Saving money is not just something you do because others tell you it’s a good idea. Mindlessly putting money away without a plan is counterproductive. All saving is to be done with a purpose! You save money to spend later, be it for emergencies, retirement, or fun. Allocating money to savings is actually “spending” money by putting it aside to use at a later date as planned. Thus, it is important to add three savings categories to your Spending Plan:
1) Emergency Savings
2) Emotional Savings
3) Long-term (Retirement) Savings
Of these three categories, the purposes of two of them are obvious, but one of them, Emotional Savings, is not so obvious.
In the book, MONEY What Financial “Experts” Will Never Tell You (Williams, Jeppson, Botkin, ISBN: 978-0-9788766-0-9) Emotional Savings are clearly defined as “anything fun for you and/or your partner.” By that definition, you might think that family vacations and recreational entertainment are things for which you would put money away in Emotional Savings. But this isn’t the case. How can you make sure you plan for and track appropriate spending categories, including the Emotional Savings category so that it is reconciled with such things as vacations and family activities?
First let’s stipulate that every Spending Plan is personal to each couple and/or family but it is generally recommended that you spend money out of the following categories for the reasons specified:
|Family Activities||Applies to families with children who engage in weekly activities including sports, dance, tuition, family game nights, etc. (If you have a Family Activities category, you may not need the Recreation & Entertainment category as shown below.)|
|Recreation & Entertainment||Applies to movies, movie rentals, entrance fees to such things as the zoo or planetarium, concerts, etc. (If you have a Recreation & Entertainment category, you may not need the Family Activities category as shown above.)|
|Vacation||Applies to that once a year major expense, and its associated costs, involving a specific week or two away with the entire family.|
|Emotional Savings||Applies to the couple. This money is not intended to be spent on family activities such as vacations and entertainment. It should be thought of as separate from the annual family vacation, which is certainly fun, but is something for which the family plans for and not something that would be purchased on impulse. Emotional Savings, on the other hand, is purely “fun” money that should be used for impulse spending, or on behalf of the other partner in the relationship.|
Of course, if you have no children at home, then you probably don’t need special categories for family activities. If there are no children, I suggest creating a category for Recreation and Entertainment — planned-for activities that you will do throughout the month including movies and concerts, which are separate from your Emotional Savings category. In addition, be sure not to mix up the Clothing, Vacation, and other categories you create for your Spending Plan for necessities with the Emotional Savings category. It is not to be used to save for needed clothing, a car, a piece of furniture, vacation, etc. You have the other categories for all those things. Emotional Savings is simply for the purpose of providing sheer pleasure for yourself and/or partner.
Emotional Savings recognizes the human need to indulge whimsically. The Money Mastery System is designed to recognize all human qualities and tendencies. There is nothing wrong with indulging yourself, when you have the money. There should be zero guilt by spending from this category — the trick is to simply save enough in anticipation of the inevitable.
The remarkable purpose of the Money Mastery System is to empower the individual and family in a very positive way. It is truly a financial message of hope, growth, and opportunity.
Here are some ideas of how this Emotional Savings can be spent:
1) For Him: to buy flowers for her, unexpectedly, for no particular reason except he just wants to.
2) For Her: to notice a shirt she thinks he would look good in and purchase it for no particular reason except to please him.
3) Together: to have enough for a weekend away, a couple of days here and there, or to splurge at an expensive restaurant, just because you want to and because you have put the money away expressly for that purpose!
Other ideas include: pampering yourself at the spa with a manicure or pedicure, purchasing novelty decor for your home, buying a special outfit for a special occasion, treating your partner to a surprise getaway, purchasing the latest electronic devices you may have been eyeing, and so forth.
The amount you accumulate in this category does not have to be a large amount. Save just enough per month that you can accommodate your need to have some independent financial flexibility. Recognize the human need to indulge yourself and have fun, but just make sure you plan for it! That’s what makes life worth living.
For more information on this and the other idea categories, contact Alan at 801-292-1099, firstname.lastname@example.org