Use This Simple Rule to Spend Less Without Giving Up Everything You Love

how to make a budget
Ian Schneider under Creative Commons

Even if you’re on a budget, it’s OK to spend money on things you enjoy.

Good to hear, right?

Of course, you have to be smart about it. That’s why I love this “Pick 3 rule” from Save Money Dammit!

The rule makes it simple to do something important: pinpoint the things in your life worth spending money on.

This method helps you manage your budget by directing discretionary funds into those areas, rather than spending them aimlessly.

Allowing yourself to splurge on the things you (truly) love is an important part of keeping a budget. I don’t think financial advice mentions that enough.

Get Your Spending Under Control

If you resolved to find ways to save money this year, one of your first steps is to stop spending so much.

As with any life change, take it in moderation.

Trying to abruptly cut off your spending will probably just make you feel like budgeting sucks — and probably make you want to give up.

This simple rule helps you ease into managing your budget and gives you a realistic chance for sticking to it.

What Brings You Pleasure?

Start by looking at the three spending habits that bring you the most pleasure.

These are the things you don’t have to spend money on, but would really miss if you gave them up.

Set aside things you do have to spend money on: rent, utilities, groceries, transportation and loan or credit card payments. Focus on the extras that make your life better.

Here are mine:

  1. Travel: about $500 a month
  2. Home entertainment (Netflix, Hulu, Apple Music, etc.,): $30 a month (I save money by sharing family plans.)
  3. Technology (laptop, iPhone, etc.): $173 for my iPhone and service plan through Sprint + $100 savings per month toward a new MacBook

What Can You Live Without?

Next pick three spending habits that really hurt you. These are things you spend too much money on and won’t actually miss when they’re gone.

For me, one of the biggest problems with these is I don’t keep track of how much I spend. Tracking my spending and mostly eliminating these habits would go a long way.

Here are my best guesses:

  1. Candy and snacks: $60 a month
  2. Thrift store/discount junk impulse buys: $20 a month
  3. Ice cream (There’s a frozen yogurt shop across the street from my building!): $20 a month

How to Use This Rule

The encouragement to spend on the things that bring you pleasure should come with a big caveat: Only spend the money you can afford.

It seems like common sense, but it’s easy to get into the habit of “treating” yourself — to the point of spending money any time you’re faced with the “treat.”

Using the Pick 3 rule will help you decide what you will and won’t spend money on.

Now you can add those things to your budget and determine how much money you can afford to spend on each of your “spending pleasures.”

Your Turn: What are your three spending pleasures and problems?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post,, Writer’s Digest and more.