Familiar terms like budgeting, saving, and investing can be mistaken for living a miserly life. Meaning you have to cut back on things you enjoy. What would be the point of life if you cannot enjoy your money? Well, it is still possible to meet all your financial goals and still have a good time guilt-free. You only need to take these three actionable steps:
1. Set aside a percentage for "good time" expenditure
Ramit Sethi, author of "I Will Teach You To Be Rich," advises one to divide their income into four categories and allocate a certain percentage to each: fixed costs (50%), investments (10%), savings goals (10%) and guilt-free spending (last 30%) money. Of course, you could always adjust the percentages and categories based on your financial situation. The 30% of guilt-free income is the secret to spending on wants without feeling guilty.
2. Choose what you enjoy wisely
Now that you can spend your 30% (or whatever percentage) guilty-free, make sure you spend on something you really like. Do not just spend for the sake of it otherwise it will take away the gratification. One way to do this is always to take time to think about a purchase for like a week. This will tell you if you need something genuinely. After all, you have had to take 30% of your income and that has to count for something. A good idea is to spend it on experiences if you already have more than enough material things. When you know and like your wants, you are less likely to draw from your savings.
3. Get more money
At this point, you already know the gap between your income and expenses will determine how much you can spend on wants. Having more income streams means you can spend on wants affordably. Even so, remember to also increase the contributions to your savings and investments. Also, do not necessarily increase your expenses to match the new injection of cash. Try to minimize your expenses as much as possible.