Different life transitions bring with them different financial challenges. For young people just entering the workforce post-college, the challenges include establishing a professional identity, developing a budget that balances their new expenses with their new income, and managing all of the stresses that come with any period of transition or change.One of the ways that people often blow off emotional steam is with spending. How do you know when the spending -- particularly deficit spending -- is worth it? Figuring that out can be confusing when the new laptop or suit is something you "need" for your new professional life.
In my financial counseling practice I have an easy rule of thumb for figuring out when people are spending based on mood versus based on necessity. Was the purchase made on the spur of the moment or was it planned for? If it was done on the fly, there's good chance that anxiety, unease, or insecurity was responsible for the impulse to buy. Rationalization after the fact won't make up for that.
Shelly Banjo writes the Starting Out column in the Wall Street Journal and asked me how young professionals can Keep Spending in Check.
