Do You Know How Much You Need to Spend on Yourself?

 

Do You Know How Much You Need to Spend on Yourself?

If you’re not budgeting properly, chances are you’re making the same mistake most people make — spending too much on yourself and too little on everyone else. Just because you have money to spend doesn’t mean you have to spend it all on yourself. Most of us like to spend money in areas where we see results, so how do you know if that gift you bought yourself was worth the cost? And how do you know if your other purchases were really worth the price?

Money can’t buy happiness

one surefire way to ensure you’re living well is to take care of yourself. In a culture that values self-sacrifice, it can be hard for people to allow themselves plenty of time and money for leisure activities. But in fact, spending more time and money on oneself could make you a better employee. When it comes down to getting stuff done at work, people who have a good balance between life and work are happier with their jobs—and they actually get more done too. If you don’t know how much you need, ask yourself questions like: What do I really want right now? Can I afford it (from my bank account or my heart)? Would I regret spending $XX on myself later?

But it can help

An abundance of research shows that we're happier when we spend money on others than when we spend it on ourselves. And yet, despite knowing that spending money wisely is one of the best ways to get ahead in life, many people make bad decisions with their cash. In fact, according to a study from marketing firm Hearts & Science , nearly 60% of Americans aren't spending enough—or anything at all—on themselves. If you need a little help figuring out how much you should be giving yourself each month, read on for three rules-of-thumb for getting it right.

When should you spend more, when should you spend less?

There are two schools of thought here. One school of thought is that you should spend more, as long as it doesn’t negatively impact your credit or ability to make future purchases. This way, you get what you want now and live with less stress about a potential financial catastrophe in the future. The other school of thought says that you shouldn’t spend at all unless you can pay for it completely, meaning don’t spend anything if you haven’t saved up enough money for a purchase before committing. Whichever option works best for your personality is right—as long as it helps keep your finances in order!

Things money shouldn’t buy

A celebrity friend, world peace, a positive appearance when you’re feeling sad and lonely, happiness. Those things don’t have an exact price. They can’t be bought in a store, over eBay or with cash. While some may disagree with me (and they may be right), I say that money should never buy: affection, respect or sexual relations from someone who doesn’t care about you. Should love cost anything? While relationships are work and will always require compromise (which is good for us but isn't something we just get for free) there are boundaries that shouldn't be crossed because we have a certain amount of money or status.

The amount you need to feel satisfied

The first step is figuring out how much you spend each month and how much of that is discretionary (i.e., after you've paid for housing, food, bills and other necessities). While there's no one-size-fits-all formula, most financial experts suggest allocating 20% of your budget to fun stuff. So if you spend $2,000 a month, $400 would be considered discretionary income — though some people may need less than that and others may need more in order to feel satisfied. Determine where your priorities lie: In order for every purchase to align with your core values, it’s helpful to determine what matters most in life before you start spending like crazy.

Spending more doesn’t mean it will make you happier in the long run.

Studies show that, as we earn more money, we spend more time working and have less time to enjoy it. That’s because our happiness isn’t contingent upon how much we make—it depends on our values and how we feel when we’re living them. When spending money doesn’t align with your values, you won’t be happy about it. Research shows that spending money does indeed increase happiness, but only up until a certain point. After people make around $70,000 per year (or $35 per hour), income has no impact on well-being. So what is most important?

In a Gallup poll conducted in January 2014, respondents answered three questions: (1) Does your current employment situation provide you with job security and opportunities for advancement? (2) Are you able to make ends meet each month and meet your financial obligations (such as rent/mortgage, utilities, credit card payments)? And finally, how likely are you to find a new job if you lost your current one: very unlikely, somewhat unlikely, neither likely nor unlikely or somewhat likely or very likely. Respondents who replied with very or somewhat for all three questions were considered thriving. Respondents who met two of those criteria were considered struggling; only one was considered suffering.