
Restrictions. Constrictions. Self-denial. And Self-deprivation.
These are often common thoughts that come to mind when the average person considers putting themselves on a budget. And for people who are unfamiliar with the freedoms of money management, the problem lies with the thought that once a budget is implemented, all the “fun” goes out the window.
No shopping, no movies, no nights out with friends. Nada, zilch, nothing!
But actually, my friend, it’s quite the contrary! Maintaining a well-balanced budget will allow you to accomplish all of your sought after financial goals, and still give you the freedom to have a little fun.
All you have to do is budget it in!
You see, as a well-sought after personal finance coach, I always encourage my clients to incorporate a personal allowance for themselves into their budget, and today we’re going to discuss five major reasons why.
1. A Personal Allowance Satisfies the Urge to Spend
Let’s be honest. For many people, the most fun part about having money is spending it. Allowing yourself a reasonable allowance to spend on luxuries satisfies that spending itch that most people feel when they force themselves not to actually spend.
It’s kinda like being on a diet, and you decide to cut out every single little carb, or sweets, or anything you think may sabotage your weight loss goal. But not long after, you find yourself in the kitchen scarfing down everything in sight like Cookie Monster all because you didn’t allow yourself to have an occasional treat to reward yourself for a job well done.
It’s the same concept when it comes to budgeting.
When you spend your time hoarding every little penny, it gets exhausting, daunting and downright depressing real quick. But, when you allow yourself the flexibility to get loose every now and then, with a reasonable fun budget, you’re saving yourself from a possible complete breakdown. You don’t want to lose it, where all logic goes out the window and you end up purchasing something utterly over the top and blow your budget!
Here’s the thing: A budget absolutely keeps your financial goals at the forefront of your mind and reminds you to be responsible with your money. The best part about this whole budgeting concept is you control it, not the other way around.
Now keep in mind that a personal allowance is not meant to be a reservoir of money waiting on standby for times you overspend, or for bills that you forgot about. No, no. This money should be separate from all other expenses and used for things you want (like going to a movie or happy hour with coworkers or purchasing those cute shoes you saw on sale) to avoid the overwhelming feelings of guilt when you spend.
2. A Personal Allowance Shifts Your Mindset Toward Abundance
Here’s how a budget can shift that money mindset from negative to positive.
Incorporating a personal allowance into your budget gives you the okay to stop obsessing over the devastating amount of debt you have to pay back, or denying yourself of casual spending because you want to save as much as humanly possible. I mean, this feeling can really put a damper on your whole financial journey, which can ultimately lead to you giving up altogether.
But when you adopt the mantra that money comes in, money flows out; save a little here, spend a little there; knowing that it’s okay to allow yourself some fun while still taking care of your priorities, that’s when your mindset will start to shift to one of prosperity and abundance, rather than absence or shortage.
Plus, when you can visually see on your spreadsheet or budget app that all the money you’re bringing in is taking care of your needs and allowing you a little somethin’ on the side for spending, that’s something to shout about! Because that, my friend, is what abundance feels like.
3. A Personal Allowance Can Minimize Money Fights Among Couples
If you’re in a relationship where you and your partner’s money is currently intertwined, and both of you are spending casually from the same account, an allowance can simplify things. Often, one spends way more than the other, and that can be quite a recipe for some serious money fights.
With couples, I highly recommend including a predetermined personal allowance into the overall budget and putting that money into two individual personal allowance accounts for fun. By doing this, no one person has to deprive themselves because the other is going cray-cray with spending. No one person is draining all the fun money to spend on themselves. And no one person is cultivating resentment for the other due to a difference in money habits.
Having your own fun money separate from your spouse’s or partner’s can enhance your relationship with peace and harmony. It allows you both the freedom to have fun together, or apart, but always within reason and always within the budget!
4. A Personal Allowance Makes Saying ‘Yes’ a Little Easier
You know those times when a teammate is retiring or having a birthday celebration and you’re asked to attend or give monetarily?
Or what about when your childhood friend invites you to her bachelorette party or your bro invites you and the guys out to watch the game?
It’s during these times that having your personal allowance money can really come in handy, and makes saying ‘yes’ to having fun easier, instead of trying to scramble for excuses like “uh, sorry, I’m busy tonight… gotta wash dishes on Friday night, uh… yea…can’t make it, sorry, bye!”
