You Should Splurge Once In A While

Photo by Corbis

There are two extremes in money management. One is the impulsive buyer, the one who spends like there's no tomorrow. These people can't seem to hold on to their money for a long time. They always have an itch to buy or spend on something, even if they don't necessarily need it, whenever they have money or there's still some credit left in their credit cards.

Then there's the scrooge, the one who saves like his life depends on it. These people have a hard time letting go of their money. They always cringe and get irritated every time they spend money on something, even if they need it. They hold on to their money like glue.

Are you one of the extremes? Or are you in between them? How can we balance between being an impulsive buyer and a scrooge?

By having a want fund.

Yes a want fund. A fund in your budget where you can use to spend it on anything that you want but doesn't necessarily need. It's important for you to have this because it allows you to enjoy what you have worked hard for without the worry of spending too much. 

You can buy that gadget or clothes that you always wanted or take that much needed vacation (as long as it is within the budget of your fund) and need not worry about spending your money and disrupting your budget.

It's important that you have a balance between spending too much or saving too much. A want fund will allow you to stay in between the two. You get a feeling of satisfaction with the money you earned by spending it on the things that you want. At the same time, you also get the satisfaction that you're budgeting your money properly and living within your means.

The suggested percentage that you allot for your want fund is 10% of your income. If what you want is expensive, then you just have to save for a while until you can afford it.

It's important that you manage your money properly. Budgeting it on things that are necessary while saving up for the future. But it is also important that you splurge once in a while to allow yourself to enjoy what you have worked hard for and be motivated to earn even more.