“Dear Timothy, Chase Bank has received a $X direct deposit. Your money is now available to be used.” It’s one of my favorite notifications to see on my phone. The minute I see it, I open my chase app. There are dollar signs everywhere and a comma appears in the symbol of my bank balance marking a shift from the hundreds place to the thousands.

Like many other people, payday is one of my favorite days. It’s such an empowering feeling to have the money that you worked so hard for come into your bank account. It’s a sign of the hustle, the grind that you are doing to make a living for yourself. Yet, what comes next is this peculiar feeling that I’ve seen almost every single person I know, including myself, feel after they receive a paycheck.


The feeling to “Treat Yo Self” – Tom Haverford and Donna Meagle

via GIPHY

You pushed yourself up from bed and went to work every day. You put up with your boss, who stressed you out, and did everything they told you to do. You didn’t punch those rude customers who treated you like you were nothing more than someone whose sole purpose is to appease their every need. You spent hours out in the cold, in the snow, in the rain to make sure that your job got done. You grinded so hard to earn that money, put up with so much stuff, cancelled on your plans with your friends after work, and gave up so much of your time just to earn that paycheck. You deserve to treat yourself.

Yes, you should definitely TREAT YO SELF. I am telling you that you should 100% do something that makes you happy and feel that all the work you did was worth it. Want to do that spa day? Do it. Buy that new video game? Do it. Go out with your friends to dinner and drinks? Do it. Life is way too short to not enjoy the simple pleasures.

But the problem with the “treat yo self” mentality just like every single thing in the world. Too much of one thing, no matter how good it is, eventually ends up being bad for you.  

The Cake Analogy

Let’s think of it this way. Every time you “treat yo self” let’s imagine that it’s like eating a piece of mouth-watering delicious cake after dinner.

You’ve already eaten your broccoli, chicken, and all the essentials that keep your body running. You’ve done well with the rest of your meal and have enough room for that piece of cake! You eat one slice and everything is great. But wait, it wasn’t enough so you eat a second piece, your body can handle it, but it definitely wasn’t as great of a feeling as eating the first slice. Then you eat a third one, then a fourth one, then oups you’ve eaten the whole cake. You feel sick.

Now taking us back to the world of your own personal finances. That meal you ate before the cake is all the essentials you need to take care of; the mortgage payment, the rent, the bills, your basic food expenses, car payments, and everything that is essential to keep you running.

Now I fully understand that not all of us are this fortunate, but for those that are, sometimes you have a little room left over in your finances to make “treat yo self” purchases for yourself. You can eat that piece of cake. So you do! The problem happens when you start to make “treat yo self” purchases that your finances can’t handle.

Unlike dessert after a meal, your basic needs don’t intuitively come before you make “treat yo self” purchases. Your rent or mortgage is due at the end of the month. You have to pay that utility bill in a few days. You buy food at the supermarket every week. It isn’t a straightforward puzzle piece. In fact, for most people, those extra purchases happen right after they get their paycheck. Due to the mentality of thinking that you deserve to spend money after you get a paycheck, you make decisions on purchasing things that seem reasonable because you just received an influx of money in your bank account, and you never actually broke down how much money you need for your necessities.

But in reality, if unconstrained, your decision to freely spend money you earn is probably holding you back from enjoying many of the best things in life!

Ever wanted to save money for a house? Save money for a big trip you’ve always wanted to go to? Save money for a wedding? Or even just save money for a rainy day? This can all be done if you can control your urge to spend all your money every paycheck on things that aren’t essential.

In the present, you should be both enjoying the fruits of hard work while also making sure that the future you doesn’t have to pay for today’s mistakes. So how do you “treat yo self” responsibly?

The Golden Rule of Personal Finance: Spend Less than You Earn.

So how much money should you be spending? Admittedly, I’m not a big fan of creating a budget for every spending category and attaching a set amount. I don’t like saying, “$100 for going out to eat every month, $20 for movies, $50 for new clothes, and such.” Just like everything else our habits and wants change all the time. One month you may decide that you love your home cooked food and instead spend that money on going out to eat on new clothes. Another month you could decide there are no new movies you want to see and use that money for a nicer dinner instead! Our habits change constantly. Creating specific buckets on what you want to do feels like an unnecessary constraint on money that is supposed to allow you to enjoy the fruits of your labor. However, I do think buckets are necessary when budgeting for what you consider to be your basic needs, at least for calculating how much money, on average, you spend on necessities every month.

