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Spend money guilt-free -- even with student loans

If your budget doesn't include any spending on

If your budget doesn't include any spending on fun, it's not a realistic budget. Credit: Getty Images/wundervisuals

Earlier this year, total outstanding student loan debt surpassed $1.5 trillion.

For those with loans they can't afford, the news confirmed that student loans have gotten out of control, and they leave a smoking crater in the place where a thoughtful budget should be. Seemingly endless and urgent new priorities compete for your attention and limited income after graduation: housing, an emergency fund, paying off those loans.

Here's one more you shouldn't ignore: yourself.

"If you've got a financial plan that includes no money for fun, it's unrealistic. It's not going to happen," says Matthew Angel, advice director of personal finance at USAA, a financial institution for members of the military and their families.

Managing your money well is about creating balance. Learn how to keep your big expenses low, get serious about setting aside "fun" money and pick activities that will bring you lasting joy.

Compartmentalize your cash. 

Budgeting meticulously isn't for everyone. But no matter your personality, you should have a general idea of where your money goes.

Start with this method:

— Add up monthly fixed expenses, like your rent, transportation, utility bills, student loan payment and average grocery bill.

— Decide how much to save per month to build a solid emergency fund, which will eventually include at least three months of expenses (it's OK if it takes time to get there).

— Use a retirement calculator to see how much you should save per month now to get a head start on retirement, even if it's just a little.

— Take a look at your high-interest debt, like credit card balances, and come up with a plan to pay it down. Put even $10 more than the minimum toward your debt each month.

The money left over is where fun money will come from.

All these expenses might seem overwhelming, and I wouldn't recommend putting off saving for retirement or letting credit card balances linger. But you can chip away at them slowly rather than throwing all your cash at one goal, giving you the freedom to set aside cash for nonessentials.

You can also save money by making smart decisions about the big stuff. Buy a used car, or sign up for a federal income-driven student loan repayment plan, which keeps your payments from exceeding 10 percent of income.

Pick the right 'fun'

It's worth making the effort to earn a little extra if that's a quicker path to building discretionary cash than cutting expenses. You can easily sell unwanted items online; you can also tutor, freelance or open a shop on Etsy.

Once you set aside the cash, spend it well. You'll likely feel more fulfilled gaining experiences, pouring money into hobbies and socializing with friends than buying new clothes or technology. If you're spending in a way that feels empty or hasty, pause and consider whether you're getting the most out of your money.

To stick to spending only the fun money you've decided you can spare, make a plan beforehand. Say, "I'm going to spend $100 at most with my friends tonight," not, "I have $500 in my bank account, and we'll see how much is left tomorrow." If you have access to credit cards, setting that limit internally is even more important.

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