Now, of course, you’ll have to prioritize all that you say ‘yes’ to because your fun money can only stretch so far. But at least you’ll have something set aside for those things you really want to be a part of, without breaking into a panic and cold sweat when anyone extends an invitation to you.
5. A Personal Allowance Breaks Up the Structure and Monotony of Budgeting
If you’re anything like me when it comes to budgeting, you have your whole money management process structured down to a T. Seriously, my spreadsheet is organized, categorized, color-coded, formulated and everything in between. But when it comes to my fun money, I allow myself to be a little more lax.
But don’t get me wrong. My fun money is structured in the sense of how much I give myself to spend every month, but when it actually comes to spending it, I just let it flow.
For example, let’s say you happen to be browsing through the aisles of your favorite store, or scrolling through the items on your favorite retail website. Something you’ve wanted, but have been holding back on purchasing due to your budget, has suddenly gone on sale. The price is right up your alley, and you feel comfortable using a slice of your fun money to purchase it. You can now scratch this item off your ‘treat yo’self’ list because your allowance money was there for the rescue.
You see, having a personal allowance provides the freedom of spontaneity. And as much as I love structure, a person has got to switch up the game from time to time, adding a little spice and freshness into your life, instead of the same ol’ stale routine. Just keep in mind, once your personal allowance money has been spent, that’s it. So choose wisely, my friend.
Fun Doesn’t Have To Be Expensive
Here’s where the real mind-shift comes in. I find it necessary to explain that to have fun doesn’t mean you have to put a dent in your wallet. There’s plenty of freebies, discounts, coupon codes and cash-back rewards for a plethora of restaurants, activities, and events to keep you entertained for a lifetime. Everyone’s budget will be different, just do what you can afford.
And if there are times when you run out of fun money, don’t fret. Take some time to think about all the things you like doing that don’t cost money. Here are some ideas:
- Go for a walk.
- Have a picnic with food from home.
- Explore your city and take pictures.
- Call a friend or family member you would like to catch up with.
- Read a good book or learn something new.
- Get some old projects done around the house.
- Start a money-making hobby.
- Invite your friends over for game time or movie nights.
- Have an at-home spa date alone.
- Take the kids to the park to play.
- Host a ‘BYOB’ happy hour at your house.
The possibilities are absolutely endless.
Setting Up Your Fun Money Account
For beginner budgeters, the best way to organize your money is to separate it into at least three accounts; a bill pay account, a ‘spending’ or ‘fun money’ account and a savings account. The more advanced you become in your budgeting skills, the more accounts you can acquire to further separate your funds. However, for the purposes of today, we’ll stick with the basics.
If you’re keeping your bill money and your spending money in the same account, it’s almost a guarantee that something might be missed, overlooked or overspent. I know we’ve all had those financial hiccups where we thought a bill payment already came out of the account, only to regretfully find out later that wasn’t quite the case, and the money is already spent.
You can make life much easier by separating your bill, spending and savings money. Doing this will enable you to track exactly how much fun money you have left to spend without worrying about a delayed bill payment, or dipping into your savings.
Now for the million dollar question: “How much of a personal allowance are we talkin’?”
To be quite honest, every budget and situation will be different, but I typically recommend no more than 10 percent of your net income as a start. As time goes on, you can identify places where your fun money could be reduced, then you can begin to challenge yourself to spend less and save more.
So if you haven’t begun incorporating a personal allowance into your budget, now is a great time to start. Finagle the numbers on your spreadsheet, determine what amount is right for you, and for Pete’s sakes, start having some fun. You deserve it!
Elle Hall-Coleman is a girl boss on a mission as a writer, speaker, blogger, vlogger, personal finance coach and CEO of the financial lifestyle movement, Girlfriend’s, Budget!. She mixes her knowledge of money management with her spunky personality to successfully coach people all over the world toward the path of financial freedom. In her spare time, you can find her hanging out with her dogs, finding a new recipe, listening to neo-soul music or binge reading personal finance articles. For more money tips, follow Elle on Instagram @gfbudget and on Facebook at girlfriendsbudget.

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