The Treat Yo Self Budgeting System

IncomeBasics Savings = Treat Yo Self Budget

Income (Money Earned Every Month): Simply calculate how much money you make every month. I personally do not like adding in bonuses or random sources of income that appear here and there. I think it is best to use the amount of money you usually receive in your bank account every month. I treat bonuses and other sources of sporadic income as extra money I can save or use for a big purchase that I wasn’t originally saving for.

Basics (Money Spent on Necessities): Take a sum total of how much money you spend every month on necessities. I bucket these categories into food and water, shelter and communication, transportation, health and care, and fixed monthly payments. Take out your past receipts and bills and calculate the amount you spend every month in these categories.

Basic food and water: money you spend on groceries every month. It’s okay to add in purchases from like snacks, candy, ice cream, and such as long as they are from supermarkets. This can all be counted as a basic food expense. Do not add in money spent eating out unless you can personally justify to yourself that you have no time to prepare a homecooked meal and are required to eat out for certain meals.

Shelter and communication: your expenditures on your mortgage/rent, home insurance, property taxes, utilities, and cellphone bills

Transportation: your car payments, car insurance, train passes, bus passes, and any expense on transportation that you require for your everyday commute.

Health and care: health insurance, a basic gym membership, and childcare expenses

Fixed monthly payments (this bucket is technically not a necessity): includes all payments that aren’t a basic need but you have already locked yourself into. For example, if you bought a brand new iPhone under a 2-year payment plan and must pay $50 a month on the phone you should add this to your “basics” calculation as it will always be in your budget.

Add all of these expenses up for a given month and you’ll be able to see how much you spend on the basics. This number tends to be stable every month, but in order to get some accuracy, I would calculate your basic monthly expenditure for 2 or 3 months and then divide by how many months you calculated. For this article, I won’t go into detail about the recommended % of income you should be spending on all of these items, but most budgeting techniques say about 50 to 60% of your income. If you do this calculation and find that the money you spend on your basics is more than you make every month, that should indicate a major concern and you should contact a financial advisor. Feel free to shoot Savvy Savior a message on our contact page and will do our best too!

Savings (Money You Save) – Calculate what your goals are and what you are saving for. Want to save money for a downpayment on a house? Calculate how much it would be and divide by the number of months you would want it to take. Apply this rule to anything you are saving for. Ideally, you would be saving money that you are investing in order to make use of compound interest. You should also save for retirement, but for the purpose of this post, we will assume an arbitrary saving target that you should set. Most budgeting techniques recommend that you save about 20% of your income. If you are older you should be saving more.

Treat Yo Self Budget (Money You Can Spend on Yourself): – This is how much money you can be spending on yourself every month. Whenever you are making a purchase that is not a necessity. in your head, this is the amount of money you should be gauging that purchase off of. Unless there’s a major change to one of the other variables of the budget equation above this should be a set amount you remember at the beginning of every month. I recommend to set up a simple note on your phone and write down this amount. Every time you spend on something that isn’t a necessity you go on your phone and subtract that amount from your fun budget. That way, it’s easy to gauge and keep track how much free spending money you have left.

With this simple equation, you can control your finances for the rest of your life. Anytime there’s a major change to one of the variables just whip out this equation and see how you can make adjustments.

Simple Case Study: Angelica

Angelic makes $3,500 a month after taxes. She wants to know how much treat yo self money she has.

Monthly Basics Budget:

Basic food and water$300
Shelter and communication$1,100
Transportation$400
Health and care$250
Fixed income payments$100
Total Basics Budget Per Month$2,050

Monthly Savings Goals:

Retirement$550
Rainy Day Money$100
Dream Vacation$100
Total Savings Per Month$750

$3,500 (income) – $2,050 (basics) – $750 (savings) = $700 in Treat Yo Self Money

Do the same calculation with your finances and see how much money you can use on yourself every month! If you are a family, do the same calculations but for your family. Now every time you make a purchase that isn’t a basic necessity, base how much money you have to spend off of the number you calculated. For Angelica, if she wants to do a $100 spa day for herself; she should definitely go for it! She wants to get a fancy dinner with drinks for $60; what is she waiting for! As long as Angelica keeps in mind that her “Treat Yo Self” budget is $700 for the month, she can spend it any way that makes her happy.

Parting words on the Treat Yo Self Budgeting System

At the crux of this article is the basic rule of spending less than you make, but it doesn’t mean that you shouldn’t be enjoying life. In fact, spend money on yourself every month; life wouldn’t be fun without doing so. Just keep in mind that there’s more to life than the time period between your paychecks.

Make sure that your short term pleasures never hurt your big plans for the future. As long as you do that, go out there and TREAT YO SELF.

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