A few months ago I got the chance to meet author Ramit Sethi of a book called I Will Teach You to Be Rich. Now that I have fully dived into his book, I love his unique ways of thinking that completely change traditional budgeting methods around. Why? Because he encourages spending money on yourself! So what can you do to start implementing this mindset shift that actually encourages spending money rather than skrimping, saving and avoiding “wasteful” spending.
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Before you can know how to start spending money on yourself, you kind of need to know what areas of your life you really want to spend money on.
The best way to do this is by creating a dream list.
All this requires is you taking a moment to write down all of the things you want the most out of your life. This is similar to Warren Buffett’s 3 steps to success.
Get clear about the areas of your life that keep popping up on your bucket list.
Is it travel to Europe? Get physically fit? Spend more time with your family?
Whatever you find on your dream list, the next step is to look at your budget and see what areas of your spending are actually holding you back from accomplishing these dreams of yours.
So often we have a crazy amount of money we spend on things that actually don’t matter to us at all. It might be quick snap purchases or things like subscription memberships that we don’t really use.
I love what author, Ramit Sethi says, “Spend extravagantly on the things you
love,and cut costs mercilessly on the things you don’t.”
Take the time to really look through your budget and see what purchases are not helping you toward your dream goals.
I dive into this completely in Budget Hacking and show you the tricks and tools we used to free up $1,000 liquid cash each month and pay off all our debt in 18 months!
Potential savings: $2,320!
I know I used to beat myself up month after month because I wouldn’t be able to save money for the life of me! With the best of intentions, I would try to tuck money into our savings, but then I would over-spend and end up taking the money back out again.
A great way to avoid dipping into your savings is by setting up automatic withdrawals to an “off shore” account.
What I mean by this is opening a savings account that is separate from your current checking account. This makes it a little bit tougher to remove the funds unless you absolutely need them.
There are 3 places I recommend opening an online savings account because on average, you will earn 5 times more interest with these accounts than with a typical savings account.
Savings Builder – Set up automatic savings of only $100 per month to get the best available interest rate!
Capital One 360 – We currently have our vacation savings and our children’s savings through Capital One 360 and I highly recommend checking them out.
Ally – Ally is one of the leading banks for investing and saving and have a variety accounts you can open to help you save even more.
Once you have eliminated some wasted expenses and automated your savings, you can easily build a simple budget that works for you!
A dream budget must include a designated amount of money that you are wanting to spend on fun stuff. That way you can spend guilt-free!
Here are some basic “fun money” categories you can add to your budget to make spending a little less stressful:
The reason I recommended the savings account that I did is because this is a great way to earn passive income. These accounts will actually pay you money in
I don’t know about you, but making free money is definitely something I can get on board with. Another great way to do this is through credit card hacking although I only recommend this if you don’t struggle with credit card debt already. Get credit card debt relief.
Investing is another great way to start earning passive income, get a 2 week free trial with Morning Star investing here.
Okay, you’ve laid all the ground work, automated savings and planned your fun spending…now go ahead and do it!!
Personally, we choose to spend most of our money on date nights, exploring with our kids and travel! Follow along on Instagram.