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Splurge, but don’t go overboard

God, I love takeout food. Eating something yummy prepared by someone else and not having to do dishes afterward is like this little mini vacation – a reward for slogging through daily life.

Sure, it costs more than cooking at home, but I’ve found that keeping an allowance for splurges actually help me stay on budget better than depriving myself of life’s simple pleasures.

It’s all about giving yourself an allowance and sticking to it. Here’s how.

• Calculate how much. In “The Dollar Code: Get Out of Debt with One Number,” author Jason R. Hastie writes about how to figure out how much allowance you can afford. You basically take your disposable monthly income and divide it by the days in the month. Say you’ve got $400 left after you subtract your expenses from your income. Divide 400 by 28 (for February) and you’ll find you can spend about $14 per day without going into debt. If you’re married, divide that by two. In this case, you’ll each have a daily allowance of $7.

The idea is to keep tabs on all those small purchases – $5 at the drive-thru, $2 at the vending machine – that add up so quickly when you’re not paying attention. While you should never go over your daily allowance, you can always go under. If you don’t hit your spending limit on a certain day, you can always roll it over, or put it in a stash to dip from later.

But settling on an allowance is not just about calculating how much you can afford to spend, it’s deciding how much you’re comfortable frittering away. If you’re fortunate enough that you can afford to blow 60 bucks a day, should you? I wouldn’t, but hey, it’s your money.

• Paper or plastic? It really is important to have a concrete relationship with the money you spend, so using actual cash “pocket money” is a great idea. Touching those bills in your wallet and watching them disappear as they’re spent just makes things click in a certain way that can’t be duplicated when swiping a debit card. And, of course, keeping count is easier.

But if you’re the type who is more likely to splurge online, a PayPal or debit account might work better. Just be sure to record what you spend immediately after you spend it.

• Scrutinize purchases. We know all too well that spending money and staying on budget involve so much more than mere numbers on a balance sheet. Resisting impulse spending can be complicated, emotional, exhausting work.

Personal finance author Pamela Yellen came up with this “spending meter” to help figure out whether you really want something as much as you think, or whether you’ll regret buying it later. You’re supposed to ask yourself:

1. How long have I been considering this purchase? Give yourself 0 points if you answered two days or less, 1 point for two days to a week, 3 points for a week to a month, 5 points for a month or more.

2. Did I want this before I saw someone else with it? Give yourself 6 points for yes, 1 point for no.

3. Last time I bought something like this, how long did I enjoy it? Give yourself 3 points for “longer than expected,” 1 point for “as long as I expected,” and 0 points for “not long at all.”

4. If I charge this item, will I cease enjoying it before it’s paid off? Give yourself 0 points for yes, 1 point for no. If you score 8 points or less, forget it; 9 to 12, sleep on it and 13 to 15 points, go for it.