Even those who are experts in budgeting sometimes say that a little splurge isn’t the end of the world.
Take Jen Smith, for example. She’s the co-host of the “Frugal Friends Podcast” and co-author of “Buy What You Love Without Going Broke.” For her, a justified splurge was investing in expensive hurricane-proof windows for her home in St. Petersburg, Florida, a spot known for its severe weather. “It was for protecting our home, and we had saved up for it,” she explains.
Deciding when to go in for a large purchase can be complicated, and even Smith felt a tinge of guilt initially. Her podcast co-host and fellow author, Jill Sirianni, notes the difficulty often comes from the perception that you have to be either a saver or a spender. "We’ve been led to believe it’s one or the other, but realistically, everyone spends, and everyone should save," she says.
The key, Sirianni points out, is to figure out when to embrace each side.
If you’re pondering whether to save or splurge, consider asking yourself a few questions to guide your decision-making:
Does the purchase align with your budget?
Financial advisor Gerald Grant, Jr. from Equitable Advisors in South Florida advises starting with a budget to instill spending awareness. “Creating a simple budget with categories for essentials and ‘wants’ and tracking your spending can ensure it matches your financial goals,” Grant suggests. If you have a budget in place, you’ll find it much easier to evaluate whether a splurge fits into your financial picture.
Will spending more now save you time?
Sometimes, spending extra can free up time or energy, making it worthwhile. Besides her window upgrade, Smith opted to hire a cleaning service monthly. With the managing of her home and a rental property becoming too much, delegating the cleaning was a relief. “Spending that money to lighten my load feels really good,” Smith says.
Is quality more important than quantity to you?
Jill Sirianni highlights that, especially with items like clothing or toys, cheaper often means lesser quality, which can end up being more expensive over time. Investing a bit more for durability can actually save money. “We prioritize quality over quantity,” Sirianni shares, acknowledging that this often means a higher upfront cost.
What triggers your spending?
It’s essential to recognize what prompts those unexpected expenses. Sirianni encourages identifying these triggers to prevent them from influencing your decisions on when to save or splurge. She recommends a 90-day review of bank and credit card statements to see spending patterns, like time of day or location, which could lead to unnecessary splurges.
Does the purchase fit with your values?
Smith looks beyond the financial side when deciding on purchases and considers her values, such as supporting local and women-owned businesses. This approach made hiring the cleaning service an easy decision as it aligned with her priorities. “I’m investing back into the community instead of mindlessly buying on Amazon,” she adds.
Can you save enough before the big expense?
Just like Smith with her windows, Sirianni saved up for her major splurge—a European vacation with her husband and friends. "We spent more than my younger self would have approved, but it was money we had put aside," she says. Using a “sinking fund”—a specifically designated savings account—she set aside $5,000 for the trip, which enabled guilt-free spending.
Grant also emphasizes saving before spending on a splurge, suggesting this as an integral part of budgeting. He advises keeping separate savings accounts to clearly track purposes and prevent the temptation to dip into funds meant for future expenses. “It’s not surplus money, but money specifically saved for expenses yet to come,” Grant remarks.
Taking these steps can transform potential financial regrets into well-planned and enjoyable splurges.
