“Treat yo self.”
Fans of the TV show “Parks and Recreation” will recognize those three words as Tom and Donna’s mantra for the one day a year when they would indulge in anything that would make them happy—from crystal beetle pins to velvet pants—no matter the price tag.
Lest you think this concept was only conceived in the minds of comedy writers, it turns out that an annual spending-spree day is a real thing.
Each year, June 18 is designated as National Splurge Day, when people across the country are encouraged to pamper themselves without feeling the guilt.
But while Tom and Donna had the right idea, taking a no-holds-barred approach to splurging could leave you scrambling to do budget damage control later.
According to an April 2015 poll by TD Bank, half of all respondents admitted to succumbing to impulse purchases.
The top culprits that led to overspending? Discretionary purchases, like restaurants, coffees, lunches, clothing and shoes—proving we’re all a little unsure of how to properly budget for splurges.
But indulging doesn’t have to mean regretting your purchases the next day. You can turn splurging into a feel-good financial boost—it just takes a little planning to avoid the spending hangover.
Why Splurging Can Be Good for Your Finances (That’s Right!)
In the same way that a Saturday night barbecue can make a week of eating nothing but kale salads for lunch all the more palatable, a splurge can actually help you stick with—and feel good about—healthier financial decisions.
The key is to strike a balance between the frequency of the splurge and the impact it could have on your bigger financial picture, says Maggie Baker, a Philadelphia-based psychologist specializing in money issues and the author of “Crazy About Money: How Emotions Confuse Our Money Choices and What To Do About It.”
Otherwise, you can fall prey to “frugality fatigue,” when you get tired of being too restrictive with your spending—causing you to go overboard when you do finally crack open your wallet.
“If you splurge too often, you’re going to lose your focus on saving for your emergency fund or other goals,” Baker says. “But if you don’t ever splurge, you’re going to feel frustrated and defeated and think, ‘This is no fun.’ You don’t want to spend too much—or be scared of spending anything.”
In order to figure out when it’s time for a little self-indulgence, Baker suggests asking yourself one key question: Am I feeling choked by my budget?
“If [that feeling] is getting above an eight on a 10-point scale, it’s probably time to have a splurge,” she says. “Reflect on the good job you’ve been doing adhering to your goals, and use the splurge as a way to reward yourself for your progress.”
But before you pull the splurge trigger, it’s vital to figure out where the money will come from. For a regular monthly splurge, you may choose to funnel a certain percentage of your budget into a “fun fund.” Or perhaps when you know a splurge is due, you scale back in other spending areas to make room for the special treat.
For example, Kate Caudillo, 29, a claims professional who lives in the Portland, Ore., area, prefers to cut back on work lunches to make room for a monthly pedicure. “It’s a small thing, but to me it’s well worth setting aside the $30 each month by brown-bagging lunch an extra few times,” she says. “It makes me feel good.”
While it may be tempting to give yourself a small daily indulgence to appease an impatient nature, you run the risk of turning the treat into something you expect—what Baker calls “habituating.”
6 Ways to Keep Your Splurging in Check
Before you decide to pamper yourself Tom and Donna style, reviewing some best practices will help make sure you aren’t crossing the line from treating yourself to tripping up your finances.
So we asked some experts and real-life smart splurgers to offer their insights on how to make the most of your favorite indulgences.
1. Keep it special. While it may be tempting to give yourself a small daily indulgence in order to appease an impatient nature, you run the risk of turning the treat into something you expect—what Baker calls “habituating.”
There’s actually science behind this: hedonic adaptation, or the idea that people get used to what they have—regardless of whether it’s a lot or a little. When it comes to your finances, it means that more money doesn’t necessarily mean more happiness.
One thing that helps stave off hedonic adaptation? Changing things up occasionally. In fact, a 2011 study from the University of Missouri and the University of California–Riverside found that one of the keys to staying happier was introducing variety into your life.
Let’s say your typical guilty-pleasure purchase is a wardrobe staple. When that starts to feel run of the mill—and you’ve got more pairs of jeans than a human could possibly need—consider mixing it up by splurging on something you can do with friends, like a concert or a ball game.
