GenNeXt Blog

Aug 8, 2018

Treat Yo’ Self (On a Budget)

Kate Arndt, Candidate for CFP® certification

To most of you, October 13th is just another day of the year, but to hardcore Parks and Recreation fans it’s “Treat Yo’ Self Day.” Think clothes, fragrances, massages, mimosas and fine leather goods. Didn’t know self-indulgence had a formal name and date? I bet that hasn’t stopped you from celebrating Treat Yo’ Self Day in one way or another. On a budget? While splurging and budgeting would appear to be polar opposites, it’s possible to achieve both.

Going Gaga for Gucci

Prior to February 2018 the only expensive retail item I owned was a pair of Ray-Ban sunglasses. Then the Gucci brand blew up among millennials around my age and I had to be in on the trend. I spent hours on the website familiarizing myself with the prices of Gucci bags so I wouldn’t experience sticker shock at the store. How did I justify my purchase? I’d already reached my financial goal of making a full Roth IRA contribution and had ample cash reserves. Splurging on the coveted bag wouldn’t jeopardize my financial security.

The first few days after my purchase were thrilling. But soon buyer’s remorse settled in. I typically shop the sale rack at Ann Taylor and use JC Penney coupons. My new purse left me feeling out of character. There was an unexpected positive side to my splurge. I was so accustomed to frugality that my big purchase compelled me to relentlessly stick to my budget!

The Right Way to Splurge

Whether you wait until October 13th to partake in Treat Yo’ Self Day or not, you need to put some thought into your expenditure. Splurging can become a problem if it’s fueled by impulse alone. But once you’ve incorporated splurging into your budget, there’s nothing wrong with treating yourself occasionally.

One way to fight impulse splurging is to plan the purchase around the achievement of a goal. Maybe you’ve reached your goal weight, paid off your student loans or passed the bar exam. All are excellent examples of appropriate times to reward yourself with something special.

Celebrating an accomplishment doesn’t necessarily mean you have to pull out the big bucks, either. Splurging comes in all different shapes and sizes. For some people, splurging can mean spending $30 on a pedicure. For others it can mean upgrading to the newest Apple Watch. If you do decide to go big, use this rule of thumb: Never spend more than five percent of your liquid net worth, e.g. savings and checking accounts.

Conclusion

Rewarding yourself for a job well-done is a form of positive reinforcement that’s scientifically proven to influence behavior. But splurging is a decision that you should make long before you’re at the register. Plan your purchase, factor it into your budget and make sure you have the cash on hand before you pull the trigger. Treat yo’ wallet while you treat yo’ self!

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