You've carefully allocated funds for everything in your budget, and things are going beautifully – and then you spot it. That one item that makes you forget all about your other expenses and throw caution to the wind. It doesn’t matter if the desired item is a car gadget, a new pair of shoes or the latest bestseller; if you are tempted to go off budget to buy it, you’re in for financial trouble later. Impulse spending can rapidly destroy even the most carefully laid out budget, but there is a way to work around it (and it doesn’t involve missing out on something amazing). A dedicated splurge account can help.
If impulse spending is derailing your carefully planned budget each month, you definitely need a splurge account. By setting aside money purely for this purpose, you can avoid accidentally spending money that needs to go to your mortgage, bills, or utilities. You can also avoid the last-minute pre-payday scramble that comes with spending too freely early in the month, but still feel pampered or rewarded for your hard work.
Take Immediate Action
When you have a splurge account in place, you can take immediate action when you find an item you simply need to have – at a once-in-a-lifetime price. Having a set line item in your budget for purely impulse spending allows you to indulge, without destroying the rest of your monthly budget. The simple freedom to see something and buy it is worth the time it takes to set up a budget and set aside a bit of splurge money each month.
Say Goodbye to Guilt
If you feel guilty or selfish when you buy something for yourself, or like you should be saving money for more “important” things, the splurge account can set you free. Buying something special for yourself (or your home, pet, or family) is easy and guilt-free when you already have money set aside for this very purpose. You are accountable for so many things and responsibilities each month, and having money that is unallocated and there for you to freely spend as you’d like without having to justify it is a must.
If you and a spouse or partner are on a tight budget, then a splurge account or amount for each of you can cut the amount of squabbling you do over money, particularly if you have different needs and interests. Your new camera lens may seem like a waste of money to your partner, while his or her mochaccino addiction may seem wasteful to you. A splurge account allows you each to purchase items you’ll truly love without feeling like you have to justify the expense.
How to Set up a Splurge Account
The amount of money you choose for this account will vary based on both your income and obligations, but adding a set amount out of each paycheck can help you build up a usable fund very quickly. The amount you need to save also depends on what your idea of an impulse buy is. For some, a weekly trip to the salon or a fancy coffee drink or two is all that is needed, while others may prefer to save for larger ticket splurges like electronics or clothing.
The amount you choose to save is up to you; the important thing to do is to direct those impulse purchases to this account instead of to your household budget. Your splurge account doesn’t need to be formal; it can be as simple as slipping cash into a specific part of your wallet or allocating a specific amount from your regular bank account each week. The most important thing is to choose an amount that works for you and then properly identify impulse purchases and use only the allocated funds.
Whether you want to stop arguing about which personal purchases are “worth it” with your spouse or simply want to protect the integrity of your monthly budget, a splurge.
