Two men splurging on new clothing.

4 ways to splurge without breaking your budget

You were careful with your money. You stuck to your spending plan. You didn’t squander a dollar.

Then you cracked. Maybe it was a crazy bargain or the perfect (pricey) gift or a dream trip on Groupon®. Before you knew it, you’d gone overboard.

Sound familiar?

As in most things, when you're saving toward a financial goal, finding your ideal balance for steady progress is a good bet. Think about other times you overdid it—the 4 a.m. daily workout plan, the grapefruit-only diet—and how being human just got in the way. Sticking to a strict budget probably isn’t realistic long-term. Neither is spending money carelessly.

Understanding it’s normal and healthy to treat yourself helps. Just as taste buds need pizza or wings to break up the monotony of leafy greens and lean protein, wallets need wiggle room. Make a sustainable spending strategy that allows it. (No crash diets for you or your budget.) Doing so puts you in control, rather than alternately starving and overdoing it.

Here are a few ideas to get started.

1. Be real with your budget.

Not budgeting for things you truly enjoy (even if they seem frivolous and unnecessary) won’t stop you from spending money on them. So why not be honest with yourself?

“Denying it doesn't make the desire go away,” says Heather Winston, CFP®, assistant director of financial advice and planning for Principal®. “It actually makes it stronger.”

According to Principal research, 78% of people busted their budgets on a variety of splurge-worthy things like dining out (27%), entertainment (19%), and travel (14%) in 2019.1

So, if it’s Sunday morning lattes from a coffee shop around the corner, or a monthly dinner and drinks with friends, make these things part of your spending plan. You might have to trim costs in other places to make it work.

How Americans are blowing their budget.

2. Define what splurge means to you.

Maybe you love the glow your high-end makeup gives you. Or you’re into cycling and want a top-of-the-line road bike. Look at your past splurges, note your trends, and start budgeting for those little luxuries that make you happy.

How often and how much are you going to splurge? Do you just need a guilt-free night out every so often? Or are you dreaming of a bigger spend several months down the line? These will affect how much to set aside, and how long it takes to get what you want without hurting your finances.

A trip abroad will likely take a little more heavy-lifting than, say, your sushi obsession. Think about the cost of your splurges, and how often you can make them. I’ll squirrel away $150 per month for 12 months and cut down on shopping to do it.

3. Find a splurge strategy that works.

Winston suggests opening a separate “fun money” account. You can automatically deposit a portion of your paycheck there (compare options at Bankrate).

Or maybe you withdraw a certain amount of cash each month dedicated to splurges. A money app, such as Mint®, allows you to set up spending allocations and alerts for when you’re getting close to your limits for the month.

Regardless of your splurge strategy, pay the essentials—and yourself—first. Things like mortgage, emergency fund, and retirement savings are generally must-haves.

4. Set and stick to limits.

Only have $50 in your “fun money” account, but the item you want is $150? It’s easy to overspend or dip into other accounts. But ask yourself if it’s worth it to overextend right now.

“Far too often we can end up in circumstances where the payoff is less than ideal,” Winston says. “Sometimes, we lose track of why we wanted to splurge on something in the first place.”

If the desire to purchase is still strong once you do have the funds, it’ll be that much more rewarding.

Start your game plan.

Picture that splurge—a trip to Italy, a high-end mixer that kneads dough to perfection, front row tickets to your favorite band—then plan for it.

You got this. And if you need help, we're here.

Next steps:

  • Make sure you’re paying yourself first. Have a 401(k) account with services through Principal? Log in to see where you stand.

  • If you’re feeling overwhelmed, work with a financial professional who can help you create a more sustainable plan. If you don't have a financial professional, we can help you find one.

2019 Holiday Shopping, Spending, and 2020 Outlook, Principal Well-Being Index, November 2019.

Bankrate, LLC is not an affiliate of any company of the Principal Financial Group®.

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The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.