You’ve been great about saving and not going on a spending spree. But every now and then, it’d be nice to loosen the budget belt a little, don’t you think?
You should — it’s healthy. In fact, some experts say that splurging or spending freely on something you don’t need can be good for you. Financial expert Kyle Winkfield put it this way:
“When you splurge responsibly, it’s like a successful diet with built-in cheat days. With any great budget that’s successful, you build in a splurge. It’s your cheat day.”
So, can you cheat with a splurge and not blow your budget completely? If you plan for the splurge with a “fun money” account and stay within your budget limits, it’s doable. Everyone has the urge to splurge, especially as the holidays approach. Nevertheless, smart spending is still within your grasp. Read on to find out how to splurge on a budget.
USE CREDIT CARD REWARDS
Using the money you’ve already spent to buy a little something extra is genius. “If your credit card offers rewards, check your statement and add up the available rewards points,” said Kevin Gallegos, vice president of sales and Phoenix operations for Freedom Financial Network. “Visit the rewards website — your splurge area — to see what you can get by converting rewards into gifts, cash or gift cards.”
People with cash-back credit cards typically earn about $25 a month in rewards, estimated one 2010 study. And if you use your card for reimbursed business travel and expenses, you might earn a nice-sized reward for your purchases.
Especially nice are the cards that offer discounts to your favorite stores, like Chase’s Amazon.com Rewards Visa Card. It rewards you 3 percent cash back at Amazon.com. Redeem your points, and you can fund some holiday shopping and pick up a little something extra for yourself, too.
But don’t go into credit card debt by getting a credit card for the sole purpose of earning points; only get a new cash-back credit card if you don’t have any credit card debt and you can pay off the monthly balance.
GO BIG AFTER A LITTLE RESEARCH
If you’ve saved your splurge money for a big-ticket item like a TV or laptop, practice smart spending. “You’ll be able to score the best deals on major items with good research,” Gallegos said. “If you are choosing a high-dollar item, check reputable online review sources like Amazon and CNET. Then, use comparison-shopping sites such as PriceGrabber, Pronto or Shopping.com to find the best online prices. Finally, search for coupon codes online at sites, including RetailMeNot, FatWallet and DiscountCodes.”
Comparison shopping alone can save you significant dollars. PriceBlink, a browser add-on, alerts you as you shop online if there’s a lower price available elsewhere on the web. Sites such as Offers.com track product pricing over time, which “can help you decide if the splurge is a good one,” said Offers.com’s Kerry Sherin. Add a coupon code, and you could save even more on your splurge. Coupon code offers can range from free shipping to 25 percent or more off purchases. For purchases more than $100, that 25 percent can add up to significant savings.
To really amp up the savings, however, fill your virtual shopping cart with your intended purchase and abandon the sale. Many online retailers will email you a discount offer for the abandoned items to nudge you to make the purchase.
SPEND MONEY ON SMALL ITEMS
Control the urge to splurge on items you can’t afford by buying small items that feel splurge-worthy. “To gain the feeling of purchasing something special, do so on little things,” said Gallegos. “Maybe it’s purchasing a $5 bar of handmade soap, a small amount of an expensive spice for holiday baking, a top-quality chocolate bar or a craft beer.”
Benjamin Glaser, features editor at DealNews.com, added, “Smaller luxuries can still make a big difference in how you feel. Fine cosmetics, bed linens, good razor blades, and yes, quality toilet paper, are all affordable treats that will leave you feeling like a million bucks.”
When you’re working toward achieving long-term budgeting goals, splurging can take a back seat. But buying a little something that makes you feel special can diffuse the feeling of “I never have any fun!” that could lead to a big budget blowout later. Even personal finance guru Dave Ramsey agreed. “When buying stuff that you really need, it’s OK to spend a little extra to avoid financial, or even physical, pain in the long run,” Ramsey wrote on his blog.