What Percentage Of Your Income Can You Use To Splurge?

What Percentage Of Your Income Can You Use To Splurge?

To treat yourself or not to treat yourself?  Or put another way, to splurge or not to splurge…..

We’ve all gotta splurge at some point though, right?

But the seemingly eternal struggle pulls at our purse strings on a daily basis. Can you actually afford to buy the new dress or will that derail your financial goals? Luckily, you can likely afford to splurge some amount of your income each month. 

Of course, you can’t overdo it. That’s where a budget comes in. Once you know what your ‘splurge zone’ is, you can more easily stay within those constraints. Plus, splurging within your budget can be more fun because you know that you aren’t hurting your bottom line too much. 

Start with a budget

Before you can decide what you can afford the splurge, you need to make a budget. 

A good rule of thumb is the 50-30-20 budgeting method

With this, you’ll spend 50% of your income on necessities like housing, insurance, and groceries. 30% can be spent on wants which includes your splurges.  Finally, the remaining 30% of your income will be stashed away in your savings for long-term financial goals.

It is important to not disregard this last portion of the budget! Saving for your future is critically important. 

Let’s see how it breaks down:

Income percentage Allocation What to include What not to include
50% Necessities Rent, insurance, groceries, transportation to work Netflix bill
30% Splurges Vacations, spa days, latest “must-have” dress, Netflix Unexpected doctor bill
20% Savings Debt repayment, retirement savings Vacation funds

Take a look at what you are already spending. Don’t just include necessities, also include recent splurges. Are your numbers adding up?

How much can you splurge?

According to the 50-30-20 rule, you can spend 30% of your income on wants. All of these wants are splurges in one way or another.

Unfortunately, the 50-30-20 framework is somewhat vague and won’t work for everyone’s situation.

Is 30% a reasonable amount of money for splurging?

Of course, if you have a high debt burden then you may need to cut into your ‘splurge spending’ to cover your debt repayment strategy. Also, if you have aggressive long term financial goals like retiring early or buying a home, then you may need to rethink 30% as the amount of money you plan to splurge.

If you have a high income, then it may feel absurd to spend 30% of your income on your particular wants. You could probably make better use of that money somewhere else.

If you have a very low income, then you might not have room in your budget to spend 30% of your income on splurges. In fact, you may have just a small amount of money available for splurging each month.

Don’t let that discourage you!

Decide what you can reasonably afford to splurge and just make sure to stay within those lines. You might enjoy the splurge more knowing that you are not ruining your month financially.

If you’re going to splurge, enjoy the splurge!

Use the 50-30-20 framework as a starting point, but make sure that the numbers make sense in your own life.

The final amount you decide to spend on splurges should be taken seriously. If you decide to move forward with the 30% of your total income for splurges, make sure to spend it where it counts. In order to do this, you’ll need to take a close look at your values.

You may highly value travel around the world to experience new cultures. Unfortunately, world travel often isn’t cheap. However, you can make a decision to focus your splurge spending on travel. Instead of blowing through your splurge money at Target, save it for something that will really make you excited.

How to stretch your splurge spending

For most of us, our splurging desires far exceed our safe splurge zone. In my case, I save most of my ‘fun money’  for travel each year. Somehow, my travel appetite dwarves my travel money limits.

Luckily, there are a few ways to stretch your splurge money.

Stretching your savings with high yield savings accounts

One of the best ways is to save your money in a high yield savings account. The returns can help you spend just a little bit more without breaking the 30% rule. A few of our favorite high yield savings accounts include:

Capital One 360 Savings Account

What Percentage Of Your Income Can You Use To Splurge? - Capital One

Capital One 360 Savings Account. You can open up to 25 Capital One 360 online-only savings accounts to easily save for a variety of goals.

At the same time, you’ll enjoy 1.90% APY without any monthly fees or account balance minimums to either open or maintain this account.

Read our full review here.

Discover Online Savings Account

What Percentage Of Your Income Can You Use To Splurge - Discover

Discover Online Savings Account. You can store your money in this competitive online-only high yield savings account paying

1.80% APY with no minimum balance required.

There is also no monthly fee with Discover’s Online Savings Account, and you get six qualified withdrawals per month.

Read our full review here.

Stretching your savings with travel reward accounts

If travel spending is your favorite form of splurging, then you need to check out travel rewards offered through credit cards.

I’ve personally used credit card travel rewards to fund a large portion of my international trips. In fact, my latest trip was our honeymoon to Scotland which was partially funded by travel rewards! It’s a fun way to stretch your splurging for spending you already do.

Here are a few of our favorite cards:

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Bank of America Travel Rewards credit card

Bank of America Travel Rewards credit card. You can earn 25,000 points for spending just $1,000 in the first 90 days which translates to a $250 travel credit, and there are no foreign transaction fees whatsoever.

You’ll earn 1.5 points for every dollar spent on the card without having to pay an annual fee. Plus there’s a 0% Introductory APR on purchases for 12 billing cycles. You will need to be sure not to carry a balance at the card’s regular APR.

Read our full review here.

Apply Now

Discover it® Miles credit card

Discover it® Miles. The Discover it® Miles card offers a point matching program after your first year anniversary. Discover will match all of the miles you’ve earned the first year. So how does this translate to miles? If you earned 35,000 miles, get ready to earn another 35,000 miles on your anniversary date.

You’ll also earn 1.5 points for every dollar spent without the burden of an annual fee.

Read our full review here.

Apply Now

Chase Sapphire Preferred credit card

Chase Sapphire Preferred Card. Finally, the Chase Sapphire Preferred offers a generous signup bonus of 60,000 which translates into $750 of travel.

In order to receive the bonus, you’ll need to spend $4,000 within the first 3 months. Plus, you’ll earn 2 points for every dollar spent on travel or dining. Imagine where you could go with that signup bonus.

Read our full review here.


Take advantage of these splurge stretching techniques to help your fun money go a little bit farther.

In the end, you’ll need to splurge responsibly in order to set up a bright financial future. Remember, you can splurge but don’t let it take over your finances. Instead, be aware of what you are spending and stay within a reasonable budget.

Most importantly, don’t forget to enjoy it!