Over the past year, many people have remembered the recently forgotten skill of minding their spending and saving for raining (or recessing) days. However, amid reports from the Federal Reserve Chairman Ben Bernanke that the recession is over doesn’t mean we are out of the woods and can go back to our old ways of pulling out the plastic and spending beyond our means! A solid budget is important now more than ever, yet there is a strategy which can make you financial plan easy to stick with and produce worthwhile and tangible results: Selective Luxuries.
For Uncommoners, being financially sensible is an important element to all aspects of life. When you are establishing your Uncommon Vocation, it is important to create a buffer fund for your transition to ensure quality of life as you switch gears. During the initial stages of your new entrepreneurial lifestyle, a solid financial grasp can provide peace of mind and that little extra that can make all the difference in your ability to take risks and succeed. Even seasoned Uncommoners rely on monetary support to help them continue to grow, achieve, and develop.
The recession and collapse of the housing market over the past year have taught – or perhaps reminded – many of us about the value of fiscal responsibility by throwing the debt heavy lifestyle of many individuals into sharp and painful focus. The result? A drop in consumer spending, an increase in savings, and a reluctance to use credit instead of cash.
Yet amid the buzz from the Federal Reserve that the recession is over, many people are returning to their old ways of spending beyond their means. One report from MSNBC states that in August, consumer spending increased while income levels and unemployment rates stayed the same.
There is no doubt that the urge to spend and instantly gratify our material needs is intense and gnawing – let me say that I myself love a good shopping trip and also have over the years also very much enjoyed using a credit card or two (for all the wrong reasons). However, this urge and trends back to our old habits are exactly why implementing a solid and livable long term budget is so important.
But what makes a budget manageable, livable, and long term? Most people think of budgets as strict, spartan and generally evil things that mean all work and no play. There is, and has been for several decades now, a sense that budgets are things only poor people should do, or only those who are financially irresponsible. Yet would it surprise you that some of the richest people in the world budget? If billionaires do it, then there must be something to this idea…
Over the years, there is one key element that I have found essential to any good budget I have ever made for myself, and that is the idea of selective luxuries. Selective luxuries is a concept born out of my experience in Weight Watchers, a diet program that has proven wildly successful worldwide because it keeps calories in check while providing an element of freedom to eat what you like, including those traditional dietary sins of bread, alcohol, and even chocolate. Allowing people to include a glass or two of wine a day and have some ice cream without issue is what has helped millions of people – including me! – lose significant amounts of weight and keep it off.
Weight Watchers works because it has room in the plan to satisfy your cravings. Sure, you don’t need chocolate, but we all know that sometimes it can feel like we need it. The first few times you experience that craving you can talk yourself out of it, but usually what happens (unless you have Herculean will power), is you deny deny deny, and then the will power breaks and you find yourself stuffing Oreos down your throat. However, if you just had one Oreo instead of something else that day, the craving would have been satisfied and you could move on with your life. This is what Weight Watchers, and all successful and long term diets, allow for.
Budgets are very similar to diets, although when you fall off the wagon with a budget you aren’t pounding Snickers bars, you are burying yourself in debt, or draining your mortgage payment for the month, or pulling out of your 401(k), all of which are much more damaging and hard to handle in the long run than a sugar high.
Just as successful diets need wiggle room for some favorite treats, successful budgets need wiggle room for what I call some selective luxuries. A selective luxury can be most easily equated to a piece of chocolate on Weight Watchers, and can include just about anything you enjoy spending money on that doesn’t fall into the category of essentials, like rent, car payments, or groceries.
Selective luxuries can be big things or small things. They can be monthly pedicures, or a facial once every 4 months. They can be eating out once a week, or a yearly cruise. They be can a fancy coffee from Starbucks 5 mornings a week, or few new clothing pieces every season. A selective luxury can even be taking a long weekend once every two months despite a loss in revenue.
It doesn’t matter what the selective luxury is as long as it has meaning to you. A selective luxury needs to be just that – something that feels luxurious to you. It doesn’t matter if it is as mundane as a subscription to your favorite magazine or as sumptuous as slacks made from a rich material. Just like your dietary splurges are unique to your individual taste, your selective luxuries should satisfy your lifestyle cravings in a way that is meaningful to you.
What are some of my selective luxuries? A fancy gym membership, a monthly massage, some occasional clothes/home furnishings, and going out to a long, multi-course lunch every Monday. They are simple things, but things that keep me from feeling deprived as I build my empire one dollar at a time 
However, just as eating chocolate on Weight Watchers has some rules, so does incorporating selective luxuries into your budget so they don’t get out of control:
Rule #1: Selective luxuries can only be enjoyed after the essentials in your budget have been provided for.
Rule #2: Selective luxuries cannot utilize funds that come from sources other than cash in the bank, like credit sources, savings account, or investment funds.
Rule #3: The amount you spend on selective luxuries should be no more than equal to the amount you put either toward paying down debt or adding into savings.
So whether you already have a budget or are in the process of making one, be sure to include some selective luxuries. It will help you stay on track, be able to maintain your financial plan for the long haul, and keep the work/play balance a little more balanced.
If you need a great online budgeting tool that is free to boot, then check out Mint.com – this program will securely pull your bank data, allow you to set budgets, analyze your spending, and even send you updates and alerts as to your spending. I highly recommend it!
Here’s to your Uncommon Life,
