Trying an allowance will not solve disagreements between how much to
spend on major purchases, or setting your overall financial goals.
12 % of those receiving tax refunds will spend it on a vacation, and 13 %
on a major purchase such as a car or television.
In the long run, a good credit score could save you thousands of
dollars on major purchases and reduce hassle through easier approval of credit cards or loans.
Many furniture stores, for example, offer financing
plans on major purchases that don't require payments for up to a year.
Before you
splurge on a major purchase such as a boat or a beach house that will eat up a chunk of your savings, run the numbers and make sure you can afford it without withdrawing more from your accounts than you had planned.
Then when the time comes to refinance student loans or apply for a
loan on a major purchase, borrowers may be more likely to receive a better offer with better terms and interest rates.
For example, a healthy credit score can greatly affect what interest rates you'll
pay on major purchases such as a vehicle or home loan, as well as increasing your eligibility for lines of credit when you need it.
Violating the rule one year to
splurge on a major purchase can have severe consequences down the road, as this reduces the principal, which directly impacts the compound interest that the retiree depends on for sustainability.
Alternatively, you may use the extra funds to make large improvements on your home or spend
them on a major purchase.