When to Splurge, When to Spend, When Do I Decide When

by David Ning · 6 comments


One of the questions that often pop into my inbox is “When is it appropriate to spend my money?” When people ask, they often want someone to give them a general answer that will solve their problem. They want a step by step guide because they want to splurge but don’t want to jeopardize their retirement. Sadly, there is no cookie-cutter answer since every situation is different, but what I can do is try to guide you to make the right decision in case you are wondering about this.

The Answer of When to Spend is Easy for Some

Two types of people don’t have any problems deciding when to spend money – those who spend every penny and those who never spend any money.

Natural Born Consumers
These people just seem to have more fun. They are the ones with the new cars, nice house and their kids always seem to be wearing new clothes. It doesn’t matter if they are earning $200,000 or $20,000 a year because they will still be living paycheck to paycheck.

When they see something of interest, they buy it. In recent years, these people have gotten even less responsible because even if they don’t have the cash for the item, they use their credit card. Eventually, debt catches up to them and they are unable to repay the monthly payments. Their dream life is taken away from them and they need to spend years repaying the money that they borrowed.

We Cannot Save the Earth But We Can Save for One
Some people never spend any money. It’s almost like they were born without the temptation to spend. Money in their saving accounts is like mail in the post office mail drop – there is only a way in and no way out.

These people can earn a pretty good living and be really wealthy without anyone knowing. In fact, I suspect that some of them don’t even know themselves. They save every dollar they earn and never seem to enjoy buying anything.

For the Rest of Us, It’s Not So Easy

Most of us are either more of a saver or spender but seldom the extremes. We know the importance of saving but we also splurge every once in a while. We like to buy new clothes for our kids but understand that we can’t do this every weekend. We all want to know “When is it appropriate to spend?”

There really isn’t a magical answer but here are some things to consider when you have decide for yourself.

Have a Goal and Plan
At some point, we all retire because of physical limitations. We will start relying on our savings with some help from social security. If we plan this right, we will have a very enjoyable retirement. Planning will involve some mathematical formulas but one thing you will know is how much you should save each month. Once you figure that out, you can spend the rest.

Learn from Others
You probably have friends that spend too much or friends that never spend enough. Why not learn from them? Instead of trying to always match everything that your “spender” friend buys, why not try to assess whether his purchases make sense? Learning to think about different situations will divert your temptation and help your urge to spend.

On the other hand, if your friend never spends any money and you often wonder how it is possible, why not try to ask for their advice? These people often provide valuable insights into what money and materials really mean and you can probably learn a thing or two about spending and happiness.

What is Life Like Without Spending that Money
To determine whether the money is worth spending, I usually try to think of what life is like if I don’t spend that money. Often times, I realize after some thought that I end up just as happy even if I don’t buy the thing I really wanted.

Know What Is and Isn’t Important to You
I really wanted the iPad when the tablet came out but I figured that life is actually the same with or without it, so I didn’t end up getting the unit even though I can afford the purchase. On the other hand, I know that moving to a new apartment would make Emma and I much happier, and thus, the decision to spend more money was simple.

Do this exercise enough, and you will know when to splurge and when not to spend.

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{ read the comments below or add one }

  • Slinky says:

    Nice post. I always say that you can feel free to splurge without guilt when you know that you are on track to meet all of your goals. If you’re saving enough that you know you’ll retire when you want to and get that awesome house you want, then spend the rest on whatever you like.

    I try to plan my purchases rather than just splurge though. I usually end up happier with them in the end.

  • hank says:

    I think you hit it on the head with “We Cannot Save the Earth but We Can Save for One” – I am actually a very good spender. I don’t starve myself, nor do I splurge. I make enough that it isn’t difficult to save, but find myself helping my wife with the urge to spend. 🙂

    In the end it is really about living within your means I think and being comfortable there…

  • Magnesium says:

    I always try to get read from my habit to buy the majority of things on impulse but as usually I just fail and buy again and again

  • Cahya says:

    Nice to see your blog.

  • MoneyNing says:

    UH2L: Planning on purchase is an important one because we often overspend because of impulse buys.

    I would imagine that my expenses would be much lower if I never bought anything on impulse.

  • UH2L says:

    The key is to plan out purchases and only buy when you really want or need something instead of just buying things on a whim. And the other important part is to track spending and savings so that you realize if you’ve been spending beyond your means recently or if your savings account needs some recovery time.

    Once you’ve decided to buy something, then I say it’s important to perhaps spend a little bit more on what you really want. This way, you’re happier for longer and won’t want something else to replace it sooner.

    In 1997, I leased a Saab which was somewhat beyond my means, but I fell in love with the car and bought it at end of lease. It has been reliable and I still like because it still drives very well, so I’m less inclined to replace it with another vehicle.

    UH2L
    http://www.thingsivenoticed.com

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