For those in debt, it’s easy to pass on purchases. When a $200 suit costs you $250 due to interest, it’s easy to see how much debt is hurting say, “I simply can’t afford it. My money could be much better spent on other things.”

But what about people who aren’t in debt? Let’s go one step further, if you have a healthy emergency fund, fully funded retirement fund, and have already put away money for other goals: how do you limit yourself from spending when you really can afford it?

Or do you splurge? If you splurge anything over your target savings goals, do you run the risk of lifestyle inflation and not being able to cut back when the money isn’t flowing as such a quick pace?

Some people say you can never save enough. Eventually you’ll get to the point where you have enough saved for retirement, but all along the way, you may be missing out on the things you really enjoy. And what’s the point of spending 30 years working hard and saving a ton of money if you never spend your hard-earned money?

Just like it’s easy to see why someone in debt can’t afford an expensive suit, it’s equally as easy to see why someone who has fully funded an emergency fund and hit all savings can. With all that money, why not enjoy some of it?

Having the proper balance is difficult. My advice is to hit the savings goals and then put in a little more and use the rest guilt-free.

Don’t try and put off purchases, don’t think about how much more you could save if you tucked a little bit more into each account. You’ve worked hard, you’ve been responsible in taking care of your goals, and now you have money left over. You’ve earned the right not to have to worry, not to have to stress, and not to have to think twice about your purchases.

Readers, how do you balance your savings goals while not being too constricting?

When making purchasing decisions, we have to come to some determination about how much something is worth to us. We have to put a value on a product and then make decisions based on the difference between how much it costs and how much it’s worth.

I don’t go overboard with my purchases, and to avoid making impulse decisions, I use a tactic that has served me well: The $1 rule. With each potential purchase, I ask myself if I would pay $1 per hour or per day for that item, depending on what it is.

The $1 Rule in Practice

When my brother went abroad last year to take some time off before college, I inherited his xbox 360. I grew up without a video game system, but as the youngest child, he was entitled to the gaming system of his choice. I guess I shouldn’t complain because now I get 10 months of enjoyment out of his being spoiled.

I’m not a huge fan of shooter games, racing games, or role-playing games. What I am into is Tiger Woods PGA Tour ’09. I was obsessed. I played about 4 hours a week, sometimes to earn points and get myself the nicest clubs, hat, and cool shades, and other times online with friends. I REALLY enjoy playing. For $15 plus $35 for a one year subscription to Xbox Live Gold (which allows me to play live online), this may be the best purchase I’ve ever made.

For the video game, paying a dollar per play is an easy decision. Would I pay a dollar to play for an hour? You bet! And when I play more 50 hours, I “come out ahead.” I believe I’ve already passed that mark and I’ve enjoyed every minute. Plus, I can now watch Netflix movies instantly on my tv instead of just on my computer, which is just another added bonus.

When I buy a $40 shirt, will I wear it 40 times? If it’s a shirt I would wear either to work or out with friends once every two weeks, I’d need to keep it for over a year to get my money’s worth.

Each person has his own limits and can decide what they’re willing to pay for fun. This system has kept me from making unnecessary purchases and figuring out what is valuable to me.

Readers, what is your ‘$1 Rule?’