Treat Yourself: How Much of Your Income Can you Spend on Lifestyle?

It is always nice to treat yourself to a bit of retail therapy or a meal out at your favorite restaurant but it is also good to show a bit of restraint with your spending, especially if too much of your income is going on lifestyle choices.

Getting tips on how to manage your money better by visiting sites like mywealthandinvestment can help you to keep on top of your discretionary spending. Also, a good question to ask when reviewing your finances would be how much can you spend on life’s little pleasures?

You could try the 50/20/30 rule

A tried and tested suggestion when it comes to managing your finances would be to allocate your monthly budget according to a method known as the 50/20/30 rule.

You will need to write down all of your monthly expenses and allocate them into groups described as necessities (expenses such as rent or mortgage payments), financial priorities (such as pension contributions and savings), and finally lifestyle choices.

An ideal monthly budget would see 50% of your income going toward necessities, 20% on financial priorities, and 30% on lifestyle choices, also referred to as discretionary spending.

How does your monthly spending compare to the 50/20/30 rule?

If you find you are spending more than 30% of your money on lifestyle choices that may prove to be a disproportionate amount and you may well want to make some adjustments to bring your finances into line.

If you can align your spending with this financial rule it could help you with your monthly budgeting and allow you to allocate the right amount of money toward the right priorities.

The spend vs save conundrum

To a certain extent, how much you spend each month and how much you save is largely a question of what sort of lifestyle you want to live now and in your later years.

A good number of wealthy people will probably have something in common aside from having plenty of money in the bank and that’s the fact that they managed to build their wealth by living below their means.

Spending less than you earn each month is a no-brainer as it ensures that you start to build up capital as each month passes by.

However, you might not want to make that many sacrifices if you enjoy a nice lifestyle, so it is a question of finding some sort of happy medium that gives you the best of both worlds if you can organize your finances efficiently.

Watch out for credit card spending

Finally, it is worth pointing out that if you are using a credit card to fund your lifestyle and building up a balance that could prove to be an expensive mistake.

If you find that your credit card balance is swelling and you are making the minimum payment each month, that is a warning flag that you may be spending more each month on your lifestyle than your current income warrants.

Nothing wrong with treating yourself, but it is wise to check whether your lifestyle spending is burning through too much of your cash each month.