How To Allocate Parts of Your Paycheck for Intermittent Luxury Splurges

Saving money is great, but every now and then, you just need that fancy dinner, weekend getaway or limited-edition gadget. But with recession fears rocking the stock market, as reported by CNN, it can be hard to think of indulging. The good news? You can absolutely treat yourself without blowing your budget. It all comes down to planning.

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Here are some ways to carve out a piece of your paycheck for those well-deserved luxury splurges — guilt-free.

Luxury splurges don’t have to derail your financial goals — as long as you plan for them. The key is to treat luxury like any other budget category.

For example, set aside a small percentage of your paycheck — say, 5% to 10% — into a separate “luxury” or “treat yourself” fund. This way, when something special catches your eye or you’re in the mood for a little indulgence, you’ve already got the cash set aside.

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“I’ve found the sweet spot is setting aside 5% to 10% of each paycheck specifically for luxury splurges,” said Andrew Lokenauth, money expert and owner of BeFluentInFinance. “The thing is, you’ve gotta be disciplined about it.”

He keeps a separate savings account called his “treat yourself fund” and automatically transfers $200 from each paycheck right when it hits. This way the money’s already earmarked for something special and he doesn’t feel guilty when he eventually spends it.

“Last December, I saved up enough for a weekend at this amazing resort in Sedona,” he added.

Lokenauth said the satisfaction of paying cash (instead of racking up credit card debt) made those infinity pool views even sweeter. And because he’d planned for it, there wasn’t that usual post-splurge anxiety.

It’s all about balance: enjoy the finer things, without sacrificing your financial peace of mind.

Here’s the critical part — intermittent luxury only works if your basic financial house is in order first. Luxury spending should never come at the expense of your essentials or long-term goals.

Before setting aside money for splurges, make sure your financial basics are covered: bills, savings, debt payments and emergency fund contributions. Once those are in place, you can figure out what’s left for the fun stuff.

Lokenauth makes sure his emergency fund has six months of expenses, his 401(k) contribution is at least 15% and he’s got no credit card debt.