Yes it's common, I'd say, and no, that is not a good translation imho. "Geld hinauswerfen" means that the money is basically wasted, whereas if you splash out on something, it just means that you spend a fair amount of money, possibly indulging yourself but not necessarily wasting the money.

Example: "I needed a new car so I decided to splash out and buy a brand-new Mercedes". You wouldn't say "Ich habe Geld für einen nagelneuen Mercedes hinausgeworfen", rather, it might be "Ich habe mir einen nagelneuen Mercedes gegönnt".

I would have thought that this is common in AE as well, but I might be wrong.

FWIW:

http://www.google.de/#hl=de&source=hp&q=%22Sp...

You might actually have checked the dictionary first...
Dictionary: splash out

Ich bin etwas schlauer geworden ...

@JP, that's interesting. I don't read NY Times, so ... point taken. It still sounds foreign to my Ami-Ears. Aren't the NY Times writers all from abroad anyway? ;-)

@Dragon, I did search! That's how I found the old entry. I couldn't find that entry you found. Seriously. It's hard to search "splash out on sth." in a typical (Leo) dictionary query. For real. Thanks for finding that!

So, it's more like: Ich habe mir was gegönnt? Ich habe mir selber was spendiert? (From the 1st person.)

So? That would make sense.

Du scheinst Dir vor allem mal wieder einen neuen Nick gegönnt zu haben.

@5, ???

Would you use this term? --- to splash out on sth.

In what context?

It's hard to search "splash out on sth." in a typical (Leo) dictionary query

No, it isn't. Type "splash out" in the box at the top of the page, press "go", voilà. Expressions containing "splash" and "out", which include "to splash out on sth." arrive at the top of the page.

Thx, DG. I swear I tried that, but didn't find anything, and that's when I went into "Suche in allen Foren". God is my witness. ;-)

At any rate, it is that easy! Enter and click, and the term is there.
And I now look silly. Oh well.

@Americans, would you use this term (to splash out on sth.)? It was new to me.