Spending Without Worries

As I’ve mentioned on The Simple Dollar before, one component of our monthly budget is what we call “fun” money. Each of us gets a relatively small amount of pocket money to spend on what we wish. We can hold onto it for a few months to buy something big or use it on frivolous things like stops at a coffee shop.

For us, this is a vital part of our budget. It gives us three key things that budgeting without such flexibility doesn’t allow.

First, it allows for spontaneity without worries. We can go to the bookstore or the coffee shop without worrying about whether that choice will undo some element of our budget or cause us to miss a bill or anything like that.

Second, it gives room for secret gift giving. Because we have this flexibility, we have the ability to surprise each other with gifts at gift-giving occasions. Not only that, we also get to feel a bit of the “pinch” of saving up for a great gift for someone, because if we’re saving up for a great gift, we’re not spending money in other areas.

Finally, it allows for some independence and freedom. We don’t question how each of us spends our “free” money. I tend to buy games and books. Sarah tends to buy books and sweet treats. Because we have that flexibility, neither one of us really worries about what the other one is doing.

Here are a few of the specific implications and implementations of allowing some free spending money for each of us.

We don’t worry about a precise amount because we follow each other’s spending. If one of us spends a bit more than our flexible amount allows, that’s fine, because in other months we definitely spend far less than usual. This policy might not work for some people who are trying to learn how to constrain their spending. In that case, setting strict dollar limits might be a very good idea.

We often withdraw it in cash form. Most of the time – unless an online purchase is involved – we do all of this in cash. For example, right now I’m saving a significant portion of my monthly “free money” for an August trip to GenCon with several friends. I’m literally sticking cash in a jar for this trip.

We sometimes use it to cover things from our normal budget. For example, I recently paid for a dinner out with the family out of the cash I had in my wallet. This directly helped our regular budget. I didn’t mind.

We still have to maintain some form of self-control. Although we have this flexibility, we still have to be in control of our spending. It would be very easy to fall back into bad spending habits if we didn’t have the basic understanding that doing so would be very detrimental to our future.

Having some “free money” for each of us in our budget makes it much easier for us to stay on track with our big financial goals without going crazy. If you’re finding it difficult to “buckle down,” consider writing some flex money straight into your budget. You might find that it makes all the difference in the world.

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