In order to know where your money goes, you need to make a budget. So that expenses are not greater than income and to keep cash flow positive, you need budgeting. When budgeting, you need to prioritize obligations and savings. But, also make sure that you allocate a budget for self-indulgence.
Why Allocate a Budget for Self-Indulgence?
Before discussing the importance of budget allocation for self-indulgence, Jago would like to discuss some examples of self-indulgence.
When you treat yourself by buying a fancy coffee because you have achieved something, this is self-indulgence. When you buy some new clothes that you don't actually need but want, it's also self-indulgence.
Then, why is it so important to have a budget for self-indulgence? Wouldn't it be better if all the remaining money is put into savings or invested? Here are some reasons why it's important to have a budget for self-indulgence.
1. It’s all about balance
Many things in life require balance. You need to have a balanced diet. You also need to move a lot after sitting for a long time in front of the laptop while working.
The same goes for managing finances. When you are consistent in saving to achieve financial goals, you need to balance it by giving yourself a reward when a goal is finally achieved, for example. Self-indulgence feels realistic and keeps you going.
2. As a reminder that budgeting is fun
Many people are not enthusiastic about budgeting because they feel that a budget will only limit their freedom. In fact, budgeting provides freedom.
You are free to decide how much budget goes to each need. Budgeting can free you from financial anxiety and stress, if you stick to the budget. When your savings grow according to the target and all obligations have been fulfilled, you can have fun without feeling guilty.
3. Minimize the possibility of not achieving goals
Just as people who are on a diet need cheat meals from time to time in order to achieve their diet goals in the end, so too do budget allocations for self-indulgence.
If you only prepare a budget to pay for this and that and save for many financial goals but never have fun at all, eventually you can reach a saturation point. You will not want to budget ever again.
Budgeting for Every Need in the Jago Application
As mentioned above, keep prioritizing monthly obligations as well as needs and savings, then allocate a budget for self-indulgence. It must not be the other way around.
To separate your needs and allocate your budget easily to each need, you can use the Jago application.
There is the Jago Pocket feature in the form of Saving Pocket and Spending Pocket for you to take advantage of. The Saving Pocket can be used to build emergency funds, save for retirement and for buying a house, while the Spending Pocket can be used for paying bills and installments, children's courses and transportation costs, for example. Of course, don't forget to create a Self-Indulgence Pocket, Jagoans.
You can separate every need into its own Pocket. So, there can be a Transportation Pocket and a Car Installment Pocket. For the budget, you can transfer money from the Main Pocket to each Pocket that you have created.
As you can see, budgeting becomes super easy and practical through the Jago application. Don't have the Jago application yet? You can download the Jago application here.