Smart Splurging

Earlier I wrote about my efforts to reduce frivolous spending. Today, I think it is important to recognize that even when you are on a budget, it’s nice to indulge yourself now and then. Splurging from time to time can actually help keep your budget on track because it can keep you from feeling deprived. In fact, a recent article in the Harvard Business Review reveals that splurging now makes you happier later and that not splurging can result in regret.

The key is to make sure the reward does not jeopardize your financial future. The following steps should help you self-indulge with a clear conscience:

Determine the treat. Make sure your treat is something you really want. Start by making a wish list and plan to purchase the item on the top of the list. Ask yourself if it is something you will use, enjoy or remember this time next year.

Make sure it works with your budget. Know your budget and make sure your priorities are paid first. Set aside a separate savings account for ‘splurges’ that won’t compromise your regular savings.

Don’t get caught up in pricey guilty pleasures. Plan ahead and stick to your plan of what to buy, when to buy, and where to buy. Don’t be trapped by impulse buying. Commit to shopping around for the best deal.

Be smart at checkout. Be aware of the hidden cost of double-digit interest. Consumers often put impulse purchases on plastic and admit that charging a purchase doesn't seem the same as actually spending money.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.