A few days ago, I was talking to a friend who was excitedly discussing her holiday bonus. Amazingly, she works in an industry that’s doing quite well, and her (privately owned) company is paying out bonuses this year. They don’t know how much they’re getting, but she got an estimated figure from someone allegedly in the know, and it sounds like they will get around $4000 before taxes.
This friend has been scrimping and saving in order to take her dream vacation next fall, and she’s so excited at the prospect of this money, because it will fund the rest of her vacation and then some. Of course she plans to save a chunk of it, but it’s nice to be able to actually plan her vacation and not have to put off planning until she’s sure she can afford it.
As I walked home that afternoon, I started mentally spending her bonus, pretending it was mine. “Okay, so after taxes… well, let’s just make this math easy. Let’s say I take home 50% (knowing it would be higher – better to be pleasantly surprised than disappointed). Take half of that and put it directly into savings. That leaves $1000! That’s so much money!”
And off I went, mentally earmarking all of this hypothetical money for things I wanted, various budget categories that needed a bit of padding, weekend trips I wanted to take. I have to admit, it was a fun exercise. In reality, I would probably be more logical. I would probably bank half and “spend” half, but much of that extra half would go into an emergency fund or set aside for the summer, when I always find things to spend money on and not enough money to go around. Okay, and I would probably buy a new pair of shoes too. Gotta have a little fun!
Do you ever do any mental spending? It’s easy to say “If I were rich, I would buy that house,” but what about if you received a holiday bonus? $400 or $4000, it doesn’t matter. How would you spend that extra money?