Feeling Guilty About Spending Money? Try This Tip From Ramit Sethi

Here's a surefire way to stop overthinking how you spend your money.

Even though it doesn't get talked about much, financial guilt is something that a lot of people experience. Unfortunately, there's a stigma out there about spending money. We're bombarded with messages about the right and wrong ways to use our money and all the expenses we should cut.

Over time, messages like that add up. Have you ever bought something you were excited about, then felt badly about it afterwards? Or have you spent way too long weighing the pros and cons of a small purchase? I know I have.

It can be hard to break these habits, as they usually come from decades of toxic financial advice about how spending money can be bad. But one personal finance writer, Ramit Sethi, has a tip that I love for avoiding financial guilt.

Make a 'worry-free number'

To get over that guilty feeling for spending money, Sethi recommends creating what he calls a "worry-free number." For every purchase below this number, don't debate or worry about the financial side of it.

Let's say you decide that $20 is your worry-free number. Whenever something costs less than that, take money out of the equation. Thinking about buying a $15 e-book? If you want it, just buy it. Don't think about whether $15 is a lot for a book, and definitely don't feel bad about buying it later.

Your number can be as high or low as you want, and you can change it at any time. In fact, you should adjust it as your financial situation changes. As you save more and increase your income, it makes sense to give yourself more leeway with your spending.

Why a worry-free number is important

Feeling guilty about spending money is common, but it's not something you should just learn to live with. For one, it causes unnecessary stress when you're constantly worrying about your financial decisions. It's also simply a waste of time and energy. Major financial decisions, like buying a home or car, deserve your attention. Small ones, like whether you'll spring for organic vegetables, don't matter much in the grand scheme of things.

Many people assume this problem will go away once they reach a certain milestone, like a specific income or amount saved in their bank accounts. That rarely ends up working out.

After financial behaviors get ingrained, it usually takes conscious effort to change them. One of the reasons Sethi talks so much about guilt-free spending is because he sees how people at all income levels feel badly about spending money. There have been couples on his podcast who make hundreds of thousands of dollars per year and still agonize about going out to eat.

If spending money is stressful for you now, that issue is unlikely to magically resolve itself later. You'll need to get comfortable with spending money, and creating a worry-free number for yourself is a great first step to do that.

Building a spending plan

In addition to your worry-free number, it's also good to include guilt-free spending as a category in your budget. That way, you have a set amount of money every month to spend on whatever you want. By figuring this out ahead of time, you won't have a constant internal debate about how much you can spend. It also helps you avoid overdoing it with that worry-free number to the point where you spend too much.

How much should you set aside for guilt-free spending? Sethi suggests that you divide your take-home pay as follows:

• 50% to 60% on fixed costs
• 10% on investments
• 5% to 10% on savings
• 20% to 35% on guilt-free spending

You can adjust those numbers if you want. Personal finance is different for everyone, after all. What's important is that you have guilt-free spending in your budget.

Lots of us give far too much thought to inconsequential spending choices. I've done it before, and sometimes I still catch myself overthinking things like whether I should buy the fancy cinnamon for $6 or the cheap stuff for $2.50. Situations like these are where a worry-free number saves time and simplifies your decision making.