When is it Okay to Splurge?

Spontaneously spending money just to “treat ourselves” can be a trap, a surefire way to derail long-term goals of retirement, building a business, or chasing other dreams. But many financial experts — including the Helmstar team — believe that a measured splurge here and there can actually help us stay on track with our financial plans.

Here are some questions to ask yourself before a splurge:

Do you have adequate savings? Check to make sure you have six to 12 months worth of emergency savings tucked away into an account. If you’re currently unable to save for retirement or are weighed down by credit card debt or loans, this might not be the right time.

Can you afford it? Splurges shouldn’t have to be financed. Before making a purchase, look into your budget and check that you can still be on track with your savings plans and bills. A general rule of thumb? Don’t go into debt for an unnecessary expense.

Will it derail other goals and plans? Maybe you’re planning to retiring early. Maybe you’re paying off your mortgage. Whatever your long-term goals are, don’t lose sight of them for a short-term luxury.

Have you done your research? Splurges don’t have to be an unplanned impulse — you can always research beforehand to avoid buyer’s remorse. Look into discounts or comparison shop, if possible. Learn about the risks involved with making the purchase and understand exactly what you will be putting your money toward.

Will it bring you joy? If you’re putting down a significant amount of money, your purchase should bring you joy. Think about the thrill that sports car might give you every time you get behind the wheel, or the memories you’ll keep from that vacation abroad. Financial experts say experiences tend to bring more long-term joy than items do.

Will you be able to keep it in check? Splurging is addictive. You might spend money on a sports car here, a vacation home there and then a series of jewelry, art or home renovations — with no end in sight. Make sure you can reign it in and get back to your plan.

Long story short: Splurges aren’t always poor decisions, and they aren’t always unplanned. In fact, splurging at the right time and place can prevent you from feeling discouraged during the pursuit of long-term goals. A good splurge can remind us why we’re saving in the first place.

© 2019 The Helmstar Group.

Material in this newsletter is for informational purposes only. It is not to be construed as tax, legal or investment advice. Information has been gathered from sources believed to be reliable, but individual situations can vary. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Please consult with an investment, legal, accounting or tax professional about your unique situation.

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