Reward yourself for saving...with spending!

[flygirl]

http://www.bankrate.com/finance/personal-finance/you-found-a-20-bill-now-what-3.aspx

Bankrate is usually a good site, but this one really made my jaw drop: Reward yourself after you've saved $100 by taking $20 for "a special splurge -- lunch out, a night at the movies, etc."

I mean, I'm on board with the "every little bit counts" crew, and some people don't have a lot of dough and saving their first $100 is a high-five situation...but holy god, if you have such a slim margin that saving $100 is a milestone, you cannot afford to then jettison 20% of it!

[frugalman]

No such namby pamby for us Mustachians! I felt bad this week because I had to drop my savings rate from 72 to 67% for the next couple of months to catch up with some maintenance items like tires.

[sideways8]

Did you eat all of your veggies today? Reward yourself by eating some Crisco!

[AJ]

Sorry, but IMO if saving $100 is a huge milestone for you then your reward should be buying canned beans instead of dried for one meal, because you darn well better recognize that situation for the emergency it truly is and be eating nothing but rice and beans until you get your inflow/outflow ratio to a safer place.

[kolorado]

You know what they could buy with that $20 reward? BIG PEOPLE UNDERPANTS!
I actually am chuckling over here. I have to laugh because it's too depressing dwelling on the idea that there are enough people with willpower so weak that they can't manage to put aside half a day's pay without promise of a special reward that the need to write and publish this article arose.
Although the veggies and crisco thing almost makes sense. Not that I eat shortening. Bleh! But some fresh cut fries in a little canola oil doesn't seem so bad after an all fruit and veggie smoothie. Of course, there's always a little trouble in viewing any food as a reward. But I digress...

[sol]

Of course, there's always a little trouble in viewing any food as a reward. But I digress...

Yes there is.  This is why I'm currently eating handfuls of chocolate chips, not as a reward, but just because they are delicious.

[JamesAt15]

But only every fifth chip, right?

[sideways8]

Yeah, I've got the first four for ya! :P

[menorman]

Well I must say, even though the $20/$100 looks like 20%, that $100 is a 500% return on the initial $20. Considering that the likely original idea was to simply to splurge and spend the original $20 anyway, "investing" it and getting $80 in the bank while still getting the $20 to splurge with is commendable.

But I digress. They definitely should be splurging elsewhere, perhaps on a second budgeting book for the next three months. Ice cream can wait.

[Daley]

Well I must say, even though the $20/$100 looks like 20%, that $100 is a 500% return on the initial $20. Considering that the likely original idea was to simply to splurge and spend the original $20 anyway, "investing" it and getting $80 in the bank while still getting the $20 to splurge with is commendable.

There's a phrase for this kind of math... what was it again?

Oh yeah, "Lies, damn lies, and statistics."

The thing that amuses me the most about this isn't the spending 20% of their investment, though... you want to get technical, the approach cited has basically earmarked $120 out of the general spending fund, not $100, and not $80 invested. The net balance of worth in this situation may only be $80, but the suggestion is to invest $100 and then spent another $20 on top of that.

You know what's an even more awesome treat for investing? Investing the extra $20 set aside for a treat on top of the $100! Even bigger long term return, same impact on short-term monthly budget bottom line!

Isn't math fun?

[Jamesqf]

But some fresh cut fries in a little canola oil doesn't seem so bad after an all fruit and veggie smoothie.

The real problem there is that you should be thinking of the yummie smoothie as the reward you get for eating those disgusting greasy fries.

Same applies to savings: the problem is that they're treating the ACT of spending as the reward.  Having money in the bank could be the reward, or having some object (bought with the money) that in some way improves your life could be, but the actual act of spending?  That should be considered an unpleasant chore.

[sideways8]

I agree that money in the bank is a great reward. I just checked my little savings account and there was $100 more than I anticipated. For a beginning mustache that feels pretty good!