Not all splurges are bad, even in today’s tough economy. Some splurges build resilience, motivation, maintain mental health, or even save you money in the long run.
But there are two tricks to getting it “right” when money’s tight.
First is the art of spending intentionally rather than impulsively. This means truly understanding the difference between what feels good now and what’s going to be good for you down the road.
Second is to be financially smart when you’re doing it. Think about stretching your dollars as far as they can possibly go — discounts, coupons, sales you can actually afford — and staying out of unnecessary debt.
There’s a temptation to deny yourself almost everything when lean financial times hit, but as a long-time financial educator, I can say with certainty that this strategy is simply not sustainable. Here’s a handful of luxe-feeling splurges that won’t ruin your finances, and how to go about affording them.
Luxe-feeling splurges that cost less than you might think
Focus on upgrades, not add-ons (better, not more). Some of the smartest splurges actually improve upon something you already do or have, and often make your life or finances more efficient.
A few examples would be upgrading your worn-out running shoes rather than buying yet another workout outfit. A quality new pair will support you in staying active and avoiding injuries, which will pay off in spades.
Another example would be to invest in a better coffee machine, which will keep you from spending $5 at the coffee shop each day. You could take this one step further, and take that money you save and invest half of it. Just $2.50 per day invested for 50 years at a seven per cent rate of return (ROR) will grow to about $420,000 — what a luxurious boost to your retirement savings that would be.
Consider mindfully using up your paramedical and mental health benefits. You’ve already paid for them either through work or your own independent policy. Strategically booking massages, therapy sessions, appointments with your physio or kinesiologist, all of whom need to be properly registered for you to claim the benefits, is amazing for your body and mind, plus your benefits won’t go to waste. The same goes for using up the class passes, gym memberships and whatever else you’ve paid for but haven’t yet taken advantage of.
If you’re into home improvements and have bought a bunch of “stuff” — wallpaper, paint, shelves — to spruce up a room or your office, but haven’t done anything about it, dedicate time to making your space exactly what you envisioned it to be … without spending any more money. A great space has a way of bringing comfort and satisfaction.
Create a small, non-negotiable fun fund
A fun fund enables guilt-free spending. It also brings complete awareness to whatever you’ve chosen to splurge on (using this savings), and prevents overspending — financial self-sabotage — later.
If you follow a budget (this is your nudge to do so if you don’t), add a line for your fun fund, and work out a reasonable amount to put toward it. With my community I typically suggest setting aside two to five per cent of take-home pay. Keep contributing, and use it as you go to pay for your splurges that really matter to you, and bring you joy.
I have a little rule I follow when it comes to small splurges. The “five times joy rule.” I focus on splurges that bring me at least five times the satisfaction of their cost. So, investing $30 into equipment or products to give myself a relaxing facial at home has a huge payoff of at least five times that cost — also, about the same cost as a luxe facial at a spa. It resets my stress level, which is so worth it. But a $30 random purchase for some kind of kitchen tool I’ll rarely use delivers no joy.
For the bigger purchases, my strategy is simply to delay, save and then decide. Use my other rule for these — the “30-day rule.”
Before booking the trip or buying the new laptop, walk away from the purchase and let it be for a month. If you still want it after that, find a way to fund it using your fun fund, and whatever else you have to do to raise the extra cash. Perhaps you can sell something that is not bringing you joy, like that sewing machine collecting dust in your basement or a pair of rollerblades you never use.
Interestingly, waiting often turns that desire to have something into a “meh,” saving hundreds and sometimes thousands.
Always, when you are ready to splurge, do it at a time when things are on sale, you can use points, coupons or other types of deals and discounts; more value for your money will expand your splurge pot.
When the economy’s shaky, there are two other splurges that seem boring but might have the highest payoff of all. The first is skills or tools that expand your earning potential, or might allow you to shift into a more sustainable career path altogether. A short course or certification can pay dividends. Second, paying down debt and shoring up your emergency fund can drastically reduce stress.
