buying the higher quality meat that is only $1 more per package because that $1 can help pay for something else.  While this is true, and we should always be aware of our spending habits, there are times when we don’t allow ourselves the luxury of simple pleasures.  Next time there is a small item that would benefit your day, uplift your spirits and just improve your life think about getting it. Evaluate what is extra in your budget for the month, and realize that $1 is typically not going to break the bank for you.  When you spend $500 $1’s it makes a difference. A handful here and there will not.

Create a Splurge Savings Account

Two methods of doing this have helped me in the past.  First I have requested $5 a month to be loaded by direct deposit into a separate account.  This can be a pre-paid credit card, bank savings account or similar. Call this your splurge money and when it is gone, you cannot take from your other accounts.  Another method is to use an online automated savings account like Digit.

Knowing how to budget for splurges is really all about understanding what a splurge actually is.  Yes, there are thousands of dollars spent every year on random splurges in homes, but for the financially sound individual who is working to better their finances it is about figuring out what your budget will allow as a splurge.

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