2. Make the splurge proportional to your budget. What a recent college grad considers a smart splurge will be different from a millionaire’s idea, so make sure your champagne taste doesn’t hijack a beer budget.
Jeff Concepcion, founder and CEO of Stratos Wealth Partners, suggests limiting a splurge to a small percentage of your savings so it doesn’t eat significantly into important money goals—you wouldn’t want your purchase to undo progress you’ve worked diligently toward. “For some folks that might be $50, for others, $5,000,” he says.
He adds that you can also give yourself a little more leeway with the price tag if you expect that you’ll get more use from your splurge.
That’s what Jim Nickerson, 46, of Oakland, Calif., did when he decided to purchase a top-of-the-line FitBit model recently to help him stay on track with his fitness goals as he trains to run his first half-marathon.
“It wasn’t a huge expense, but I had to divide the cost in half and spread it over two paychecks,” says Nickerson, co-owner of a digital marketing agency. “It’s turned out to be one of the best investments in quality of life I have ever made.”
3. Remember that experiences count, too. You can get a lot of bang for your buck from an experiential purchase, whether that’s a weekend getaway with old friends or tickets to that reunion tour for your favorite band.
Not convinced? Consider this 2014 San Francisco State University study, in which researchers interviewed subjects before they made various types of purchases.
Before buying something, participants believed that experiences would make them happier, but that material goods would be a better use of their money. After making a purchase, however, they believed that experiences made them happy and provided a better value.
And another study published in 2014 in the journal Psychological Science found that even the anticipation of an experiential purchase was deemed more pleasurable and exciting than waiting to buy a material object.
4. Count an upgrade as a splurge. Baker says part of knowing when something is a splurge is identifying whether it’s a need or a want, which feels a little more decadent and special.
Splurging on an upgrade, however, can be a little of both. For example, a need might be a set of wheels to get you to and from work—but the want is spending enough to get there in style.
That was the case for Tommy Lee Kirby, 34, an office manager in Los Angeles. After borrowing a friend’s convertible, he decided that he wanted to be able to cruise around town with the roof down in his next vehicle—without busting his budget or falling into debt.
“I am not a man of means or wealth, so I saved for this splurge by staying on track with what I wanted,” Kirby says, adding that he put the brakes on road trips and traded extravagant dinners out for cheaper home cooking to get there.
“If I wanted to buy something, I asked myself, ‘Is this going to delay my quest to own a convertible?’” he says. “If the answer was yes, I avoided it.” After six months, Kirby had saved $4,000 toward the down payment for his car.
“Harmful splurges typically take place when an individual is at their peak stress level. So plan them in accordance with when you know your schedule will be the most challenging.”
5. Don’t let emotions control your splurge. One problem that Concepcion sees with many splurges is that they are purchased in the heat of the moment—and therefore aren’t always what you might have wanted had you put more thought into it.
“[Harmful] splurges typically take place when an individual is at their peak stress level,” he explains. “So perhaps plan them in accordance with when you know your schedule will be the most challenging.”
In other words, if the in-laws are coming into town in two months or you anticipate a busy work period next quarter, start saving for your splurge now—and rest a little easier knowing you won’t be paying for it in regret … and with interest.
6. Get excited about it. The best splurges are those in which the road to getting there is just as enjoyable as the splurge itself.
Kirby, for instance, kept a picture of the convertible he wanted next to his computer at the office, which made working overtime easier to swallow.
Another way to build momentum? If you’re saving for a big-ticket splurge, Baker recommends incorporating mini splurges along the way.
Say you’ve been diligently saving for a trip to Cabo, which could be six months off. As you stash away cash for it each month, you might decide to bake in little indulgences to remind you of your trip and congratulate yourself on your progress—say, a new beach bag in month one or a night out at the new taqueria in month five.
These little purchases are still pleasurable and rewarding, but won’t sidetrack you too much from your real goal.
And feel free to share the excitement with friends, who can encourage you to stay on track toward your goal. “It can amplify your own enthusiasm,” Baker says, “if you also hear it from someone else.”