3 Steps to Splurge the Right Way

Financial discipline is hard work, and achieving your goal is good reason to celebrate. There is a way to reward yourself and keep the advantages of new money habits, too.

By Leah Golden

 

Maybe you’ve chosen to curtail your spending to reach a savings goal. Maybe you’ve been diligently paying down your debt. When you’ve finally made it, you deserve a reward, right?

You can savor your victory in a smart way. Before you start celebrating:

• List your wants … and your needs. This exercise focuses on your wants, but your needs also need to be part of the equation. Creating a budget before you treat yourself is the best way to make sure you have everything covered.
  
  
• Reflect on what’s important to you. Do you love travel? New clothes? Lavish meals? Consider how the items on your list-of-wants will make you feel long term before you run out and buy. Spending on impulse can result in a forgettable and unfulfilling reward.
  
  
• Maximize happiness. What one thing on your list of wants will make you the happiest in the long run? Using that question to prioritize your wants can help maximize your spending satisfaction and minimize the risk of overspending.

Financial discipline can also be its own reward: People who spend less than they earn report being more satisfied with their lives than those who overspend.

Personal Finance