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When You Have the Urge to Splurge

Ask yourself these three questions before reaching for your wallet

Mature couple jumps on a beach, Rules for making a splurge purchase

To splurge, or not to splurge? Create a financially sound future by holding off on that big purchase. — Istock

En español | You recently turned 50 — or maybe even 60 or 70 years old — and now you want to buy something big.

A vacation home. A cruise around the world. That luxury car you've always wanted.

Others might try to talk you out of it, suggesting it's your age or ego speaking to you. Could they be right?

Here are three questions you should ask yourself before any major or possibly extravagant purchase.

1. Can you really afford it?

"If your plans don't upset the apple cart, if you're still in good shape financially and you've made your estate plan, then absolutely — go on and enjoy the money. You've earned it," says Stephanie Genkin, a financial planner in New York. Genkin also cautions pre-retirees and retirees to think carefully about the types of expenditures on which they decide to splurge, which leads to the next query.

2. Is the purchase in line with your values?

"There's been a lot of research from the fields of psychology and neuroscience on what makes us happier," says Donna Skeels Cygan, a financial adviser based in Albuquerque, N.M. "At the top of almost every list was spending time with friends and family."

For most people, splurging on a vacation with family and friends can definitely be justified, Cygan says. "A person just needs to make sure it fits within their budget.

"I always recommend that people spend money on experiences rather than things."

Genkin agrees.

"With a cruise or a road trip, you not only have the joy of adventure and the trip itself, but you also get the bragging rights leading up to the experience and the joy of telling people about it and reliving the trip afterward in your memories," Genkin says.

"Even all the bad parts [from a vacation] become great stories to tell."

Another thing about vacation splurges: "If you're 60 and really want to have that bucket-list travel experience, I recommend doing it sooner rather than waiting until, say, age 65 or older because there could be health issues later," says Cygan.

Next page: Who is impressed by debt? »

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