We have all seen them out there: The cute little meme-ified messages that say if you would just give up your daily Starbucks, or your avocado toast, or — gosh, ladies — all those shoes, you would be able to pay off all your debt, buy a house, and retire early. It’s just that easy!
It’s 110% not that easy, and we all know it. First of all, a scarcity mindset isn’t likely to help you build good long-term habits. That kind of “I’m not allowed to have the things I like” thinking is too rigid and sets people up for failure from the very beginning. Second (and more important), the systemic problems that hold people back from financial independence go a heck of a lot deeper than lattes.
Still, if you’re actively trying to get your finances in order, it’s easy to find yourself thinking this way, stressing over every purchase, feeling guilty about spending money on yourself … even if you can responsibly afford to do it.
Not ideal. Here’s how you can ditch that unhelpful little voice in your head and stop feeling guilty about spending your own damn money. Because if that’s not self-care, then we don’t know what is.
The reason people feel guilty about spending money is that they think they should use it for something more “responsible.” So step one: Check “responsible” off the to-do list.
A high-level budgeting guideline called the 50/30/20 rule is a great place to start. With it, 50% of your take-home pay goes to needs, 30% goes to fun, and 20% goes to Future You (paying off high-interest debt above the minimum payments, building an emergency fund, and contributing to other saving and investing goals, like your retirement).
You can tweak those percentages to fit your real life. Maybe you live in a city where housing is really expensive, so “50% to needs” isn’t gonna cut it. No biggie, turn it into the 60/20/20 rule. Or maybe you have a lot of debt, or some really aggressive saving or investing goals, like starting a business or putting a down payment on a house soon. So then maybe it’s the 50/20/30 rule. It’s flexible.
You might also decide to increase that Future You budget — at least temporarily — if you aren’t on track for retirement. Getting on track involves three steps: First, let yourself daydream about your ideal retirement lifestyle. Second, figure out how much you’ll need in order to afford that lifestyle. (Ellevest can help here. We project out the salary we think you’ll be making just before you retire and then create a plan to help you pay yourself 90% of that salary in retirement.) And third, start investing toward your goal.
Oh, and if you find that you’ve fallen off track with your goals, don’t sweat. Just adjust next month, or for the next few months, and get back on it. You will. You got this. That’s what this is all about.
Either way, once you’ve got your needs and Future You budgets set for the month, you’ll have a better idea of how much is left over fun.
Here’s the rule: If you have to put it on a credit card in order to buy the thing, then don’t buy the thing. If you have to dip into your emergency fund and this is not, in fact, an emergency, then also don’t buy the thing. Otherwise, you’re probably in fair territory.
Some people are resistant to the idea of creating a budget because they think it’s going to fence them in and make them feel like they aren’t allowed to spend money. But that couldn’t be further from the truth.
Budgets aren’t restrictive — they’re freeing. They are, in themselves, self-care.
Because if you have a smart, responsible plan to hit your long-term financial goals, and you’ve built yourself a budget that’s designed to get you there, and that budget accounts for 30% to fun, then you have already given yourself permission to spend money on fun things.
You did the math. You know that going out to eat tonight isn’t going to stop you from paying off debt by next year, or buying a house someday, or saving enough for retirement. So why on Earth spend extra energy feeling guilty about going out to eat?
Budgets. Are. Self. Care.
You work hard for your money, and if it fits into your budget, you absolutely deserve that dinner, or that latte, or that random thing at Target (we’ve all been there), or that trip with your friends. So treat yo self.
Originally published on Ellevest.
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