CAN YOU SAVE UP BEFORE THE SPLURGE?
Like Smith with her windows, Sirianni also saved up before her big splurge, which was on a European vacation with her husband and friends. “We spent more money than my younger self would be OK with, but I had set this money aside,” she says.
She used a “sinking fund” — a dedicated, regularly-funded savings account — to save up for the trip.
“We had about $5,000 set aside for this trip, so we were able to spend that without guilt or shame,” she says. Grant advocates for the same savings-first approach when it comes to splurges. Saving in this purposeful way can be part of an overall budgeting plan. He suggests creating separate savings accounts outside of normal savings so it’s easier to track the purpose of different accounts.
Otherwise, you could end up spending that money before you need it for the vacation.
“It’s not extra money, but money you’re putting aside for expenses that haven’t yet occurred,” Grant says.
KIMBERLY PALMER writes for NerdWallet. Email: kpalmer@nerdwallet.com Twitter: @kimberlypalmer The article When to Splurge and When to Save originally appeared on NerdWallet.
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