One of the biggest hurdles in this track meet we call money management is figuring out when it’s “ok” to spend your money – really spend some money. In trying to grow our financial fortunes, we look at both increasing income and reducing expenses, and then tend to focus on the reduction end of the equation. That usually means a thorough battening down of the financial hatches; reducing spending to a bare minimum and shying away from frivolous costs.
But frivolous isn’t the same as unnecessary. Writing for DailyFinance.com, financial blogger Hank Coleman explains why he’s happy to “waste” money on a personal trainer. “To me, it's an investment that I'm making in myself and my health. Paying (the personal trainer) gives me an added incentive to go to the gym, because he charges me if I don't show up without giving at least 24 hours’ notice. That monetary penalty works for my personality.”
The trick is to not fixate on your money goals, but rather to focus on the experience goal behind the money. Money is, ultimately, just a means to an end. It’s healthy to set concrete fiscal goals (saving X amount by the end of the year, for example), but you have to remember that each fiscal goal is in service to a deeper experience goal.
What’s an experience goal?
Behind every financial goal is a feeling or experience that you’re striving towards. Building an emergency savings account of $3,000 isn’t necessarily about the $3,000 itself, but rather about the feeling that the money will provide you – a feeling of security, of safety. All material goals – houses, cars, college degrees – are ultimately in service to positive feelings that you want to cultivate.
Understanding the experience behind your financial goals is important, because it helps you decide how and when to break from the plan. And by break from the plan, I mean splurge.
As in the example of the personal trainer, spending money on something you could clearly live without could be construed as wastefulness. But just because you can live without something, doesn’t necessarily make it wasteful, or even unnecessary. Ultimately, all the work you do is in the pursuit of a better, happier life. You’re trying to arrive at positive experiences. Often it takes hard work and sacrifice to get to those positive experiences. Sometimes it takes knowing when to set the sacrificing aside and spend appropriately.
Healthy splurging is all about knowing what’s most important to you and your happiness and making smart decisions based not only on your long-term goals, but on your day-to-day wellbeing and overriding values. Stick with your goals and remember why you set them in the first place, but don’t be afraid to spend money when the time is right.