The fast track to financial success revolves around making wise choices with every dollar you bring in. However, sticking to that tactic can be incredibly hard. Life is full of temptations, and the ability to splurge a little on occasion can make a big difference when it comes to feeling joyful and fulfilled in everyday life.
How can you balance those two drives, which seem to be in direct conflict with one another? If you give into temptation and splurge, you’re using dollars that could have otherwise been used for a strong financial future. If you never give into temptation and never splurge, you’re likely living a life that is going to eventually make you unhappy.
The answer is in moderation and balance. And that moderation and balance can be found in a typical household budget.
[See: 10 Foolproof Ways to Reach Your Money Goals.]
Most household budgets simply allot money to various categories in an effort to keep spending in check and to identify how much money will be left at the end of the month for saving and investing. There are a few tricks you can use to maintain a strong and aggressive household budget that ensures that you have money for the future while also having some money for small splurges.
Here are four of those strategies for “cheating” your budget without undoing your financial goals.
Give yourself a free spending allowance each month and write it into your budget. Simply include a line item in your budget that allows you a certain amount of money to spend in whichever way you choose. Consider it your pocket money and restrict yourself to just spending that money.
You might choose to keep out, say, $100 a month and use that for a weekly treat at the coffee shop and then a night on the town with your friends once every few weeks. You might keep out $200 a month and use most of it for hobbies you’re passionate about. You might keep out $250 a month and save most of it for two recreational trips per year. It’s money that you can spend however you like without undoing any retirement savings or debt repayment.
[See: 8 Big Budgeting Blunders — and How to Fix Them.]
Strive to come in under budget for the month, then allow yourself to use the excess freely next month. Another approach is to simply make day-to-day choices that ensure that you wind up under your budget for the month. In that event, you’ll find that you have leftover money, which you can then use for other purposes.
For example, let’s say you budgeted $500 for food for the month, but you did some careful meal planning and didn’t eat out except for during social occasions, and you end up spending only $400 on food. That leaves you with $100, which you could then use for splurging.
A point of advice: If you wind up with leftover money in one category, make sure that you make up for shortfalls in other categories before spending it.
Budget for a little flexibility in the areas where you want some freedom to spend. Let’s say that you mostly like to splurge on gourmet foods and occasional bottles of wine and you’re pretty tight in other areas of your life. You can accommodate this within your budget by simply allocating more money to your food budget than you normally would while budgeting other areas more tightly.
This allows you to buy a bottle of wine at the store and some nice steaks every once in a while without wrecking your budgetary plans.
You can apply the same principle for whatever area is most important to you. Perhaps you have a big taste for movies and binge-watched television series. You might budget for subscriptions to Hulu, Netflix and Amazon Prime and also have some more entertainment space left for a few rentals, too. Maybe you like to drive a nice car. In that case, you can budget more for automobiles.
Just make sure that you focus on just one or two splurges that really matter and toss all of the minor impulses to the curb. Enjoy the things that really excite you and don’t worry about the rest.
[See: Dear Younger Me: 12 Financial Truths We Wish We Knew Earlier.]
Find nonfinancial ways to splurge. Simply “splurge” by finding uninterrupted blocks of time for meaningful leisure, giving you the sense that your life is a joyful one without throwing money at the problem.
You can often do this by rerouting how you spend your time. Instead of watching television all evening, cut back to an hour or so and spend that time on a task you’d normally leave for the weekend. Then, when the weekend rolls around, block off an entire afternoon and evening to go fishing without a worry in the world, or to read a book you’ve been anxious to check out. Those kinds of “time perks” can feel incredibly luxurious without hampering your budget at all.
Budgeting is a powerful tool, but when used too firmly it can lead to a sense of deprivation. Don’t let that happen. Use smart strategies to keep a sense of spontaneity and pleasure in your life without sacrificing your big financial goals.
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How to ‘Cheat’ Financially Without Breaking Your Budget originally appeared on usnews.com
