Step 8 of the 12 Steps to Financial Wellness- Know when and how to indulge
Living a life of financial wellness means being happy with a lifestyle that’s within your means but doesn’t leave you feeling like you’re lacking. At the same time, financial wellness means money choices are governed by discipline, not emotion. So how do you strike a balance between the two? These tips will help you know when and how to indulge to keep a healthy financial balance.
Here’s how to indulge responsibly.
Live with a budget
To do this:
- Track your spending for three months.
- Make a list of all your expenses and income in a parallel column.
- Tally up your totals and assign a realistic dollar amount to each expense.
From now on, spend only within the allocated amount for each expense category.
Leave room in your budget for “just for fun” purchases
As you work on building a budget, leave room for the occasional treat. The exact amount will vary by income level, lifestyle, and personal choice. However, wisely choose an amount you can easily afford without feeling deprived.
Review your savings
Before permitting yourself to indulge, make sure you’re setting aside some of your monthly income for savings. Ideally, short-term savings should be enough to keep you afloat for 3-6 months if you have no source of income. Long-term savings should be sufficient to support your retirement and any long-term savings goal you may have.
Choose your “treats”
Everyone’s got a personal vice or three. Look where your non-discretionary money went over the last month and highlight the more expensive impulse buys. Then, hold these purchases up to these questions:
- Did this purchase bring me happiness or positive energy the day I bought it? How long did that feeling last?
- Did this impulse buy blow my budget?
- Does thinking about this purchase now fill me with joy, guilt, or something else?
Use the insight about your indulgences to help you make better money choices in the future.
Lose the guilt
Once you’ve decided how much you want to spend each month on indulgences, it’s time to let go of guilt. If you’re spending responsibly, there’s no need to beat yourself up over an impulse buy you could have skipped. Instead, you can maintain your financial wellness if you keep these just-for-fun purchases within your budget.
Using these tips to know when to indulge and the other 7 steps, you are well on your way to financial wellness. And if you missed the other steps, make sure to check them out on our Money Smart Tips Blog; here is the link to Step 7- Pay Yourself First
