- Aggressively limiting your spending is kind of like dieting – at some point, you’re going to overindulge and blow all the progress you made.
- Instead of saying no to every single “indulgence,” a financial counselor says it’s better to say yes once in a while and let yourself enjoy your money.
- Don’t toss your budget, though – it’s still important to track your money, save, and spend within your limits. Consider giving yourself a monthly budget for “fun money” so you don’t feel overly restricted.
- Read more personal finance coverage.
If you’ve ever blown your budget on eating out, shopping, or entertainment, you know some of the biggest financial issues we deal with can stem from a basic lack of self control.
But there’s actually scientific evidence that depriving yourself could do you more harm in the long run. That’s why people who crash diet typically end up craving and eating more junk food.
On the flip side, some behavioural scientists think allowing yourself a lapse in self control every now and then could be key to maintaining will power.
Flex your ‘self-control muscle’
Picture self control as a muscle. If you’re constantly working that muscle, it will eventually run out of energy, leading you to lose control later on.
Financial experts say this principle holds true when it comes to money. For example, if you say “no” to eating out with friends every time they ask for the sake of sticking with a tight budget, your deprivation might cause you to overdo it later on, leading you to spend more money.
Todd Christensen, accredited financial counselor and education manager at MoneyFit, regularly counsels clients and leads workshops on effective budgeting.
He compares an overly-tight budget with no wiggle room to physical pressure. “Like a release valve on a steam engine, if we don’t release the pressure on the boiler, it will explode, leading to massive overspending and loss of effectiveness.”
How to ‘let loose’ without totally losing control
Just because an ultra-strict budget could cause you to overspend doesn’t mean you should throw out the budget altogether.
Mindless spending with no boundaries in place isn’t a great solution, either, since it can result in the same over-spending problem.
So what’s the happy medium for keeping the self-control muscle strong, but not fatigued?
Christensen says the best way to give your self-control muscle a rest is with intention and thoughtfulness.
By incorporating some incidental, frivolous spending into your budget plan, you can make sure you’re not totally deprived of opportunities to spend money on things you enjoy, while also ensuring you don’t go overboard.
Build ‘fun money’ into your budget
To maintain a healthy balance of saving and spending, Christensen often recommends his clients build “cheat days” into their financial routine. “It’s fine to spend money on the frivolous and temporary,” he says. “Just set some money aside every month for just such a purpose.”
For those who want to keep a stricter budget while allowing themselves a chance to spend, he suggests taking “fun money” out of your paycheck in cash so you can have it with you to spend however you want throughout the next week, two weeks, or month.
Stretch spending money across budget categories
While some spenders might prefer a lump sum of spending money to use on a whim, Christensen says incorporating your spending money into other budget items could be more effective.
For example, rather than allotting a lump sum of $X to “housing expenses,” Christensen recommends breaking up housing-related costs into percentages and categories that encompass not just utilities and bills, but also line items like improving (home renovations and maintenance) and enjoying (home entertainment and leisure).
Budget-minded individuals could apply the same principle to other spending categories. For instance, if you have a “food” category, groceries could take up 70% of it. But make sure to include room for the occasional restaurant splurge with a 30% “enjoy” fund.
“The enjoying piece of the pie is the most important, in my mind,” Christensen says. “If you are not allowed to spend any kind of fun money, your budget becomes restrictive and you lose motivation.”