Why Saving Money Makes It Easier To Spend Money

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Jeans with a price tag of 300,000

Expensive jeans? So long as you plan ahead, they can be yours—guilt-free!

Probably the most useful financial step I’ve taken in the past few months is setting up a savings account dedicated to spending.

It might seem counterintuitive at first, but I assure you, it has been a budget-saver.


Separating Money Helps You See Goals More Clearly

It’s easy to get overwhelmed with regular bills, debt payments, retirement contributions, and financial goals like saving up for a down payment on a home or buying a car. One of the easiest ways to see your finances clearly is to use separate accounts for separate goals.

For example: All of my daily bills come out of my checking account, my retirement savings is in a mutual fund and savings account, and my travel savings gets its own savings account. But just recently, I opened up a second savings account to act as a “spending” account.

Since I regularly spend everything that’s in my checking account, setting up a spending account was the best way to save for things I want that will take more than one paycheck to acquire—like a pair of designer denim or a luxury espresso maker.

Guilt-Free Spending

By allocating a few hundred dollars a month to my personal spending account, I can spend without worrying about throwing off my budget. I always know how much I have available, so I can say “yes” to friends who invite me to a fancy restaurant or a concert. There’s no charging it to my credit card and hoping I have enough to cover the expense when the bill comes in; I have already allocated this money to fun, so I can enjoy it anxiety-free.

To give my spending account an extra boost, I’ll throw in small, unexpected cash windfalls—like $40 for babysitting or any money from selling clothes on eBay. They’re small contributions, but they make a big difference.

There Are Still Limits

When I drain my spending account, my fun is over until I build it back up again. While I would love to have unlimited disposable income for endless splurging, I unfortunately have a limited income.

Living with limited means will always be a challenge, but by including splurges in my budget, I get to enjoy some of the finer things in life without compromising my retirement savings or debt repayment efforts.

Who said you can’t have it all?

How do you save up to splurge? Let us know in the comments.

(Photo: Micky Wang)

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