Savvy Consumer Tips: When to Blow Your Budget and When to Save



Think Splurge Instead of Blow

A budget should have some flexibility for a splurge.

"Instead of blowing your budget, think of when you want to splurge on a purchase," says Herigstad. She recommends that your splurges be on items of higher quality that will give you a greater pleasure of ownership. "I don't mind buying a cheap shirt," she says, "but I insist on spending more money on my shoes!" Her point is that quality shoes are important to her, so that part of her wardrobe is where she has decided that spending more is money well spent. In her own personal spending, Herigstad also has no problem choosing to spend more on fresh produce rather than less-expensive packaged foods. "I believe that spending more on fresh food will save money in the long run on health costs," notes Herigstad. You need to decide for yourself the items or categories of products where you place a higher importance on quality and are willing to pay higher prices.

 

Build in Some Splurge Money

A splurge purchase may not blow your budget at all, provided you build in some splurge spending to begin with. With an amount of unallocated spending included in your budget plan, the question shifts from whether or not you should blow your budget to whether the item you are considering is how you really want to spend your "splurge" money. If you include some money in your budget to account for extra or impulsive spending, you might actually find that you are not as tempted to make the type of purchase that would blow the budget.

Budgets Are Not All About the Future

Herigstad states, "Many of the clients I work with have a belief that a budget is about sacrificing now to prepare for the distant future. This outlook is a major reason why budgets fail to work." Your spending plan should be just as much about how you spend your money now. The plan should give you the freedom to buy things you really want. Money management with a budget that actually works lets you live and enjoy life now, while at the same time allows you to save for some future goals. If you set up a budget that is too restrictive on your current lifestyle, the temptation to blow the budget will eventually cause to whole process to stop working.

There Is No "Budget Jail"

"Do not think of your budget as 'budget jail,'" emphasizes Herigstad. Viewing your budget as a prison or straitjacket just keeps a negative mindset in place, leading you to blow the plan when you feel like the budget is keeping you from doing what you want. Your spending plan should be built around how you want to live your life, and each individual or couple must discuss and decide what their personal spending priorities are. The urge to blow your budget may be a sign that your budget was not put together with realistic expectations.

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