For many people, a budget is like a diet. They allow themselves only enough money to live on and no money for extras. Unfortunately, this strategy often backfires, leaving them feeling deprived, and splurging on little luxuries here and there. After a while, however, these luxuries add up, and because they are not in the budget, can eventually destroy the budget completely. However, if you actually budget for luxuries, not only will you feel less deprived, but you will have a better chance of reaching all of your goals, including the savings goals.
When you are setting a budget for luxuries, it does have to be one of the last things that you add into the budget, but that doesn’t mean that it is the least important. Set aside as much as you can, even if it is only a few dollars. Even saving just a few dollars at a time can add up into a nice dinner or even a nice vacation after a few months. In the meantime, you can enjoy thinking about what you are going to do with your luxury budget. The larger the amount of money you set aside, the more you will be able to do, but remember that even doing small things for yourself or your family can result in reducing large amounts of stress and frustration.
You can also make it easier to set a budget for those things that you want if you look for ways to save on everything else. When you are grocery shopping, use coupons so that part of your grocery budget can go toward luxuries. When you are at home, make sure that you are conserving as much energy as possible so that your utility bills will be lower. When you do finally start looking for the ways to spend your luxury budget, look for the best deals, and other ways to save money on those things. All of this will help you to enjoy your budget to the fullest.
You will also want to be careful of putting your savings toward these goals into your regular savings account. The reason that you need to keep it separate is that if you lump it in with your regular savings or emergency fund, it is easy to get the two mixed up. You either start to feel that your luxury fund should be part of your emergency fund, and are therefore afraid to spend it.
On the opposite end of the spectrum, and even more dangerously, you may start to think of your emergency fund as part of your luxury budget and spend it on things that you shouldn’t. Either way, this could cause you to have problems down the line. If you use your emergency funds for luxuries, you may wind up not having it when you need it. If you save your luxury budget as your emergency fund, you may wind up going on a spending spree, or becoming depressed.
The most important thing to remember about your budget for luxuries is that it doesn’t have to be very much. It just has to be enough that you can afford to indulge your wants occasionally, because it is a need to indulge yourself once in a while. Make sure that you have enough to cover all your needs first, but don’t forget the little luxuries in life.