4 Ways Spending on Little Luxuries Can Actually Help You Reach Financial Goals
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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When you’re focused on achieving a financial goal like building an emergency fund or paying down debt, you might feel guilty if you spend money on anything that isn’t a necessity. But Bernadette Joy, a financial coach and self-made millionaire, believes that allowing yourself to splurge on little luxuries can actually help you reach your financial goals.
Here’s why it’s OK to treat yourself while working to improve your finances.
Being Too Restrictive Often Backfires
Joy believes that cutting out all little luxuries from your budget will make you less likely to stick to it.
“If you cut out every joy in your life, you’ll rebel against your budget and end up overspending later,” she told GOBankingRates. “The key is intentional spending — treat yourself in ways that truly bring happiness, while staying on track with your bigger money goals. You can enjoy life and build wealth at the same time.”
Allowing Yourself To Spend on Little Luxuries Keeps You Motivated
In her book, “Crush Your Money Goals,” Joy explains that allowing yourself to buy little luxuries will help keep you motivated as you work to pay down debt. She recommends breaking a large debt repayment goal into smaller milestones, and then rewarding yourself whenever you hit one of those milestones.
“Once you hit each smaller milestone, promise to pay yourself back 5% to treat yourself for hitting your goal,” Joy wrote. “For example, you could pay off $1,000 of debt at a time and give yourself a $50 treat. It’s OK to treat yourself while you have debt — you are allowed to have some fun!”
Planning Shopping Days in Advance Helps Curb Impulse Spending
Joy recommends picking one day a month where you spend your 5% “little luxuries” money.
“Rather than restricting myself from shopping, I now schedule a day once a month where I’m ‘allowed’ to shop with my little luxuries money,” Joy wrote. “This plan might seem like it encourages me to spend more, but instead it’s actually curbed my impulses to shop the other days of the month.”
Balancing Spending and Saving Can Help You Meet Long-Term Goals
If you aren’t working to pay down debt and the 5% rule doesn’t apply to you, you can still use little luxury spending to help you meet other financial goals. Joy explains in her book how she implements this in her own life.
“Nowadays, I don’t deprive myself of buying clothes that I want — as long as I am also willing to invest at the same rate that I shop,” she wrote. “For example, if I spend $200 on a jacket that I really wanted to buy, I can buy it and also contribute $200 into my 401(k) account.
“Implementing this connection between now and later helps you really evaluate how badly you want to buy something,” Joy continued, “knowing it will essentially cost you twice as much in your budget.”
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