One of the most difficult things is trying to balance luxury with income: we want to buy the things that give us pleasure, while also not compromising on either. We don’t want to purchase a big screen TV only to be able to afford electricity.
But that doesn’t mean we need to be so frugal we never do anything a bit indulgent; but it also means no being so frivolous you can’t turn the lights on.
One of the first things we can do is get knee-deep into our budgets. Here we can understand how much we’re earning and now exactly where that money is going.
Lifehacker advises the following steps in keeping track of expenses:
- List all the things you spend money on each month.
- Determine your essential expenses.
- Find ways to cut back on those essentials, if possible. Use our bill-by-bill guide.
- Of your non-essentials, determine what you enjoy spending money on most…
- Nix the non-essentials you don’t get much out of…
If something brings you a little enjoyment, find ways to get it for free or cheap …
Come up with a number for your spending/entertainment/splurge fund. Whatever you want to call it, figure out how much “budget breathing room” you’re comfortable with.
Focus your spending fund on the areas you enjoy. If you can save money in those areas, even better. That optimizes your spending budget.
By utilising this system, we can almost triage our priorities: taking the things that exists in our life and focusing only those that actually matter.
For example, consider your purchase of a car. First it doesn’t need to be a brand new model. You can look at pre owned cars for sale and find plenty of excellent models. Second, it doesn’t need to have all the trimmings or latest gadgets; do you really need to install GPS if you have a smartphone? Do you really need the world’s greatest tires if you don’t travel often or offroad?
This applies to the home, too. For example, reading authors who’ve written entire books on how to live a life of luxury and style your home in a way that reflects who you are and what you need. The most important aspect that rings true to all these tips is knowing what is and isn’t priority; then once that ascertained you can allow yourself some leeway to indulge in those aspects that can benefit you. Many would suggest rather focusing your money on experiences rather than objects, since experiences leave a longer impression and greater benefit.