In our quest to save money for emergencies, retirement, and future goals, it’s easy to develop a fear of spending money. But that’s not a healthy way to approach your finances. As long as you have an emergency fund to cover the basics and are saving consistently for retirement, you are allowed to spend money on yourself sometimes!
The key is to align your spending with your values. Cut back on what you don’t find particularly important to make room for what you prioritize. Ultimately, money is a tool, and you can use your finances to do things and enjoy life.
If you’re afraid to spend money because you’re worried about the “what ifs,” take a step back and take these actions right now.
Identify Your Values
Before thinking about all the things you could spend your money on and panicking because of how much they might cost, alleviate your stress by evaluating your finances. Create a comprehensive financial plan that outlines how much you earn, how much you spend (and on what), how much you save, and what you donate or give to charity. This is your financial framework. All you have to do is figure out how to live within it.
Once you have this outlined, it’s time to identify your values. What makes you the happiest? Write down your short-, medium- and long-term goals in detail. Then rank them in order of how important they are to you.
A general rule of thumb is to choose experiences over things. Material possessions tend to lose their luster shortly after you purchase them, whereas memories of a trip with family or friends will last for years. Plus, the personal enrichment that comes from doing things you love is usually way more satisfying than an object you glance at once in a while.
As you start to understand and define your values, you can use your spending money as the tool that it is — a tool that can help bring you joy.
Prioritize Your Spending
To maximize the impact of your discretionary income, prioritize your spending. Remember, your goal is to enjoy your money now in ways that won’t feel frivolous in the long term.
For example, say you have deep, valuable friendships with two people from your hometown, and the three of you are planning on taking a vacation next year. Consider that when you’re invited to a happy hour with coworkers or when you get a mailer advertising a weekend sale. If it keeps you from reaching your goal, skip it and save your money.
On the other hand, if you’re working toward building your own business or landing a promotion at work, you might prioritize those happy hours with coworkers or an updated professional wardrobe. Spend money in ways that support your pursuit of that goal!
See why you need to identify your values first? It’s hard to prioritize how you use your money if you’re not sure of what’s most important to you.
Diversify Your Income
Sometimes thinking about spending money can be overwhelming because you doubt the stability of your income. If you depend on clients for a consistent paycheck, it can be hard to justify spending money on things that feel frivolous or self-indulgent, like relaxation and travel.
You’re right, of course, that you need a certain amount of money to save, pay your bills, and fund your priorities. But your ability to earn more money is theoretically infinite. Seriously! There’s no limit to how much you can earn. Alleviate fears of instability by trying your hand at a side hustle. If your day job pays enough to reliably cover your bills, put your side hustle directly into a “fun money” account for travel, nice dinners, a savings goal, or whatever else helps you enjoy life.
You’ll not only have more money to put towards your goals — or toward plain old fun — but you’ll also diversify your income. If you were to lose your main source of income, you would still have another income stream to help get you through a tough time.
Diversifying your income could involve doing small jobs, like taking your used clothes to a consignment shop instead of Goodwill. If you have more time, seek a consistent side gig.
By allocating some of your free time to picking up extra work and extra funds you’ll alleviate concerns about not having enough money for your goals. In addition, you may find a steady stream of extra work that can contribute to your long-term goals as well.
Is It All About the Money?
If you can’t think of anything you’d rather spend your money on, maybe you really are balancing everything: retirement, emergencies, and enjoyment. If that describes you, yet you still don’t feel completely fulfilled, then maybe it’s not all about the money.
Some people equate spending money with happiness, but that’s not always the case. If you work a lot and make more than enough money to do what you please, you may want to consider taking a step back and spending some of your time. Think about a cause that means a lot to you and spend some of your time helping out. It can be hard to get started as a volunteer, so do a little research and see where your time would be best spent: Most animal shelters can use people to walk dogs or clean up after the animals, whereas other causes might want you to help them fundraise or design marketing materials.
Offer your skills to your cause, and be open to whatever they want you to do. Your time is money, and giving back in this way can have innumerable benefits for both you and your cause.
There is no reason to deny yourself happiness because you’re paralyzed by money fears. As long as you aren’t up to your eyeballs in debt, you have the ability to free yourself from your fears and allow yourself a little fun here and there. The key is to do it responsibly by creating a comprehensive financial picture and identifying what truly makes you happy.
Sometimes those priorities cost very little, like spending time with nearby family members. However, sometimes you have to spend more in order to realize all of your goals. By determining what is important to you and working your way to those goals, you can enjoy life and take care of your future at the same time.