The best way to prevent a spending splurge is to remember your why. The reason why you saved and invested a majority of your income is for financial freedom for yourself and your family. That is a much bigger goal than to let a spending urge get in the way of your goals.
I had the spending urge before. It was 2022 and we were coming off from the biggest bull market we’ve ever seen in our lives. My net worth was on fire! It was the highest number I’d ever seen in my life, $444k. On top of which, I got a 30%+ raise at my 9-5 job.
Life was good! So it was natural that I wanted to spend as much money as possible. So I did exactly that. No expense wasn’t worth it. An audible subscription? Worth it. A $20 Shark Tank product I wanted to try? Give me 5, please.
I went on a spending splurge. However, everything came crashing down because the bear market of 2022 decimated my net worth. Then add in a car accident that made me buy a car at the worst time imaginable. And so on and so on.
The only thing that kept me afloat was my job. That’s when I realized just how dangerous the spending splurge actually is. Even if you are a multimillionaire, spending way more than you are used to is not the way to go. I learned the lesson the hard way.
The best way to resist the urge to spend money is to get back to the basics.
Spending Splurge: 9 Ways to Resist the Urge
Below are the 9 ways to resist the spending splurge urge. I’m glad I learned this lesson early and while I relatively had little to lose. It’s best to get the urge out of the way early.
1) Remember Your Why
I personally want to save and invest as much money as possible to be a millionaire by my 30s. That’s the sole reason why I sacrifice so much and save so much of my income. Day in, day out, year in, and year out. I thought I could afford the spending splurge in 2022.
Then I was proven outrageously wrong. I lost my roots. I lost my roots to save and invest as much money as I could just because I thought the good times would last forever. 2023 is when I went back to the basics all over again.
Even $10 expenses gave me a second pause to spend in 2023. Even though my net worth kept hitting all time highs, I remained conservative. I put cash into money market accounts that gave me a risk free 3%+ return per year. I started remembering why I was doing all of this for.
It was for my future family and myself who was going to benefit. I’m never going to forget ever again, which led me to create the bear market checklist.
2) Spending Splurge? Delayed Gratification
The number one test to see whether you’ll be successful is the delayed gratification test. The one who is patient and can resist their impulsive urges is the one who always win in the end. Long term thinking is what differentiates and separates the truly greats from the masses.
The best antidote to the spending splurge is delayed gratification. Yes, it’s painful to toil away at your 9-5 for so many hours only to get little reward in the end. However, it’s completely worth it. Delayed gratification is how I got to a $400k net worth in my 20s.
The times I forgot the benefits of delayed gratification is when I got into trouble. 2023 was all about saving and investing as much money as I could again. I spent to my heart’s desires in 2022 and I was ready to get back on track again.
Delayed gratification created more winners than instant gratification.
3) Expect Less
High expectations of a quality of life is what stops people. I get it. Once students graduate, they think they deserve the “good life”. I mean, they put in 4 years of hard work, it’s time to get paid and start spending money! No, that’s not true.
Now is not the time to live it up. Many people enjoy the fruits of their labor in their 30s from the labor they put in their 20s. People do the spending splurge because they have high expectations of what their life should be. When I graduated college, I lived in run down apartments that needed a lot of fixing.
And I cooked meals every single day to save money on food. Anywhere I could save $5, I put in the hours, effort, and work for it. High expectations are what ruins people’s lives. Even though I saved multiple six figures of money by now, I still don’t have high expectations of quality of life.
I live in a $800/mo apartment. And that’s completely OK with me. One day, I will afford a big house and it will have all been worth it.
4) Ignore the Joneses
The Jones are one of the worst people to emulate. They spend money on frivolous things that add no value to their long term quality of life. They drive the fanciest cars and live in the best places in the city. And they declare bankruptcy after years of living the lifestyle.
The good times don’t last forever. The ones who protect for the future gets mocked for not spending as much as they can. But they always end up ahead of the ones who go on a spending splurge. The Joneses are not the ones to try to beat at their game.
Because they will always find a way to outspend anybody who tries to compete against them. Even get into debt to afford their lifestyle. Lifestyle creep and envy is what ruins many people’s financial lives. I personally couldn’t care less if I see my friends drive Teslas and buy nice watches.
All I care about is stacking as much assets as I can to generate the cash flow to pay for my lifestyle.
5) Stick to a Budget
A budget counters spending splurges because a budget dictates how much you’re allowed to spend. 2022 is when my budget went out the window. I spent way more money than I would’ve liked and I paid the price for it in the subsequent months afterwards.
I learned from that experience and spend as little as possible now, yet again. That’s how my net worth kept hitting all time highs in 2023. Because I went back to my roots and started spending less than what I made. My budget is approximately $2k – $2.5k/month.
And I intend to keep it that way, no matter how much higher my income goes. After another 2 – 3 years of following this strict budget, that’s when my spending will increase again. I went on too many a spending splurge and it brought me no more joy than when I was spending as little as possible.
The expensive life is not the same thing as the good life, for me.
6) Appreciate What You Currently Have
There’s no need to get a second car. There’s no need to replace your $10k car if it runs just fine and brings you from point A to point B. I currently drive an 85k mile car and I intend to keep it that way for the next five years. Not even including the fact that car prices went haywire in 2022 and beyond.
There’s no other big purchases I need to keep myself happy. One exception I have is technology. If an equipment helps me get to my business goals faster, then I don’t hesitate for a second to spend money on it. My MacBook Pro that I bought in 2022 was worth every penny.
