YOLO: When is it OK to splurge?
By Dawn Papandrea
For years, I had kids at home so I couldn't do anything spur of the moment. Now that I have an empty nest, I think it's important to take advantage of these opportunities as they come up.
Finally: How will this purchase alter your budget? Before you pull out your credit card or dip into your savings to go for a big-ticket item or experience, live as if you were paying back the debt for two to three months, says Winston. In other words, put aside the monthly amount it would cost you in an account. If you can handle the extra expense, the purchase probably won't cause too much havoc. And, bonus: By doing that trial run, you'll have saved some money to put toward the initial purchase.
But, those moments ...
While the tips above are a great guide for any financial decisions that arise, let's go a little deeper and take a look at some of those YOLO moments -- when your heart or others around you might encourage you to seize the day.
Whether you're invited to a high school reunion in your hometown, a destination wedding or find out that your grandmother's health is in decline, sometimes the desire or need to travel doesn't sync up with your budget. As long as you're not having trouble paying your bills and have some money socked away in a rainy day fund, you can book your trip; just downgrade it a bit, says Geller. "See if you can find a bargain, a deal, something that will give you almost what you want, but not full-blown carte blanche to spend," he says.
That approach helped convince freelance writer Amy Buttell to say yes to her friends' last-minute invitation to join them on a cruise. "I had reservations about spending the money because I already had a trip scheduled to London to see my son the next week and London isn't cheap," she says. Because it was a great deal and to escape the awful winter weather in Erie, Pa., however, Buttell decided to pay for part of the cruise from her current income and put the rest on her credit card.
"For years, I had kids at home so I couldn't do anything spur of the moment. Now that I have an empty nest, I think it's important to take advantage of these opportunities as they come up," she says.
Treating yourself or your kids
Doing something pleasurable keeps you going and keeps you motivated, says Cunningham. "If you've done a good job saving, you can put some of it toward you." For instance, if your favorite musician is doing a farewell tour in your town and you'll be upset if you miss it, then why not go for it?
When it comes to the kids, however, they have a lifetime of experiences ahead of them, so don't fall into the YOLO trap and feel obligated to splurge on every big item or event for them. If you're going to pay for the Sweet 16 party because "she's only 16 once," you can't then also foot the bill for the senior class ring, the limo for the prom, etc., says Cunningham. "Consider this a teachable moment for the child that he or she can't have it all."
Of course, this is also the perfect opportunity to suggest that the child earn some money to put toward those extras. "When a child has some skin in the game, it enhances the experience, and puts the kibosh on any sense of entitlement," says Winston.
Because you only live once, you don't want to feel unhappy at a dead-end job. But career advancement can be costly, whether it's attending an industry conference that only comes around once a year, taking a course or building a professional looking website.
"Make financial decisions with your head, not your heart," says Cunningham. If you're confident the investment will pay for itself in the form of higher earnings or better opportunities, or if you can find a way to supplement your endeavor (see if your employer will pay for some or all of it, or if there's a related tax credit), it could be a good move for you.
Can't afford it?
Just because you don't have cash on hand doesn't mean you're doomed to a life of frugality. "There is 'camouflage cash' hiding in that paperwork on your desk, and stuff around your house," says Winston. You can sell items, use your credit card rewards or maybe even trade something with someone to get what you want without going into debt.
The next time you're tempted to seize the day, live in the moment or shout out the YOLO mantra, remember that spending tomorrow's money -- money that has yet to be earned -- can put you on a slippery financial slope, says Cunningham. "Of course spending money we don't have with a promise to pay is the essence of credit, and is something people do every single day," she adds. "Some just do it better than others."See related: Take steps to prevent bipolar card splurges