You want a Ferrari but your budget says Geo Metro.
In life there are luxuries. Plenty of them. The luxury car, the all-inclusive week-long trip to a foreign destination, and the latest technology sure to enhance your life. It's hard to calm your desire for such luxuries when surrounded by marketing efforts and influences. This leads to feelings of frustration and inadequacy.
But we say no longer! The luxuries you seek can be afforded, even while on a budget. Here's how:
Make a List
The first step in budgeting for luxuries is to establish what luxuries are top priority. This is no easy task. Luxuries are only such because we see them all in such great light. At times we can equally desire all.
But that's not productive. That won't lead to you receiving any of them.
So stop idolizing everything and take a moment to filter through your thoughts. What is it that you desire most? Is it the vacation you haven't been able to afford? What about the expensive night out on the town with your partner?
Making a list of what luxuries you consider most important will help you understand just how much you need to set aside to afford them.
Look at your current spending habits
Do you have a rule when it comes to your spending habits? If not, you definitely should! Budgeting for a luxury item necessitates an understanding of how your money is currently spent.
Take a look at how much you make and where it goes. Be thorough. If you realize you don't have a true financial plan or savings strategy, find one fast. One top recommendation is the 50/30/20 rule.
Trim the fat
Subscription services, memberships and dining out can be sneaky. They add up fast. Take a look at where your subscriptions are and cancel or downsize any you haven't used in the past month.
Same goes for that gym membership you promised you'd follow through on. Find ways to replace these services with free or cheaper alternatives.
And that daily coffee? Make it at home. Small savings make a big impact when you trim across the board.
Create a separate savings account
Having a dedicated savings account is critical to financial health. By setting up a savings account for luxury purchases you'll have greater clarity in where you stand and how far you have to go. This gives you added motivation to see your plan through.
Wait for the sale
Being impulsive will ruin your budget for luxury items. Take a deep breath and repeat after me: good things come to those who wait. Do some research into when your luxury items are cheaper and on sale. Soon enough that high-ticket item will be all yours!