While not much talked about, financial guilt is something many people experience. Unfortunately, there is a stigma out there about spending money. We are bombarded with messages about the right and wrong ways to use our money and all the expenses we should cut.
Over time, such messages add up. Have you ever bought something you were excited about and then felt bad? Or have you spent too much time weighing the pros and cons of a small purchase? I know I have it.
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It can be difficult to break these habits, as they usually come from decades of toxic financial advice on how spending money can be negative. But a personal finance writer, Ramit Sethi, has a piece of advice I love for avoiding financial guilt.
Create a “worry-free number”
To overcome that guilt over spending money, Sethi recommends creating what he calls a “worry-free number”. For any purchase below this number, don’t argue or worry about the financial side.
Let’s say you decide $ 20 is your worry-free number. Whenever something costs less than that, you take money out of the equation. Thinking of buying a $ 15 e-book? If you want it, buy it. Don’t think if $ 15 is a lot for a book and you definitely don’t mind buying it later.
Your number can be as high or low as you like and you can change it at any time. In fact, you should fix it as your financial situation changes. As you save more and increase your income, it makes sense to give yourself more leeway with your spending.
Because a worry-free number is important
Feeling guilty about spending money is common, but it’s not something you should just learn to live with. For one, it causes unnecessary stress when you constantly worry about your financial decisions. It is also simply a waste of time and energy. Major financial decisions, like buying a house or car, deserve your attention. Small ones, like you liked organic vegetables, don’t count for much in the grand scheme of things.
Many people assume that this problem disappears once they reach a certain milestone, such as a specific income or an amount saved in their bank accounts. It rarely ends up working.
After financial behaviors take root, it usually takes a conscious effort to change them. One of the reasons Sethi talks so much about guilt-free spending is because he sees how people at all income levels feel bad when they spend money. There have been couples on her podcast who make hundreds of thousands of dollars a year and still struggle to go out to eat.
If spending money is stressful for you now, the problem is unlikely to magically resolve itself later. You’ll need to be comfortable with spending, and creating a worry-free number for yourself is a great first step to doing that.
Build a spending plan
In addition to your worry-free number, it’s also good to include guilt-free spending as a category in your budget. This way, each month you have a certain amount of money to spend on what you want. By understanding this in advance, you won’t have constant internal debate about how much you can spend. It also helps you avoid overdoing that number without worry to the point of overspending.
How much should you set aside for guilt-free spending? Sethi suggests splitting the take-home pay as follows:
- From 50% to 60% on fixed costs
- 10% on investments
- From 5% to 10% on savings
- From 20% to 35% on guilt-free spending
You can change those numbers if you want. After all, personal finance is different for everyone. The important thing is that you have a guilt-free spending in your budget.
Many of us think too much about irrelevant spending choices. I’ve done this before, and sometimes I still find myself thinking too much about things like should I buy fancy cinnamon for $ 6 or the cheap stuff for $ 2.50. Situations like these are where a worry-free number saves time and simplifies decision making.
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