Ramit Sethi Believes in Guilt-Free Spending. Here's How to Pull That Off

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

There was a time in my life when I felt extremely guilty every time I made a non-essential purchase, whether it was tickets to a concert, 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 shake that guilt and use 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 also don't necessarily need to feel that way. 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. So you'll need to assess your financial situation and strike a good balance.

How to spend money on yourself without feeling guilty

Sethi thinks people should divide their budget into four categories:

1. Fixed costs
2. Investments
3. Savings
4. Guilt-free spending

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

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

That's an attitude I've worked to adopt through the years. But these days, I don't give myself a hard time for buying a $3 coffee I can make at home for $0.40. I also don't beat myself up for spending extra on things like cable and streaming services, which provide me and my family with entertainment.

The reason I've grown to be okay with this sort of spending is that I consistently save a nice chunk of my income. So as long as I'm staying 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 and savings and investments for the future. And the key to being able to spend guilt-free is really moderation.

If you're meeting your savings goals and are spending a reasonable portion of your paychecks on fun stuff, then you shouldn't hesitate to keep that up. But if you can admit that you're behind on your savings goals, or that you can't remember the last time you put any money into your IRA for retirement, then it may be time to make some changes.

These days, I specifically allocate money in my household budget for fun. And it's definitely changed my outlook for the better.