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?
Earn and save more with our free course:
What would you do with more money in your bank account? Join over 15,537 other young professionals receiving our best money hacks to get out of debt by 30, increase your income (starting this year) and invest for financial freedom.
100% free! I will NOT spam you and I will NOT share your email.