Buy the latte! PennyGem’s Elizabeth Keatinge tells us why treating yourself can be a part of a reasonable monthly budget.
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00:00You may have heard the age-old financial advice that in order to save, you need to skip the
00:09latte.
00:10Well, we beg to differ.
00:12Budgeting for things that bring you joy is a completely respectable and, in fact, important
00:17category in your budget.
00:19So how much should you budget for the lattes, or the vacations, fitness classes, girls'
00:24nights out, date nights, or whatever it is that brings you joy?
00:28The Motley Fool explains that the 50-30-20 rule says 50% of your budget goes to needs
00:33— rent, bills — while 30% goes to wants, and 20% goes to paying off debt and saving.
00:41Easier said than done, right?
00:42NerdWallet suggests setting aside that fun money in a separate account.
00:46If the goal is to spend it on things like vacations, a savings account that earns interest
00:51is a good idea because you're oftentimes limited to six withdrawals or transfers a
00:55month.
00:56If it's for a daily splurge like coffee, a checking account may fit your needs or wants
01:01better.
01:02Calculate 30% of your income and literally transfer that amount to the fun money account.
01:07If you're saving up for a vacation, you'll get joy watching that money grow while you
01:12plan your itinerary.
01:14Or if that latte is what brings you joy, you'll get caffeinated without worry because literally,
01:20you've earned this.