Use The ‘Responsible Spending’ Ratio To Splurge Without Destroying Your Finances

Use The ‘Responsible Spending’ Ratio To Splurge Without Destroying Your Finances

There’s nothing wrong with the occasional splurge as long as it doesn’t get in the way of your financial goals. The problem is, many of us splurge mindlessly. To combat this, try Financial Samurai’s responsible spending ratio.

Photo by Pictures of Money

It’s sort of like the previously mentioned spend to save rule, but a bit more specific. Financial Samurai explains that if you want to spend $1 on something unnecessary, you should first spend $2 on something financially responsible, like getting out of debt or saving for an emergency. Here are some other examples he offers:

  • Sell $2000 worth of clothing, shoes, electronics and other household clutter before paying $1000 for the latest ultra high definition TV.
  • Pay down $10,000 of debt before spending $5000 on an international holiday.
  • Pay down $1000 in mortgage principal before paying $500 for concert tickets.

Of course, those are just examples, and your own scenarios will be different, but the idea is the same: It’s OK to splurge, especially if you ensure your finances are in still intact. For more on this idea, head to the full post at the link below.

If You Want To Be Bad, Follow A Good Spending Ratio [Financial Samurai]

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