If you try to restrict your budget too much, you might end up like the dieter who goes on a no-carb diet.
That no-carb diet seems like a good idea until two days later the dieter finds herself standing at the kitchen counter devouring a loaf of French bread.
Crash diets rarely work because they can leave us feeling so deprived that we end up consuming more calories than we would have under normal circumstances. The same principle applies to your budget.
There’s no denying we’re in the midst of a difficult economy, but our “always-on” media culture can make a bad situation appear even worse. You can hardly go a day without hearing a cable news pundit talk about the possibility of a double dip recession or reading a news update about the country’s debt crisis.
PJ Lamberson, a visiting scholar and senior lecturer at Northwestern University, is studying the impact of social media on consumer behavior. He says our constant connectivity via Facebook, Twitter and other social networks means bad news travels fast. “The whole social network phenomenon can reinforce fears when people are feeling worried about the economy.”
You don’t want to bury your head in the sand about the economy, but you also can’t let negative chatter guide your personal financial decisions. If you trim all of the “fat” from your budget, you may resort to a spending spree you really can’t afford.
“If you’re doing proper planning and have a budget, it’s good to splurge once in a while so you feel like you’re doing something for yourself,” says Northbrook resident and RBC Wealth Management financial advisor Jeffrey Simon who hosts monthly seminars focused on women and wealth.
Inspiration for indulgence
Splurging doesn’t have to mean buying a new car or even a $500 pair of shoes. Sara Clemence, co-founder of the popular blog Recessionwire, says “indulgence comes at many price points.” Try ducking out of work early for a massage or simply grabbing a decadent gelato on your lunch break to feel indulged without breaking the bank.
If you need to make some cuts, Clemence says to think about which expenditures make you happiest. That’s what she did when her position as an editor at Conde Nast’s Porftolio.com was eliminated in 2008. “Keeping premium cable was not important to me, but having my cleaning lady come in once in a while was.”
Sell the Old Splurge
Another clever way to finance indulgences: selling old splurges. Clemence recommends selling luxury goods on sites like eBay or ReFashioner. That designer handbag gathering dust in your closet could be your ticket a new fall coat or dinner at the hot restaurant you’ve been dying to try.
Indulge us. What is your favorite affordable luxury?