This is the time of year when many of us like to shop for ourselves as much as we begin shopping for family and friends. Retailers roll out deep discounts on the things we love, knowing that Black Friday and the winter holiday shopping season are right around the corner. Do new home decor items, the latest electronics and gadgets or comforting spa retreats as temperatures dip sound familiar?

For anyone who has worked hard to build comfort into their finances, these seasonal bargains and splurges are tempting — and perfectly reasonable so long as they do not derail bigger plans such as paying off a home equity line of credit (HELOC) or mortgage before retirement, saving for a renovation project or helping grown children.

The way to treat yourself without guilt and while protecting long-term goals is with an intentionally funded stash of cash. Whether you call it your joy fund, splurge supply or freedom fund, here is how it works and why you want one.

What is a freedom fund and how is it set up?

Whatever you call it, your freedom fund, joy fund or splurge supply is simply a dedicated account where you set money aside for

discretionary spending

. You might use a high interest savings account or an account where the money is easily accessible and clearly earmarked for splurges. For those who want to separate their needs and wants more concretely, they may keep freedom funds in cash in a safe location.

The point is not to skim cash from your

household budget

or pretend that splurges are not indulgent. Instead, your fund is a way to categorize your expenses so that your budget calculations do not leave you short. Then, the fund allows you to reap the rewards of your hard work, but within guidelines so that you do not get carried away.

Once you have incorporated this money into your budget and determined the best location to stash the cash, using the “set it and forget it” method will help the fund grow quickly. Through your online banking, start a fixed automated transfer to your fund each time you are paid or on a specific day each month.

Direct additional money such as bonuses or

unexpected windfalls

into the account to help it grow even faster. Stop yourself from spending the money mindlessly by making the account hard to access. You can do this by blocking it for purchases on your ATM card or opening an account that is not accessible at the ATM or via your normal banking channels.

However, visibility is important to monitor your progress. Seeing how much you have allocated towards enjoyment spending or splurges makes

impulse purchases

feel less like you are betraying your financial goals and more like planned experiences.

Spending from your splurge supply

Before spending money from your fund, it helps to have a decision-making framework that blends logic with lifestyle. Start with an affordability check: Make sure that your emergency fund is intact, debt payments are up to date and contributions to your long-term savings accounts are on track. If your goal is to

pay off a HELOC or other loan

before a set date, such as when you plan to retire, ask yourself whether this purchase will truly bring you joy or delay another goal that is more important to you.

Next, evaluate the opportunity cost of your splurge and what else this money could do for you. Each dollar you spend on a weekend getaway or new furniture could also

speed up paying off

your mortgage, fund an aspect of your renovation or help your kids with a down payment. Treating yourself is fine but only if you have consciously decided that the splurge is worth more to you than the alternatives.

Finally, think beyond what you plan to pay for your splurge and conduct a quick life cycle assessment because many bigger splurges bring with them ongoing costs. A

vacation home

comes with property taxes, insurance and maintenance. A summer sports car adds insurance, storage or parking fees and maintenance. Even a deeply discounted high-end television may need an extended warranty or new furniture to suit its placement in your space.

Evaluating your splurge through this three-step process transforms your spending from reactive to intentional, allowing you to fully enjoy your luxuries while keeping your financial goals intact.

Real considerations when planning a splurge

How you fund a purchase from your freedom fund matters. If your money is invested in a registered plan it could have tax or regulatory consequences, and selling investments could trigger capital gains. Upgrading to the newest iPhone is not the same as buying additional real estate and now being subject to property taxes and possibly vacancy rules and fees.

Renting out a property creates taxable rental income and may heap landlord responsibilities onto an already busy schedule. Insurance needs and regular maintenance will become recurring budget items that, over time, can eclipse your anticipated budget. If any of these issues apply, consult your accountant, realtor or financial advisor to understand timing and tax-efficient strategies before committing to your purchase.

Once a purchase passes all the tests, enjoy it, but set a post-purchase rule to revisit your decision within 30 to 90 days to ensure you have a way to mitigate unintended consequences that may have crept in.

The best way to keep splurges from derailing your financial plan is to incorporate them into your budget. Implementing structural adjustments, such as establishing a dedicated savings account and adopting an efficient decision-making framework, can help maintain the flexibility of discretionary spending while shifting such choices from impulsive to purposeful. This will ultimately allow you to spend wisely, enjoy fully and keep the bigger picture firmly in view.

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Mary Castillo is a Saskatoon-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt since 1996.