Most of us have friends who follow a strict diet and workout regime throughout the week, but live on beer and fried food throughout the weekend. They seem to have almost the same logic behind this behaviour – They eat right throughout the week and exercise more on Saturday so that they can indulge themselves, have fun, and relax during the weekend. This is the logic which we can follow when we plan our spending.
Many articles that we find on the internet are about planning our necessary spending or how to invest money adequately. However, we might not be helping ourselves on a long-term plan, if we avoid things that give us pleasure and by compelling ourselves to curb our desires.
Since it is season of festivities and several sale offers are ongoing on products, you may feel the itch of overspending, but you can control this tendency as well as pamper yourselves, if you follow the below mentioned tips.
Additional Reading: Prepare Early in Life to Manage 5 Common Financial Accidents
- You should have a Cheat Day in Financial Planning as well
All effective workout and diet plans have a cheat day. Similarly, we need a cheat day in financial planning so that we can cater to our temptations. By not catering to small temptations and by controlling our desires continuously, we lose it one day and indulge ourselves in binge spends. Thus, by not catering to desires at all, we lead ourselves to binge spending that can land us in debt. Such debts lead us to financial troubles.
- Prioritize your Expenses Rather Than Curbing Them
Those who manage their finances well usually prioritize their expenses wisely. They judge which investment deserves most of their funds and which expenses they should make or avoid making. Deciding upon the pleasures you really want to indulge in and are, almost essential for your emotional well-being (within the bounds of reason of course!), will enable you to prioritize your spending in order to spend money optimally.
For example, if you love watching movies, eating out, or buying books, then you should add these to your list of expenses and plan for these. Although all of us would love to indulge ourselves always, a limited income does not make that possible. We need to prioritize choices among the desires and allocate a portion of our income for that purpose.
- Plan for Happiness with a Fund for Indulgence
The best way of ensuring that you do not end up feeling miserable due to overspending on things you want to buy, is to plan for your happiness at every step. Just like we keep emergency funds for sudden mishaps or ailments, it makes perfect sense to maintain a fund that would meet your other spending needs.
This fund might vary in volume as it would depend on your earning and choice. You can split your monthly earning into four parts.
- 20% of your earnings should go to your long-term savings
- 20% of the income should take care of the rents.
- 40 to 50% should meet the everyday expenses
- 10 to 15% should meet your desires.
It is only you who can find the right balance for expenses, on the basis of what your necessities and indulgences are. You should also decide whether you can at all afford to spend on things other than immediate necessities. Many realize the right away to handle expenditure when it is too late. But, of you start early, keeping track of your spending and keeping enough to manage different sectors, while also saving and investing enough for future, you can indulge yourself into small pleasures now and then.