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6 Ways to Splurge Strategically (and Get the Most Bang for Your Buck)

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Splurging feels synonymous with overspending and impulsiveness—but it doesn’t have to be. If you're smart about your budget, you'll have the means to spend a bit extra on high-ticket items or experiences. After all, the goal of budgeting isn't to deprive yourself; it's to prioritize your spending so that there is enough money to go around.

1. CREATE A SPLURGE FUND.

By definition, splurging just means spending on a luxury without worrying about the effect it has on your finances. It doesn’t have to be an impulsive, mindless purchase. You can plan for splurges—and you should. By living frugally you can get your spending and lifestyle inflation under control. However, being too restrictive with your spending can backfire. You get tired of pinching pennies, so the next time you feel the urge to splurge, you go overboard. Without any guidelines in place, this can put serious strain on your piggy bank.

The solution? Set aside some money for a splurge. Allow yourself the occasional frivolous indulgence, just make it mindful and create some guidelines around it. Figure out how much you want to put aside each month for your splurge, then keep it in a separate account or earmark it in some way. That way you have the money on hand to treat yourself the next time you're tempted.

2. SPEND MONEY WHERE YOU SPEND TIME.

A splurge fund will help make your spending less impulsive, but ultimately, mindful splurging comes down to, well, mindfulness. Splurging strategically means optimizing that purchase: Go for something you'll be able to enjoy often.

For example, a $300 pair of shoes you’ll rarely wear might not bring you as much joy as the $4 lattes you'd like to buy daily. On the other hand, if you wear the shoes often, they might be a better use of your fun money after all. Take stock of your own habits and preferences in order to make smart splurging decisions.

3. SPEND ON EXPERIENCES.

A study published in the Journal of Positive Psychology found that people "enjoy greater well-being from life experiences [rather than material items] and consider them to be a better use of money." The idea is that you feel a deeper sense of fulfillment and create memories that will last.

4. PRIORITIZE YOUR LOVES, NOT LIKES.

However, a tech junkie might get more out of the new Apple Watch than a fancy dinner out. And while a playoff football game is an experience, it's one only sports fans are likely to enjoy. You want to splurge on the areas that mean the most to you—so it helps to know what those areas are to begin with.

Make a list of the three areas in which spending brings you the most joy. It could be travel, electronics, spa visits, restaurants, or any other non-essential that makes you happy. Use this as your guide to understand and better divvy out your discretionary spending. If you notice you dole out a ton to restaurants, for example, and it’s not in your top three, you know you’re giving up something you love to pay for something you like.

5. CREATE RULES FOR SPLURGING.

Even with a splurge fund, excessive spending can be tempting. Rather than rely on your own willpower to resist that temptation, have some guidelines in place to rein yourself in. For example, make it a rule to consider the effect of your splurge. Over at Becoming Minimalist, author Joshua Becker explains:

Whenever you feel the pull of consumerism, simply ask yourself the shortened version of this thought, ‘What might I be able to do if I didn’t make this purchase?’

Every purchase contains an opportunity cost. The question, "But what if I don’t?", forces us to recognize and articulate it.

Or, if you want to buy something outside of your budget, you could make it a rule to save more for another goal first. Let’s say you want to buy the latest $600 smartphone, for example. Allow yourself to splurge only after you pay off an extra $1000 of student loan debt. You may have to cut back on other areas to afford both, but this helps you keep sight of your long-term financial goals while you meet your immediate desires. Similarly, you could establish a rule that, for every splurge, you save the same amount. Spent $20 on fancy cocktails at dinner? Move $20 to your savings account. 

6. WAIT IT OUT.

If your goal is to get your impulsive spending under control, the best rule of thumb to follow is to wait. If you want to buy something you haven’t budgeted for, make it a rule that you can only buy it if you’ve waited a certain amount of time. Chances are, you’ll rethink your priorities. (And if that expensive dress or concert still seems like a great idea, it probably is.)

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California Startup Pays Users to Consume Less Energy
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You may know that turning off the lights when leaving a room or lowering the thermostat before bed are smart habits, but with no way to see their immediate impact, they can be hard to keep. OhmConnect is built around the premise that more people would follow through with these actions if they had a little motivation. As Fast Company reports, the San Francisco-based startup rewards California residents for their green choices with real cash.

The mission of the company is to prevent energy grids from using costly and dirty emergency power plants by encouraging customers to conserve power when demand outweighs supply. During “OhmHours,” users receive a text suggesting energy-saving practices. They can choose to opt out or agree to make an effort to lower their consumption. If their usage in the next hour is lower than the average for their home on that type of day (weekdays are compared to the weekday average; weekends to the weekend average) they receive points which can be redeemed for money. The more people participate on a regular basis, the more points they’re able to earn.

Participants in homes equipped with smart devices like a Nest thermostat or Belkin smart switches can program them to automatically consume less during those times. Nearly a fifth of the user base chooses some type of automatic response.

Someone living in a small apartment participating once a week has the potential to make $40 to $50 a year, while a family living in a larger home can earn up to $200. The California energy grid has also reaped the benefits: Since launching in 2014, OhmConnect has saved the state a total of 100 megawatts (the equivalent of not running two emergency power plants at high-demand times). California residents who get their energy through Pacific Gas and Electric, Southern California Edison, or San Diego Gas & Electric can sign up to participate online. If you don’t live in the state but are interested in the service, you may get a chance to try it out soon: OhmConnect plans to expand to Texas, Toronto, and potentially the East Coast.

