Oct 23rd, 2007

How Much Do You Spend on Frivilous Purchases?

By David Weliver

During a rare half hour of channel surfing last week I caught a segment of the Suze Orman Show on CNBC show discussing a married couple’s disagreement about how much is acceptable to spend on “frivolous” purchases.

I didn’t catch the couple’s full introduction, but they were 32 with two kids and an above-average combined income. It sounded like they didn’t have a big debt problem, but they were behind on their savings.

The couple faced the proverbial saver/spender dilemma. He was conservative with his money while she splurged on shopping and Starbucks.

The couple hoped to reach a compromise that would allow the wife to continue to enjoy what the husband labeled “frivolous” monthly spending while cutting back the amount she spent and contributing more to the couples’ savings.

After some back and forth Suze recommended the wife limit her “frivolous” spending to $400 a month. I didn’t hear her exact income, but I estimate her monthly after-tax income was between $4000 – $5000, so Suze’s recommendation would put her frivolous spending allowance at between 8 and 10 percent of her income.

Now, mass-media relies on bite-sized bits of information and advice that will appeal to our 30-second attention spans, so I know why Suze just said: “$400 on frivolous purchases,” but I think the advice was oversimplified.

First of all, what do you define as frivolous?

The only purchase mentioned by name was Starbucks lattes, but I think even the most hard-core coffee-drinkers would have a hard time racking up $400 a month at the ‘Bucks.

I also imagine a husband and wife might disagree about weather a manicure or a round of golf is frivolous or not.

I prefer to watch my spending across the board, regardless of whether it’s on coffee, lunch, a new shirt, a dinner out, or a trip to visit a friend. While I could make separate budgets for coffee and lunch, clothes, and travel, pulling from the same spending pot helps remind me that if I spend on one thing this month, I need to cut back on something else.

That said, I think that 8 to 10 percent would be a bit high for only frivolous expenses. I think setting a spending budget of about 10 to 15 percent of your income is about right – for all discretionary spending.

I would recommend ten percent would be for the frugal, and 15 for the ones who find it a bit harder to squelch their spending.

The only difference is I would include spending that I don’t consider frivolous, such as a weekend getaway or a new pair of pants (assuming I have earned myself a vacation or have worn out an old pair of pants).

How much do you spend on yourself each month? Do you make a distinction between “frivolous” spending and other spending at all?

Related Posts

1. The Worst “Creditaholic” I Have Ever Seen
2. How to Live on $10 a Day
3. Strategic Spending: The “Fruitful or Frivolous” Test
4. Applying the 80/20 Rule to Personal Finance
5. How to Budget for and Track Cash Spending

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4 Responses to “How Much Do You Spend on Frivilous Purchases?”

1. bluntmoney says:

   October 23, 2007 at 7:17 pm

   I’d estimate that I spend 4-6% per month on myself, which I thought was high.
2. Money Under 30 says:

   October 30, 2007 at 3:46 pm

   test
3. Jenn says:

   November 8, 2007 at 5:30 am

   My percentage would look abnormally high because I don’t pay my health or car insurance and I consider most spending to be frivolous- I don’t *need* more clothes, that tasty coffee, more yarn…

   I use an excel document to track expenses. It is divided in to categories- i.e. food is fruits and veggies, grains, packaged, and junk. Restaurants are in another category (entertainment) since I am too lazy to tweak the spreadsheet. For food though, everything but the fruits and veggies (which is my local and organic produce) and whole grains is junk food I don’t really need.
4. Emma says:

   March 2, 2008 at 2:45 pm

   I too use an excel sheet to track my finances and I also count restaurant spending as “entertainment” since I don’t have to go out and spend the money in the first place.

   My total spending money for all things – food, entertainment (movies/dinner out with friends, etc), shopping (new clothes, etc), medical, and miscellaneous (gifts, etc) – is very limited.

   I have around $375 I can spend a month for everything once you factor in my bus pass, my rent, my RRSP $$, my student loan payments and the money I try to put away for savings. Money really doesn’t go that far once you start living in the real world!

   My total spending varies each month – but my average food budget is between $250-$300/month

   After checking my budget, I have just determined that I have around 20% to actually SPEND a month. When removing food from that spending money, I’m down to under 6% for everything else.

   I don’t know how someone thinks 4-6% is high to spend on yourself. 6% of my monthly income is just over $100 – when that covers anything that you spend money on all month (whether that’s eating out, buying new clothes, paying for a movie/going out with friends), that becomes around $25/week to spend as you wish. If I drank coffee, that would leave me with like $15 a week to work with.