Ramit Sethi believes in guilt-free spending. Here is how to achieve that

A happy couple on a sofa with receipts and a laptop.

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There’s no need to feel bad about spending money you can afford to part with.


Key points

  • Most of us divide our financial resources between essential bills, savings, and non-essentials.
  • There’s nothing wrong with spending on the latter, as long as you can afford these purchases.
  • Work your guilt-free spending into your budget, so you’ve planned for it.

There was a time in my life when I felt extremely guilty every time I made a non-essential purchase, whether it was concert tickets, a new pair of sneakers, or another takeout meal, because I just didn’t want to deal with cooking. These days, however, I’ve learned to let go of that guilt and spend some of my money on things that bring me joy and make my days easier.

If you’re the type to feel guilty about non-essential spending, you’re probably not alone, but you don’t necessarily have to feel that way either. In fact, financial guru Ramit Sethi advises people to include guilt-free spending in their budgets.

That said, you may need to limit that spending if you’re behind on other essential goals. Therefore, you will need to assess your financial situation and strike a good balance.

How to spend money on yourself without feeling guilty

Sethi believes that people should divide their budget into four categories:

  1. Fixed costs
  2. Investments
  3. Savings
  4. no-fault expenses

Your fixed costs are things like rent or mortgage payments, car payments, and other recurring expenses that you can’t live without. Next, he thinks he should allocate money for savings and investments, and then have money that he can spend on non-essentials like movies, streaming services, store-bought coffee, and non-work clothes.

But to be clear, if you’re not pumping as much money into your savings or brokerage/IRA account as you should, you may need to spend less on non-essentials to make up for it. On the other hand, if you’re doing well in those categories, then there’s no reason to feel guilty about spending your extra money on things that make you happy.

That’s an attitude I’ve worked to adopt over the years. But these days, it doesn’t cost me much to buy a $3 coffee that I can make at home for $0.40. I also don’t blame myself for spending more on services like cable and streaming services, which provide entertainment for me and my family.

The reason why I have come to accept these types of expenses is that I always save a good part of my income. So as long as I stay on track in that regard, there’s no reason I can’t treat myself.

You deserve to enjoy your money

You work for your money, and you deserve to spend some of it on fun things, not just essentials, savings, and investments for the future. And the key to being able to spend without guilt really is moderation.

If you’re hitting your savings goals and spending a reasonable portion of your paychecks on fun things, then you shouldn’t hesitate to stick with it. But if you can admit that you’re behind on your savings goals, or that you can’t remember the last time you put money in your IRA for retirement, then it may be time to make some changes.

These days, I specifically allocate money in my family budget for fun. And it has definitely changed my perspective for the better.

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