Knowing When to Splurge – and When You’ll Regret It

The other day, I stopped by a used bookstore and I splurged a little. I walked out with several big thick books under my arm, books on topics that I’m excited to read about but, honestly, I’m kind of intimidated by those books at the same time. When I look at them – they’re stacked up in my office right now – I get a mix of excitement and a bit of trepidation, like, “Wow, that is going to be a deep dive.”

I spent some money I hadn’t planned on spending, and that’s really okay. A good, sound financial life isn’t about denying yourself all splurges and all pleasures. It’s about finding balance.

It’s about knowing when to splurge and knowing when you’ll regret it.

Don’t get me wrong at all. Splurging can be a wonderful thing. It allows you to enjoy something extra that’s beyond the normal routine of your life, and it is often that little change in routine that makes life exciting and vibrant and interesting and well worth living.

At the same time, splurging can also be a very regretful thing. If you splurge on something forgettable, it essentially becomes lost money. If you splurge on something that was unfulfilling or leaves you without much joy, it was something you spent far too much on. That money could have gone for something really worthwhile in your life instead. Even worse, if you splurge using money that was really needed for something else, you create havoc in your life in exchange for what’s typically a really small short term positive feeling.

In order to combat that regret, many people mentally erase bad splurges. They forget about that “dud” purchase. They forget about that beverage that was purchased and consumed and the cup tossed in the recycling bin. That $3 they spent on a forgotten drink or that $10 on that forgotten item in the heat of the moment is just swept aside, only to be seen again if you happen to glance at that single line in a bank statement or a credit card bill.

The best way to ensure that your splurges are good splurges and not wasteful splurges that you’ll either completely forget or truly regret is to have a few key principles that guide your splurges. Having a few simple principles to completely trust and follow in those splurging moments makes it much easier to make a choice that you won’t regret, one that enables you to enjoy great splurges but also have a strong financial life. Here are ones that I follow.

A good splurge is one that you’ve thought about for a while and still strongly desire. The thing to remember here is that there’s a difference between a splurge and spontaneity. You can decide, for example, that you’re about due to splurge on a book or splurge on a new blouse or splurge on a couple new craft beer bombers, but that doesn’t mean you rush out to the store and buy it. Instead, you can just let the anticipation grow and then do it spontaneously when the time is right.

Part of this consideration, of course, is that I make sure that it does fit into my budget. That stop at the used bookstore was accounted for within my spending plans for the month.

I often decide that I’m ready for a splurge in some aspect of my life, but I actually don’t give into that desire right away. Instead, I wait until the opportunity presents itself spontaneously (or, sometimes, if I nudge it a little, because a considered splurge is sometimes a really great way to suggest something to do in a social moment).

For example, I had decided a while ago that I was going to visit a used bookstore and look for a few particular books there. I decided that it was cool to spend a certain amount there ($25, to be exact). However, I didn’t rush right out to do it. I let the opportunity come along serendipitously. That way, when it did occur, I could splurge on those books with zero guilt.

It’s worth noting that sometimes the desire for a splurge will fade away. That’s okay – in fact, that’s a pretty good thing, because it means that the target of that splurge was something that wasn’t really important to you after all. Deciding on a splurge in your own time and waiting until the right time to let it happen spontaneously is a great way to filter out momentary urges.

An impulsive splurge in the heat of the moment is often a bad splurge, as it’s often quickly forgotten. If an opportunity to splurge jumps up at me out of nowhere, it’s usually a bad idea and I’m better off saying “no” to it. That’s because impulsive splurges are almost always bad splurges.

I’ll use the example of visiting a coffee shop. If I walk into a store with a coffee shop kiosk and decide, in that moment, to buy a coffee, it’s probably a bad splurge. I hadn’t thought about it at all up to that moment, so it’s not really a lasting desire, just a whim. Instead, if I’d thought about getting a good cup of coffee somewhere for the last few days and then I spy a coffee kiosk, then it’s a different story and I can splurge without concern.

In general, it’s best to figure out your desires outside of the heat of the moment. If you find yourself suddenly faced with a new temptation, you’re better off backing out. Reflect on it later and if the desire persists, then jump on board the next time it comes up.

Splurging on experiences is generally preferable to splurging on possessions. The reason is simple: if you buy something and take it home with you, you end up having to deal with that physical item. It has to go somewhere. If you don’t end up using it very much, it probably winds up in a closet or in a pantry and you have to deal with it again later.

Experiences, on the other hand, don’t go home with you except in your heart and mind (and maybe in the form of a few pictures on your phone). They don’t create clutter. They don’t require living space.

Thus, I generally find it’s better to splurge on experiences rather than things. I have a higher threshold in terms of how much consideration I need to give to a physical purchase than to how much consideration I should give to an experience. I’m more likely to splurge on a dinner date, for example, than a new book.

(Given this principle, it’s kind of funny considering that I opened this article with a description of splurging on huge books. I do plan on taking them back to that used bookstore when I’m done with them, but it’s still illustrative that this is a principle, not a hard and fast rule.)

Splurging on consumables is generally a bad idea unless it’s an exceptional situation or it’s a planned special occasion; otherwise, it almost always ends up in the “forgotten” category. What I’m talking about here are small consumables – a soda from a vending machine or a coffee at the coffee kiosk or a candy bar. Those types of consumables, usually considered and bought in just a moment’s notice and consumed almost as quickly, are easily forgotten, but their expense remains as a negative stamp on your financial state. They’re almost always best avoided unless you’ve given them some advance consideration, as noted above. Try really, really hard to avoid making such consumables into a routine that you don’t actively think about, because those expenses really add up.

For bigger consumables, like a dinner date, they’re usually fine because they’ve been considered and they’re usually going to be memorable for other reasons, such as the company or the exceptional quality of the food or some other aspect of the experience.

A great example: when I go to a restaurant, I almost always order just water as my beverage unless I’ve decided in advance that I’m going to enjoy a craft beer with the meal. If I’ve not been hankering for a special beverage, I don’t order it as a splurge.

Try to think of ways to translate this splurge temptation into something free or incredibly low cost. If you’ve thought about and somewhat decided on a particular splurge in the near future, don’t be afraid to reconsider that splurge through the lens of whether or not there’s a free or very low cost alternative option.

For example, I’ll often get all keyed up about reading a particular book. I’ll want to buy it and read it and reflect on it and maybe even read it again. It’s on my mind and I’m on the verge of talking myself into it. Before I do that, though, does it hurt to see if that book is available from the library? I’ve found that by simply checking to see if the book is available at the library, I keep myself from spending the money.

Consider other options for fulfilling your splurge and you might just find that you get the joy you’re looking for without the cost.

Whatever you do, remember this: Splurges are a good thing; it’s just that poorly considered splurges can end up being a big regret. Avoid the regret by putting a few principles to work and you’ll be in a happier place.

Related Articles:

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.