Splurge & Save

Anytime you make a frivolous splurge purchase – dining out, buying a pair of shoes, or even something as small as buying name-brand cereal rather than the generic- force yourself to automatically sock away an equal amount into a rainy-day savings account. This has a few advantages: It makes the associations with saving less painful; it effectively doubles the price of the splurge, thereby inducing a little more caution before the spending; and it creates an easy way to track how much you’re spending on frivolous things since the size of your emergency savings will mirror the amount of frivolous spending.  -Jonathan Bogard, PH.D.candidate at UCLA’s Anderson School of Management, Los Angeles