How to Prioritise Savings While Enjoying Life’s Little Luxuries
Chloe Jones
Published on 1st June 2023

Saving money and enjoying life don’t have to be mutually exclusive. In fact, finding a balance between the two can make managing personal finances more rewarding and sustainable over time. By learning how to prioritise savings while allowing yourself small luxuries, you can stay on track financially without feeling deprived.

Here are some practical strategies to help you build a solid savings plan while enjoying the journey.

1. Set Clear Financial Goals

Before allocating any money for discretionary spending, it’s essential to set clear financial goals. Define both your short-term and long-term objectives, such as building an emergency fund, saving for a holiday, or planning for retirement. Having concrete goals will not only motivate you to save consistently but also give you clarity on how much you need to set aside each month.

Action Step:

  • Write down your financial goals and assign a specific dollar amount to each. For example, if you want to save $1,000 for a holiday in six months, this means setting aside roughly $167 per month.

2. Create a “Fun Fund”

A dedicated “fun fund” allows you to enjoy life’s little luxuries without impacting your core savings goals. By setting aside a small monthly allowance for personal treats—whether it’s a nice dinner, a shopping spree, or even trying pokies online occasionally—you can enjoy your leisure time guilt-free. Allocating a specific amount to this fund prevents overspending while adding a sense of freedom to your budget.

Action Step:

  • Decide on an amount that feels comfortable, such as 5-10% of your monthly income, and deposit this into a separate account or cash envelope specifically for entertainment.

3. Use the 50/30/20 Budgeting Rule

The 50/30/20 rule is a popular budgeting framework that can help you organise your finances while allowing room for fun. Allocate 50% of your income to essential expenses (like rent and bills), 30% to discretionary spending (such as dining out and hobbies), and 20% to savings. This approach provides a structure that prioritises savings while still permitting spending on non-essentials.

Action Step:

  • Analyse your current spending to see if it aligns with the 50/30/20 rule. If not, make gradual adjustments to direct more money toward savings without feeling restricted.

4. Prioritise Quality Over Quantity

When you do spend on luxuries, focus on quality rather than quantity. For instance, instead of frequent small indulgences, save for one meaningful experience or purchase that you truly value. This approach can reduce unnecessary spending while still giving you memorable experiences.

Action Step:

  • Identify one or two luxuries that bring you the most joy, and prioritise these in your budget. This could mean saving for a concert, a special meal, or an enjoyable evening of entertainment.

5. Make Savings Automatic

Automating your savings is a foolproof way to prioritise it. By setting up an automatic transfer from your checking account to your savings account on payday, you ensure that saving becomes a priority. This “pay yourself first” method helps to avoid the temptation of spending the money before you save.

Action Step:

  • Set up an automatic transfer that moves a specific amount to your savings account every payday. Many banks offer automatic transfer options, making it easy to stick to your savings plan.

6. Track Your Discretionary Spending

Tracking discretionary spending, even on small luxuries, can help you stay on budget and prioritise what truly matters. By monitoring expenses, you’ll gain insight into spending patterns, which can reveal areas to cut back if needed.

Action Step:

  • Use a budgeting app or a simple spreadsheet to record discretionary spending. Review it at the end of each month to see if any adjustments are necessary to align with your goals.

7. Reward Yourself Without Overindulging

Saving money doesn’t mean you have to sacrifice all enjoyment. By setting small rewards for achieving certain financial goals, you create positive reinforcement for your saving habits. When you hit a milestone—such as paying off a credit card or reaching a certain savings target—treat yourself to something from your fun fund. This reinforces good financial behavior without derailing your progress.

Action Step:

  • Choose a reward that aligns with your budget, such as a meal at your favorite restaurant, a weekend activity, or another affordable luxury.

8. Re-evaluate and Adjust as Needed

Your financial situation and priorities may change over time, so it’s essential to revisit your budget and goals periodically. As you hit milestones, such as achieving a savings target or receiving a raise, reassess your allocation to savings, essentials, and fun. Adjusting your budget ensures that you remain flexible and able to adapt to new circumstances.

Action Step:

  • Schedule a quarterly financial check-up to review your savings goals, spending habits, and priorities, making adjustments as necessary.

Balancing savings with life’s luxuries is about setting boundaries and practicing moderation. With clear goals, a structured budget, and a little discipline, you can prioritise savings without sacrificing the enjoyment of occasional treats. Embrace a financial plan that lets you live for today while preparing for tomorrow—ensuring your financial future stays bright and secure.

About the author
Chloe Jones Personal Finance Writer
Chloe is a seasoned financial services professional with over 15 years of experience in banking, financial strategy, and risk management. From her early roles as a Personal Banker at HSBC and Finance Specialist at Heritage Bank to her current position as a Senior Manager in Financial Services, she has developed expertise in strategic planning, financial oversight, and stakeholder relations. Chloe also shares her industry insights as a Financial Services Consultant and writer, helping individuals and businesses navigate the financial landscape with confidence.
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