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Splurging Is Okay Sometimes

July 12, 2009

in Personal Finance

Being frugal has lots of benefits. It can help us save up money for emergencies and retirement. When we lose a source of income, it can help us survive until it is replaced. And it allows us to get more for our money. The biggest drawback is that sometimes it’s not very much fun.

Even though we know we don’t need it, it can be disheartening to see that stylish jacket or great laptop that we’ve been dreaming about and know it’s not practical to buy it. We may feel deprived when we see friends and co-workers going out to dinner at fancy restaurants and buying the things they want. Yet in the interest of frugality, we resist the urge to emulate them.

But when frugality becomes a drag, it can lead to poor morale. And that can lead to impulsive spending on small items as a way to make us feel better. Those small items add up, putting a strain on the budget. Wouldn’t it make more sense to splurge every once in a while?

Hardcore frugalists cringe at the thought of splurging, but there’s nothing wrong with it as long as we do so within our means. That means instead of spending money that is intended for bill paying or using a credit card, we pay for the splurge with our discretionary income. This way we avoid putting ourselves in a bind and prevent budget burnout.

Splurges come in many shapes and sizes. Those who love fashion might splurge on that unique designer dress in the boutique window. Families with young children might splurge on a trip to an amusement park. Gamers might splurge on that new gaming system that everyone has been raving about. As long as it’s something you will truly enjoy and springing for it won’t adversely affect your finances, there’s nothing wrong with it.

That’s not to say that we should make a habit of splurging. If we do, we miss the opportunity to put money to wiser use. Instead of buying a new pair of shoes every month, even if you can afford to do so, make it every four to six months. Put the money you save into your emergency fund, toward the kids’ college education or in a retirement fund.

Oversplurging will also make each splurge less meaningful. It is thrilling to get something that you want, but when you buy everything you fancy, the thrill fades away. And when it comes to material things, you probably won’t use half of what you buy. Instead of throwing money away on something that will end up in the back of the closet, save it up for something more practical.

When we diet, it’s hard to stick with it because we feel deprived. An occasional splurge can help keep us on track, as long as it’s done in moderation. The same is true when it comes to money. By giving in to our desires on occasion without going overboard, we can feel better about being frugal and keep up the good work.

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Five Common Financial Lies

May 16, 2009

in Personal Finance

Dishonesty can ruin friendships, relationships with bosses and co-workers, and even family ties. But in a marriage or domestic partnership, it is particularly harmful. Finding out that your significant other has been deceiving you is a difficult thing to deal with, and it can easily destroy a relationship.

Lies come in all shapes and sizes. But some of the most common types of lies between couples are those of a financial nature. Sometimes they’re told with the couple or family’s best interests in mind. Other times, they are just cover-ups for bad decision making or inappropriate behavior on the guilty party’s part. But no matter what the reason, financial lies are just as bad as any other kind of lie.

There are many aspects of our financial lives that we may feel the need to conceal. Here are five of the most common financial lies.

1. Hiding credit card statements ? One of the easiest ways to spend money undetected is to charge it. If one partner is responsible for paying the credit card bill, the other may never see it anyway. And it’s not hard to get away with hiding one monthly statement every now and then. This lie of omission is one of the easiest to get past an unsuspecting partner.

2. Concealing gambling winnings or losses ? Gambling is a very expensive pastime. It’s also highly addictive. Gamblers often keep their activities a secret from the ones they love, including the money they win or (in most cases) lose. Those who lose a small amount and quit may feel that it’s no one else’s business since they’ve learned their lesson. Those who lose large amounts might be embarrassed or fear the repercussions of telling the truth. And those who are addicted may be in denial, waiting for that big win that makes up for their losses and then some.

3. Understating spending ? Some financial lies are more like half-truths. Sometimes people spend more money than they should, and when confronted about their purchases, fudge the numbers to avoid an argument. This might seem like the right thing to do to preserve the relationship, but it’s detrimental to the budget and can cause serious problems when discovered.

4. Secret bank accounts ? Opening a secret bank account is often done with good intentions. One partner might feel like it’s the only way to keep the other from dipping into savings. Sometimes, however, a secret bank account is opened to conceal bad behavior. And if the other partner finds out about it, the chances are good that he or she will assume the latter. Either way, hiding a bank account is not a good thing.

5. Secret credit cards ? Keeping credit cards a secret is surprisingly common. One partner might secretly get a card in his or her own name, in the other partner’s name, or in both names. If the other partner’s name is on the card without his or her knowledge, identity theft has been committed. And even if the card is only in the cardholder’s name, it can affect the chances of getting joint credit in the future.

Nothing good can come out of financial lies in a relationship. Even seemingly small lies can come back to haunt us. Being honest about money matters may sometimes lead to conflict, but such conflicts are much easier to work out than those that stem from the discovery of lies.

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