[h/t Fast Company]

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11 Secrets of Financial Planners
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You share your darkest money secrets with your financial planner. You even tell him about the time you spent your last pennies at Starbucks, because without caffeine, how could you work? This is the person who is supposed to sort out your life so that you can buy everything your heart desires, after all—or so we want to believe. We found out whether financial planners judge your shoe-buying habit, whether they get mad if they have to repeat themselves time and time again (we hear what we want to hear), and why they don’t always follow their own advice.

1. SOMETIMES, THEY GET A LITTLE ANNOYED WITH YOU.

“I grimace when friends or clients get involved with multi-level marketing endeavors, thinking it’s a quick way to make money,” says Quentara Costa, a certified financial planner in Massachusetts. These MLMs, including LuLaRoe, Matilda Jane, and others, rarely last more than a year, but according to Costa, the outlay of funds and time you pour into developing and understanding the product could have been better spent pursuing other means of career development. “While well-intentioned, it’s my least favorite method of supplementing income because it can take years to develop business and trust within the community, as with any business venture,” he explains.

2. THEY DON’T ALWAYS APPROVE OF YOUR CAR-BUYING WAYS.

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Meghan Chomut, a certified financial planner in Thunder Bay, Ontario, says she can’t stand it when her clients overspend on vehicles. She even has a golden rule about it: The total value of all your vehicles and motorized toys shouldn’t add up to more than half of your annual income.

3. BUT THEY UNDERSTAND THAT YOU’RE GOING TO FORGET ABOUT SAVING MONEY DURING YOUR VACATIONS.

This is the time when clients tend to go off the rails, says Bill Ryon, co-founder and managing partner of the Dover, Delaware-based Compass Investment Advisors. Whenever Ryon sees clients taking distributions that are larger than what’s called for within their financial savings plan, he knows that they’re going on an international trip. “It can be a little bit of a sensitive conversation, since it is their money and I want them to enjoy themselves," he says, "however not at the expense of derailing their plan or jeopardizing their lifestyle in the future."

4. THEY BLAME YOLO.

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“If you can’t afford it, you shouldn’t do it,” Chomut says. “But then #YOLO, and all of a sudden, you’ve booked a trip to Florida. Or #FOMO you are going out to eat at a fancy restaurant with friends and putting it on a credit card," she says. "The struggle is real.”

5. THEY TOTALLY EXPECT TO REPEAT THEIR ADVICE OVER AND OVER AGAIN.

Warren Ward, senior planner with WWA Planning and Investments in Indiana, says that many years ago, his doctor told him that about half the medical issues he dealt with in his practice were optional: people overate, refused to exercise, or smoked. But they still wanted their doctor to keep them healthy. “He responded by repeating his good advice, and making medical interventions when appropriate,” Ward says. “Just like that physician, we care about our clients, and will patiently repeat our advice at every visit, knowing from experience that people can change over time and become more financially healthy.”

6. EVERY FINANCIAL PLANNER HAS THEIR OWN FINANCIAL TRICKS TO PASS ON.

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Ward is a huge fan of the “cash envelope system,” he says. Basically, you map out your spending for the week, and put that amount of cash into an envelope. “Mapping out your spending for the week allows you to know where your money goes instead of wondering where it went,” he says.

7. SOME WANT YOU TO FOCUS ON THE BIGGER PICTURE ...

“The secret is that all retirement planning is income planning and everything else is detail,” Ryon says. “I’ll have to repeat that several times, but that’s it. It helps them to focus on what’s really important and what they are planning for.” Essentially, he says, you’re saving and investing to sustain your lifestyle for at least 30 years after you retire. So if you focus on the fact that all of your retirement planning is income planning, then you’ll be able to think of your money as a machine that’ll pay the bills once you stop working.

8. ... OTHERS WANT YOU TO THINK ABOUT EVERY DOLLAR YOU SPEND.

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The key is to make a budget every single month, Chomut says. “Every dollar overspent is a dollar you have to either work harder for tomorrow, or a sacrifice you’ll have to make later.”

9. THEY DON’T ALWAYS FOLLOW THEIR OWN ADVICE ...

Ward says that the most difficult part of financial planning is convincing his clients to plan for death. That means setting aside money for the kids’ education and naming a close friend or relative as a potential guardian for those children ... just in case. “Just like my clients, I’m slow to face updating my estate planning documents,” Ward says. We don’t blame him!

10. ... BUT THEY STILL WISH YOU WOULD TRUST THEM ...

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“In our modern age of 24/7 news coverage, I think people tend to put too much emphasis on interpreting the latest headline, and then trying to act tactically in response,” Ward says. “Whether this involves making an investment decision based on world affairs, or following the weather minute-by-minute prior to a vacation, we prefer that they think strategically, formulate a plan and stick to it—of course allowing for periodic review and adjustment.”

11. ... BECAUSE AT THE END OF THE DAY, THEY’RE THE EXPERTS.

“I struggle watching one of a couple—usually the husband—claiming expertise that’s actually incomplete,” Ward says. After all, he doesn’t brag about medicine when he goes to the doctor, nor does he claim knowledge of the law if he visits a lawyer. “I try not to be judgmental, but this is an area where I struggle,” he says.

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