Splurging's OK. But just sometimes.

If a splurge starts to feel normal, it's time to cut back

One of my biggest splurges each year comes in August, when I travel to Indianapolis with a few friends and attend GenCon, a gaming convention. During a given year, my wife usually goes on some sort of trip by herself as well, often to visit family in the Pacific Northwest.

I usually pick up a new game and a new book about once a month, on average. Sarah’s more of a reader and tends to pick up two or three.

We go out to eat perhaps twice a month as a family.

Sarah and I tend to buy each other fairly nice gifts for gift-giving occasions.

All of these things are splurges. Each of them are expenditures that are purely for personal enjoyment that would be easily cut out of our lives if we were to do so.

I’m absolutely in favor of some degree of splurging in everyone’s life. The ability to freely experience the things we enjoy is a wonderful aspect of modern life, and eliminating it completely from our lives leads only to misery.

The challenge comes in when the cost of splurging begins to interfere with other aspects of one’s life. It’s particularly dangerous if splurging actually makes it difficult for you to pay your bills, but it’s also an area of concern if splurging is keeping you from moving forward on your goals and plans for those goals.

I’ll use my own life as an example. One of our biggest goals is to eventually buy a home in the country, hopefully before our children grow up. We’d like to build a home that includes a nice home office (rather than the small reconstituted bedroom I currently use) and a few other features, as well as a small barn in the back.

In order to achieve that goal, we had to establish a savings plan that would pay for that home in eight or so years (ideally paired with a rapid payoff of our current home’s mortgage). It’s an aggressive plan, but it’s a big goal that both my wife and I want to achieve.

Splurging is not allowed to interfere with that goal. Covering our monthly savings for that goal comes first before any splurging.

In other words, we treat our financial goals as bills that have to be paid. Once those bills are paid, we can then focus on the splurges we want in our life.

So, for example, I save slowly throughout the year for my GenCon trip. I put away about $20 a week all year long and when the trip arrives, I can easily afford the whole trip – the food, the travel, the hotel stay (usually, I’m in a room with several other people), and the event participation, often leaving myself with enough cash to pick up a game or three.

How do we determine how much we have each week or each month with which to splurge? Sarah and I each have a “splurge” line in our effective family budget. We’re each allowed to spend a certain amount each month without question. If we don’t spend it (or aren’t saving it for some specific goal), it just rolls back into the general pool, helping all of us.

Family-wide splurges usually come out of our excess money at the end of the month, as we constantly come in under budget (since I usually budget for the maximum for almost every bill).

An important thing to note is that I could easily define things like cell phones, television service, and internet service as splurges. All of these services are useful to us, but all of them are also, in essence, splurges.

Again, if splurges get in the way of your long term goals, cut back on them. Yes, that might mean your cell phone or your cable box.

Another good rule of thumb I’ve found is that if a splurge no longer feels like a splurge – in other words, it no longer feels special – it’s time to cut back on it.

My GenCon trip is a highlight of my year, so it always feels “special.” On the other hand, if I get a new book more often than once a month or so, it begins to feel routine (especially considering I can read public domain books for free quite easily or just pick up something on PaperBackSwap).

In the end, splurges come around after your goals are taken care of. If you find yourself splurging without taking care of your goals first, your future won’t be what you want it to be.

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