3 Financial Tips for Spontaneous Living
A spontaneous lifestyle could be standing between you and your financial goals. But weighing the costs and benefits of every single purchase can snuff the fun out of life. There is a way, though, to balance spontaneity and financial responsibility. If your impulsive life choices are harming your finances, creating a financial cushion can be a smart move.
Here's how to be financially prepared for whatever new opportunity comes your way.
Open a dedicated savings account.
Quitting your job when you have no prospects, relocating to a city without first settling on housing plans, embarking on a weekend adventure, or another spur-of-the-moment activity might sound exciting, but it can be financially devastating if you're not prepared for the financial impact. Fortunately, you don't have to abandon your spontaneity when you have a financial backup plan.
Open a separate savings account and label it Adventures, Financial Transitions, or another suitable name. Unlike an emergency savings fund, this dedicated savings account should only pay for unplanned, yet welcome, life decisions.
Fund the savings account by earning extra income.
You'll need a steady stream of extra income flowing into your new savings account to pay for your adventures. Part-time work or a side gig, like pizza delivery, can help grow your account quickly. If family commitments or a busy schedule prevents you from taking on additional work, deposit a portion of your regular paychecks into the account.
You can either earmark a certain amount for automatic deposits into the account or set up an auto- transfer from your checking account to this savings account at regular intervals. Tax refunds, cash rebates, or other unexpected windfalls can also help grow your account. As your account balance builds, so might your ability to take new risks without jeopardizing your financial future.
Pause before taking your next great adventure.
While you may have enough money in your account to follow your next pursuit, take a breath before you take another step. Although there's no need to mull over the decision for days or weeks, a few simple questions could reveal whether the action you're about to take is worth your time and money.
Here are a few questions to get you started:
- How much money have I saved to pay for this action?
- What are the benefits of moving ahead with this action?
- Could this action result in long-term negative financial consequences?
A list of pros and cons could also help you determine whether the adventure is worth the cost. For pros, list the benefits of pursuing the opportunity. For cons, write down the reasons this particular adventure might not be in your best financial interest.
Perhaps waiting until you have more money saved is the best move for your finances. Or you might conclude that you're ready to leap into the unknown since you have a cushion large enough to break your fall. The short time it takes to evaluate your next move could save you from making a major money mistake.
Being spontaneous doesn't have to interfere with your money goals. When you have a healthy savings cushion, it's possible to live in the moment without damaging your finances. Open a Primary Savings Account and start building your financial cushion today!