When making a buying decision, do you often go cheap because you’re saving money for a rainy day? Or do you splurge because you like the best and no one knows what tomorrow will bring?
There are certain criteria that people who are good with money consider when deciding whether to splurge on a purchase.
Kimberly Palmer, a personal finance expert at Nerdwallet, defined someone who is good with money as “strategic about how they save money and how they spend money.”
“They’re not surprised by unexpected expenses, because they have a plan in place for that kind of thing. They also have a plan in place for the good things,” Palmer told Business Insider, like vacations or their children’s college tuition.
She also said that splurging is just not for everyone. You shouldn’t splurge if you have credit card debt or are already spending more than you have the budget for, Palmer said. “A good rule of thumb to determine if you are overspending is to apply the 50/30/20 budgeting method, where 50% of your budget goes to needs, 20% to savings and debt repayment, and 30% to wants.”
If you’re wondering what items are worth spending a little more on, here are six things that smart people splurge on: