Look back at my archives and you’ll notice I’ve written plenty of articles about the importance of saving money and spending less than you earn. But when it comes to posts on spending money and having a good time, well, you have to look a little harder.
Please accept my apologies; I never meant to be such a wet blanket.
The Conflict Between Splurging and Frugality
One of the first personal finance lessons I ever learned came from my dad, when he first told me that he’s never seen a Brinks truck follow a hearse. He’s right, you know.
Sometimes we owe it to ourselves to splurge a little. After all, what is the point of working if we can’t derive a little pleasure from the money we make?
The truth is, in the same way that all work and no play makes Jack a dull boy, all saving and no spending makes Jill a depressed girl. Very very depressed. In other words, splurging is not only an essential part of our financial life, but it is also critical for keeping most of us happy. (Well, at least it is for those of us not lucky enough to have a Xanax prescription.)
Part of the problem for many folks is that they equate “frugality” with miserly living — but in reality that’s truly a perverted understanding of the word. In fact, frugality should be more appropriately thought of as a technique for smartly managing our money.
How to Splurge Without Breaking the Bank
I love buying music for my iPod. Even though I know how to save money on iTunes, over the course of a year I figure I still spend close to $1000 on new music. The Honeybee and I also like to splurge on the occasional weekend getaway at a posh resort, but it’s all good.
The important thing to remember is frugality and splurging are not mutually exclusive. The trick, of course, is to pay for those splurges by consciously reducing expenses in other areas. Here’s how we do it:
1. Our home. We minimized our monthly mortgage payment by purchasing a nice, but smaller, home that was well under our budget. We also decided to stop making extra principal payments on the mortgage.
2. Our cars. We drive older, well-maintained, fuel-efficient vehicles to avoid monthly car payments; besides, why own a luxury car?
3. The kids’ education. We send our kids to public schools. (I know. So sue me.)
4. Our lifestyle. We maintain an otherwise minimalist lifestyle. In addition, we constantly strive to reduce the impacts of our money leaks. We’re also not afraid to buy used items as often as we can.
It also helps to budget for some of those bigger splurges. For example, we set aside a place in the budget each year for our annual family vacation. By doing so, we ensure that we save a fixed amount of cash every month to cover the expected expenses of our trip.
When It’s Okay to Live It Up
Merriam-Webster defines a splurge as “an ostentatious expenditure.” Even so, there is no reason to feel guilty splurging every once in awhile when your financial house is in order. If you’ve already built up an emergency fund, are saving for retirement, and have eliminated all of your credit card debt, then by all means, go ahead! Treat yourself to something that will bring a little joy to your day. Just be sure when you do splurge, you do it in moderation.
Remember, it’s never wise to sacrifice our passions simply for the sake of saving money, because it’s our passions that ultimately make life worth living.
Photo Credit: tsuacctnt