My brand new iPhone that I bought in 2023 as well. Hoarding cash is not the answer. I estimate this purchases will help me make an extra $2,000 per year from 2024 and beyond. A $2,000 purchase that brings me an additional income stream of $2,000/yr is worth it.
However, for all the other big picture items, there’s no need to go on a spending splurge. Even though I could qualify to buy a $1.5M house, I refuse to spend that much money on it. Lifestyle creep is not the answer.
7) Consider Affordability to Resist Spending Splurge
Many people purchase equipment on a loan because they can afford an extra “$100/mo” payment. I bought my $800 iPhone on a 0% installment loan at $33/mo for 2 years. Although I truly can afford it, many look at the monthly payment and think they can actually afford to buy the brand new car.
Just because the payment is spread out over months and even years at 0%, that has nothing to do with affordability. It just means that I have debt to service on my balance sheet. And I personally do not like debt, no matter how low the interest rate is.
Spending splurge can be avoided after calculating affordability. And it’s about true affordability instead of just looking at the monthly payments. The best rule of thumb for affordability is if you don’t have the cash to pay for it upfront, then you can’t afford it.
It saves many headaches of calculating monthly payments, next paycheck, and the like.
8) Think in Hours Spent to Earn the Money
If your wages are $25/hour, then a $100 meal costs you four hours to make up for it, not even including taxes. Is that 1 hour of time to enjoy the meal worth four hours it takes just to break even? Even if I make $100/hr, I don’t want to buy a $100 meal.
I get the same joy out of a $15 meal than I do from a $100 meal. It’s why I believe fine dining is a waste of money. The hours that you spend toiling to earn the money is not worth it to go on the spending splurge. Too many think they deserve the “good life”.
What they deserve is to act their wage. Many people live above their means and why they go into trouble. There are many who make $350k/yr who are financially struggling than the ones who make $50k/yr. Although the higher income helps, that’s not everything in the wealth building game.
The hours you spend at your desk to earn that money to make purchases is more than people realize.
9) Find Cheaper Alternatives
Off brand is just as good as name brand. Not when it comes to technology, but when it comes to buying simple things like water. I personally used to like Aquafina or Ozarka. But now, I buy a Costco Kirkland brand to save money on bottled water.
Not only is it cheaper but it’s literally the exact same taste for me. A spending splurge does not mean buying the best name brand product out there. There’s a sweet spot between cost and quality and the best efficiency ratio is what people should consider.
Not only the cost and not only just the quality. But that cost/quality ratio that is the most efficient. Cheaper does not mean worse quality. More expensive does not mean higher quality, either. I personally love the off-brand products at Costco more than the name brand products itself.
It’s cheaper and gets the job done as well as the name brand products. I lose nothing by going this route.
Spending Splurge Shouldn’t Happen Often
There’s nothing wrong with a spending splurge every now and then. Spending splurge is defined as spending $200 or more. Even with high inflation, $200 still buys a lot of products. Every now and then is defined as every 2 – 3 months.
I personally only go on a spending splurge maybe 3 – 4 times per year. My MacBook and my iPhone are the largest purchases I made from 2022 – 2023. I don’t foresee any large expenses for the next 6 months, either. There’s not a lot of things I need to make me happy.
I’m a simple person who doesn’t need all of the materialistic stuff that capitalism tells us we need to make us happy. Buying things makes me happy but not when I do it too much. I know my saved and invested money is only going to make me more money down the road.
THAT is when I’ll spend as much money as I could want. That’s when I’ll have so much money that I won’t know what to do with. I enjoy a spending splurge as much as the next person but that doesn’t mean that I do it often. I’m a born wealth builder at heart.
The basics of maximizing income and minimizing expenses will always be at the forefront of my decision making process. 2022 was not the year for me. It was one of the most financially destructive years of my life. However, I am feeling great about 2023 and beyond.
Once I shunned going on frequent spending splurges is when doors opened up.
Spending Splurge Should be Stopped
The rich have less chances of being abused. When you’re rich, you can afford insurance, lawyers, and anything of the kind to protect yourself from the outside world. The rich didn’t get there with a spending splurge. They got there by diligently saving and investing over decades.
A spending splurge is not healthy. It’s an addiction. It’s on the other side of the frugality disease. Whenever something’s wrong with my personal life is when I feel the need to go on spending splurges. Either my boss chewed me out or I wasn’t feeling powerful due to the debt I held in my balance sheet.
Which worsened the problem even more because my financial position was then worsened. Even though my blog is all about building wealth and getting financial freedom, that doesn’t mean my journey was perfect. No one’s journey to the millionaire status is perfect.
However, the best you can do to get to the millionaire status is to achieve financial security. Making the mistake of a spending splurge more than once is what allowed me to highlight the mistake so others don’t repeat my mistakes.
I regret all of my spending splurges and wish I could take it all back. My net worth would be so much higher otherwise. It would’ve saved me an entire year of working as much as I can to build wealth. It was fun to spend $50k in 2022.
However, in 2023 and beyond, I’m going right back down to a $25k/yr budget.
Spending Splurge: 9 Ways to Resist the Urge Shortlist
- Remember your why
- Spending splurge? Delayed gratification
- Expect less
- Ignore the Joneses
- Stick to a budget
- Appreciate what you currently have
- Consider affordability to resist spending splurge
- Think in hours spent to earn the money
- Find cheaper alternatives
