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A Certified Financial Planner by qualification and a corporate trainer by profession, wants to create awareness about personal finance and management mainly to educate people in general about how to manage their financial needs and attain financial freedom. Write to me at vandanadubey@yahoo.com

Monday, May 26, 2014

Guilty About Spending?


A friend of mine took an impromptu trip to Goa with her children, had a wonderful time there but returned feeling guilty about spending through the nose. Another woman I know has a habit of sneaking in her shopping bags in her husband’s absence so that he wouldn’t know about her extravagance. Incidentally, both these women are financially independent and make good money. This leaves me wondering; why do women feel so guilty about spending money even if it’s their own?

Most women are programmed to feel guilty. In fact it is wired into their DNA. They feel guilty about having yelled at the kids, about ordering food from outside over the weekend instead of cooking themselves. They feel guilty when they shop for themselves or pamper themselves at a spa. In fact any kind of indulgence leads to guilt. Well nothing can be done about feeling guilty after yelling at the kids; for everything else consult a financial planner.

A lot of guilt, especially around spending, comes from not knowing where you are financially and where you ought to be. A little planning can help you by checking your cash inflows and outflows systematically, planning for a surplus every month and last but not the least planning investment in line with your future goals. I believe that once your necessary outflows in terms of routine expenses; EMIs, rentals, education expenses and insurance premiums have been taken care of, set aside some money to spend as you wish. Call this discretionary spending fund. Now that you have earmarked this money for your own consumption you will find it easier to let go of guilt. More so as you have worked hard for it, you have the right to be happy.

Cheat sheet for guilt free spending:

1. Create an annual budget for discretionary expenses. Break it down monthly and give yourself the allowance to spend within that limit each month.

2. If you would like to splurge once or twice a year on big holidays or purchases, start saving from the start of the year. Start a Systematic Investment Plan (SIP) for 12 months. Redeem it at the end of the year. Use this to pay for your holiday. Doing this will ensure you don’t dip into your monthly budget to fund such expenses and you would also earn higher return than a savings account.


3. If you are married, create a separate account for your discretionary expenses after budgeting for essential expenses and investments. Use this money without guilt.

4.  Use a debit card for your discretionary expenses. This way you ensure that you don’t spend more than what you have. It would save you the guilt of high credit card bill the following monthJ.


5.  Get more bang for your buck. Look out for discounts or deals on things that you enjoy spending on; clothes, footwear, and perfumes or anything under the Sun.

Step by step guide to build your spending money:

1.  Set aside 10-20% of your disposable income for investing for your long term goals such as retirement planning or children’s education. If you receive a bonus, it must be used for clearing liabilities such as loans first, before using for discretionary spending.

2. Add up all your expenses and average it out into monthly expenses. Regular expenses are more or less constant every month such as EMIs, rent, utilities, domestic help, groceries, fuel etc. Insurance premiums, property tax, and school fees are generally annual. These can be termed as your needs. Once these needs are taken care of set aside some money each month to build at least six months of average monthly expenses in your account as emergency fund.


3. The remaining is what you can spend on your wants. Creating a budget would give you better control of your finances and you will free yourself from the guilt of spending. All you need is a start.

It’s a good thing to spend on you. Go meet your friends for lunch in a nice restaurant, get a smashing haircut, indulge yourself at a spa, and buy yourself that dress you have been eyeing for quite some time. Go ahead; it will not break the bank! Do it! Guilt free!! Stay Blessed!!



4 comments:

  1. There is a deeper sense of spending since Its once a while, guilt is there since its not done often. I always believing in (Allocated) spending .Its good for economy ( better for the country). I aint gender bias but I have not see this often. But I wish to appreciate Vandana for her though of Budgeting. If a country does allocation of funds why cant family do. So spend wisely....

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  2. Thanks for the appreciation Joellionel ! Keep reading !!

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