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The Secret to Spending All You Want

Without going bankrupt.

There are two types of people — those who find it hard to save, and those who find it hard to spend. Yes — hard to spend. Either because we go overboard and spend more than we meant to — cue the self guilt-trip, or we are simply too anxious to spend, fearing the first outcome.

I definitely belong to the second category. I am a ‘saver’ at heart, always looking for a ‘frugal’ way out, and I would rather save than spend. I also have a secret (well, not that secret anymore now) fear that once I start spending, I won’t stop.

Spending is an art. Anyone can spend mindlessly, with only a momentary spike in dopamine. But spending freely, on things that will provide value to you, without any associated guilt, while also ensuring that you are on track for your financial goals, in other words, spending well, is truly an art.

Whether you are like me, or simply need some help in spending well, here are some ways to do so.


Why Pay Yourself First is a Blessing in Disguise

Pay yourself first(‘PYF’) is a way of saving where you consider your monthly ‘savings target’ as an expense — as your most important expense. As soon as that paycheck hits, a chunk of it is taken automatically towards your savings. What is left is all that you have to manage your monthly expenses in. It is something that really forces you to prioritize your spending and cut a lot of the extra flab away.

While PYF is an amazing way to ensure that you are saving enough, it is also an equally handy way to SPENDING enough. That’s right, with great PYF comes great guilt-free spending.

How? It is simple. Once I know that my long-term and other financial goals, like retirement, health, education, et cetera are well taken care of through automatic transfers, the remaining money is mine to do as I wish. If I earn more in a month, from my main job or my side hustles, well, that means I get to splurge. If I am able to manage my other ‘boring’ expenses well, the excess is for my ‘non-boring’ dopamine-inducing shopping. Any money left over is mine too, without worrying about putting it towards a 401(k) or towards the house. I can accumulate it towards a larger spend, gift it away to friends, or simply keep it in the bank for visual pleasure.


The Step-Wise Plan to Guilt-Free Spending

Photo by freestocks on Unsplash

We love step-by-step guides. So, here it is!

  1. Step 1: Figure out your life goals. The important ones — long-term and short-term. It would usually include your retirement, paying the down payment on a house, building an emergency fund, paying for a car, educating your children, and maybe some travel.

  2. Step 2: Convert them into financial goals. Google any financial calculator — here is a simple one. Only when you convert your vague goals into solid figures, will you work towards it. ‘Educating your child’ means nothing. Putting away $100 every month with a view to accumulate $50000 in 20 years with a return of 5% — this is a financial goal.

  3. Step 3: Implement your financial goals. Set up standing instructions to take that money out of your account as soon as your pay hits. Divert the monies towards appropriate accounts. For example, the $100 for your child’s college fund would need to be redeemed after 20 years, meaning that it is long-term enough to put in equity. But the $500 you are putting aside for travelling to Mexico next year isn’t. That would go into a high-interest savings account. Each goal needs to be tagged to an account — and then funded.

  4. Step 4: Pay off your boring expenses by the middle of the month. This would include all your utilities, mortgages if any, debt repayment, groceries — things that need to be paid for no matter what.

  5. Step 5: If you’ve reached here with even a dollar remaining in your account, congratulations! It means that you are well on your way to achieving the life you have envisioned for yourself, even though you may be cutting it slightly close. If not, go back to step 1 — maybe your goals need some tweaking, maybe your income needs some bolstering, or maybe your expenses need some trimming. The aim is to reach this step with a few dollars left over.

  6. Step 6: Ah, the glorious one, the one everybody only dreams of. The money left over is yours to do as you please. I won’t tell you what to do with it — that is the whole point! But I will tell you what I do with it, so you can get some ideas. I usually have a few ‘luxury’ purchases in my head. Not LVs and Guccis (though you can, of course, go for those too). But more along the lines of upgrading my flooring, buying twenty books at a go, or giving an unexpected gift to a friend. For you, it may be putting together a slush fund for travelling, or starting a new business. Whatever it is, if I am not using up the slush for anything, I move it to another account, to build up for a bigger purchase.

The best part about this is that any purchase out of the slush fund is 100% guilt-free. It is not taking away from my responsibilities as a functioning adult, nor is it toying with my or my family’s future. And because that feeling is so priceless, I truly enjoy spending that money and then truly enjoy savouring the small luxuries it has afforded me!

Spending and saving are not mutually exclusive — co-existence is the key to a happy, balanced life.

Want to enjoy your life while saving up for the future? Join my 10-day Personal Finance Crash Course absolutely free here.

Learn how to

· Budget without tracking every penny

· Use credit cards responsibly

· Plan for retirement while having fun

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