Splurging Every Once in a While as a Reward

How do you reward yourself? Me, I like to buy books. To keep my spending on track and to eliminate binge shopping trips and tears over credit card bills that are too large to pay off, I decided to make myself work for those books. It works like this:

Set short-term and long-term goals for yourself. The goals can be anything that fits your needs and lifestyle. For example if your goal is to lose ten pounds, then establish exactly how you're going to lose those ten pounds and by when. Also establish a reward. Make the goal as specific as possible and the reward as specific as possible.

For example, if you want to lose 10 pounds, then you could say, "I'm going to lose ten pounds in six months by cutting my carbohydrates and exercising for 30 minutes a day three times a week. When I reach my goal I'm going to buy that "whatever your goal is" I've had my eye on for a few days."

I think it's a good idea to define the cost of your reward also so that you can resist going overboard with it. Otherwise, once you're at the store you could end up spending more than you intended and it will no longer feel like a reward when you see your credit card debt. Additionally, by predetermining your reward you will be able to plan for the expense.

Long-term goals work a little differently. Let's say, for example, that your goal is to train for and run a marathon. This is a long-term goal because it can take several months and a lot of determination to reach your goal. In this case you may want to give yourself mini goals to reach, like when your training reaches the 10 mile mark you get a reward.

This goal and reward process works well because the rewards have meaning. They're not just "I'm a great person and I deserve these books" types of rewards. Additionally, this system helps to keep your spending under control because you know you're going to buy the item, you know how much it costs, and you know exactly when you're going to spend the money. If this type of system doesn't work for you, leave a bit of wiggle room in your budget for a monthly splurge.

After all, money is for enjoying!

Recommended: Guide to Family Budgeting

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• Curb Spending By Writing Goals on Credit Cards [via Zemanta]

An Eye-Opening Experiment - Tracking Your Expenses

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Credit cards can be very useful things. You can earn cashback, earn miles and they’re about the most convenient spending tool available.

The downside to credit cards, besides the interest you pay if you don’t pay off the balance each month, is that it is so very easy to lose track of how much you’re spending.


Think about the last $100 you spent using your credit card. What did you spend it on? What about the last $1000? It’s scary to realize you could have no idea where $1000 went - yet most people don’t remember. Even scarier is finding out at the end of the month that you’ve overspent, again, and paying off your card becomes a stressful event.


So, where does the money go?

If you’re brave enough and if you feel that your money is controlling you, here’s a quick way to examine your expenses and gain control over your money:

Begin by writing down your expense categories or create a simple spreadsheet:


* Home
* Utilities
* Food
* Family
* Medical
* Transportation
* Debt
* Entertainment
* Pets
* Clothing
* Miscellaneous
* Investments and Savings
* Donations

Take a few minutes to review the categories listed. What categories can you eliminate? What categories will you need to add? By reviewing your credit card statements, checkbook register, and your bank accounts for the past three months you can find this information. Take a look at each category that is right for you and add any sub-categories you might need. For example, under Transportation you might have the following sub-categories:


* Public transportation costs
* Insurance
* Car Payment
* Maintenance


Take a month or two to track your spending using the various categories you’ve determined. This means keeping track of all your spending, keeping receipts and not letting any dollar go untracked. You need to know how much you spend on everything. You need to know where your money goes.


Do not to limit your spending or spend less than you normally do. The point is to gather information. If you normally go out to dinner three times a week, don’t all of a sudden go out to dinner just once a week simply because you’re tracking it.


Once you have completed this experiment you might be surprised to find for example that you spend $1000 a month on groceries and only $100 a month on entertainment, or vice versa. Maybe you'll find that you spend $1000 on going out to dinner. It is guaranteed to be an eye-opening experience. After careful evaluation, you’ll most certainly find there are areas where you are overspending and can cut back.

Recommended: The Complete Budget and Bill Organizer