Monday, February 5, 2018

Financial Preparedness: Benefits of Having a Personal Allowance in Your Budget

Every successful financial plan includes a budget ...
Some budgets are really tight ...
Some budgets have more wiggle room ...

But the one thing that all long term successful budgets have in common, according to the research I've done, is for every adult in the household to have a personal allowance.  It may be as little as $5 per paycheck or even $5 per month, but it belongs exclusively to it's owner and can be spent however it's owner wants.

(For some, their budgets are so tight that there is simply not any money available for personal allowances.  I get it and totally understand, we've been there at different times in our lives, but that's not what this article is about.  It's about the wisdom and benefits of having a personal allowance in your budgets if possible.)

Why would you want a personal allowance catagory in your budget?  

Here are 5 reasons that I came up with ..

It keeps us from feeling deprived.  When we feel deprived long term we’re more susceptible to an all out unplanned spending splurge that would wreck havoc with the budget.


It teaches us to ‘consider’ our purchases more when we have a set amount to work with for our personal wants.  ‘Do we really want ‘said item’ bad enough to spend our allowance on it?’


It cuts down on impulse buying.  Enough said!



It teaches self-discipline.  When it’s gone, it’s gone, so spend wisely!!!




It turns us into ‘deal hunting’ sleuths!  We want our allowances to stretch as far as possible!  We want to get the most bang for our allowance bucks!


What are your thoughts on having a personal allowance catagory in your budget?

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patsi
She looketh well to the ways of her household … Proverbs 31:27 



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24 comments:

  1. I agree, it is essential to sanity!

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    1. Rozy, I think it's the thing that helps us keep on keeping on for the long haul!

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  2. I agree. I always hold a little cash back in case I really, really want something. I may go for weeks without spending it, but just knowing it's there makes a real difference to me, mentally. For whatever reason, I never feel poor, even under the most difficult circumstances, if I have enough set aside to take the kids (mine or my nieces and nephews) to get a little ice cream or French fries if I decide to. Strange, but true. It's amazing to me that it matters to me, but it does. So, I keep a little aside, just for that purpose. There have been times when we didn't have even that extra, but for normal, everyday life... I usually do.

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    1. Becky, that's a good idea to have a little 'treat money' stashed away! I bet your children, nieces and nephews think your pretty cool!

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  3. Dear Patsy,
    We do this, as you know, and it works so well. I even budget my own allowance sometimes if I need to save up for something lol.
    As a little incentive for each of us, sometimes (depending on financial circumstances and goals) we are also allowed to keep whatever profit we might make from our allowance. For example, if I use it to buy craft supplies and then sell what I made, I get to keep the money. Colton grows his by buying and then selling or trading. It is just a little extra fun on the side.
    Thanks for doing a post on this. It could really help someone!
    Love, Kelsey

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    1. Kelsey, now, why have I not ever thought about 'growing' my allowance! You are one smart young woman!!! Thanks for the tip!

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  4. I totally agree Patsy! It helps keep couples from arguing over the money. We each have hobbies that require money. An allowance is just part of our budget. We know how much we get and it just makes life easier in so many ways.
    Melody in OR

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  5. Dear Patsy,

    We do something a little different and run under budget throughout the year and keep a track of that amount in our financial spreadsheet. Throughout the year if we want something we purchase it out of that over our savings budget target. To us this gives us more incentive to be more frugal throughout the year.

    I am also like Kelsey in the fact that I grow my money and sell items on the internet that I make or sell saved vegetable seeds from the garden. This money is another source of if I want to purchase something.

    Sewingcreations15

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    1. Sewingcreations15, any incentive to be more frugal is a good thing! Do you have a website, blog or etsy shop? Where do you sell your things?

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    2. Hi Patsy yes I sell on eBay under the same nickname but don't have a shop so you can find me by searching by seller on there. Still working on catching up with listings I need to put up there too :).

      Sewingcreations15.

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  6. We do the personal money but also have an eat out/date budget in cash each month. I often see that personal money is spent on eating out. We have incentive to be frugal with the eat out money by moving any leftover to an envelope at the end of the month. That saved money goes for a getaway for our anniversary each year. We really work to use coupons and specials to eat out so that we can fill up the envelope. Our income went to half when we went on disability but it does not seem a hardship since we have personal funds and the eat out funds.

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    1. Lana, thank you for sharing how you're coping with income reduction and not feeling deprived!!!

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  7. My husband and I have been good with budgets and saving all of our married lives, but any extra money always went to home and kids. Now that we are retired we have hobbies we spend money on and I think that it is important. We could spend what we want,and I think our kids wish we spent more on ourselves, but I think once you live a frugal life you don't snap out of it. We are also trying to downsize and might move out of state at some point and don't want to acquire more things. Our solution is to sell our extra things and spend it on our hobbies. My husband just bought a gun last week, but I know he has been selling tools on Ebay and bought it with the money. I have a booth in an antique mall and sell my antiques, plus enjoy thrifting and garage "sailing" and sell those things. I use the money to buy yarn and fabric and pretty things for the house and we use all the extra money for traveling. We shouldn't feel guilty for taking money out of the checkbook to buy those things, but the fact is we do. It is much more fun to spend "extra money" and it keeps us busy. This is a long comment, but I also want to say that my thinking was changed by some friends example. They worked and saved all their lives and when they were retired they traveled, bought a new home, cars whatever they wanted. Things happened, illness happened and money dripped away like water. Now they are in their 70's and both have part time jobs to make ends meet and were forced to sell the home that they shouldn't have bought anyways. I tried to explain this to my kids, Dad and I don't go without, and that moving to a smaller home was not just about the money, we wanted less work. And we really would not enjoy blowing our money.

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    1. Gloria, what a great comment! I hope everyone reads and ponders on it ... you've shared some true and very wise wisdom! Thank you!

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    2. Exactly! Good thoughts on selling what we do not need and rolling it into fun. I have a grand piano that needs to go and have just been putting off doing it. That would be a nice chunk of money toward the motor home we are saving for.

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  8. Great idea to have an allowance. I get a small amount once a month and like it because if I want something that is not in the budget I don't have to feel like I shouldn't. I spend mine on material, plants, etc. Nancy

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    1. Nancy, exactly, that's what I'm talking about!

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  9. I would like to add that I think it is good for a marriage for each spouse to have a little free money of their own to do whatever they want with. Even if it is only 10 or 20 dollars. Men and women always have things they want that the other does not understand and we shouldn't have to explain it. My husband buys bullets and goes to a shooting range. To me it seems like a waste of money, but it's his extra money so I zip my lip. And now I see, he has fun and has male companionship and gets out of the house. And he ignores my huge yarn stash.

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    1. Gloria, LOL, I so totally agree ... and we won't talk about my huge yarn stash either!!!

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  10. During my first and second stints as a stay at home mom in this marriage I had no pocket money, no discretionary fund and had to account for every single penny I spent. It made me feel broke and angry because you just can't justify a new bottle of nail polish or lipstick no matter how hard you try. So on my third and last attempt as a stay at home mom I claimed an allowance and that was MY money to spend as I chose and insisted that my husband do the same. I could save it, I could blow it all at once but it was mine and when sharp words were said about a new purchase I'd made, I'd say quietly, "That was my money..." and instantly the argument was averted. Over the years we've been able to increase our allowance and we get a very generous amount each. However, if circumstances changed, we'd not stop getting an allowance, though we would decrease it.

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    1. Terri, I so agree. Having a personal allowance can take care of a lot of financial issues in a marriage.

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