Have you ever tracked your “miscellaneous expenses” or for my budgeting process “extra expenses”? This term refers to expenses incurred that are not included in the monthly budget. If you have never added these expenses up you are most likely missing out on one of the most telling indicators of where your money is going every month. Let me fill you in on an eye-opening realization I had recently that has altered my family’s approach regarding money management moving forward. A grown-up allowance, it could change everything.
I have a very systematic budgeting process that I have used for my family’s finances going on 2 years now. I add up every expense that we have for a given time period that is not on the budget. This number is my “extra expense”. It is composed of all the small purchases that my husband and I do for a given time period. Month after month the number for this is staggering! You would be SHOCKED to find out how much of your money each month goes to coffee, lunch, new stickers for your planner, etc.
For a while now my husband and I have been talking about getting new iPhones. This though was not something we were going to do until we could walk in and pay for the phones. Guys, with the amount of “extra expenses” we had month after month, we could have bought new iPhones a long time ago and possibly a couple of times. It’s CRAZY! Enter my solution:
A Grown-Up Allowance
Why I haven’t thought of this earlier I don’t know and boy do I wish I had. Each month my husband and I are allotted a set amount of money that is budgeted in. We get the same amount each month whether we have excess from the month before or not. This was a game changer for our budget and for us as individuals. It’s a win-win. Nothing hits our account that is not already budgeted for or at least talked about beforehand, and speaking as the “official budget-er”, this is priceless!
From an individual standpoint, we have complete discretion on how we spend the money without any guilt that we are spending money that the household could use for other things. If you’re a spender you know what you have and that is all you have until the next disbursement. If you’re a saver, well good for you! This allows you the ability to save for something special that you want or even surprise someone with a gift because you alone are the only person who knows how you spend the money. My husband could never surprise me with anything because the hawk was always monitoring the bank account!
This simple concept of a grown-up allowance has allowed me the ease of a much quicker budget process and for each of us to individually feel free to spend what we have as we choose. In many ways, we feel like we get far more enjoyment out of the money we spend from our allowance. While we are in fact spending less than we did when we did not even know where it was going! Why make things more complicated than they have to be. A grown-up allowance was a small change that made a huge impact.
Looks like allowances are a good thing no matter how old you are!
While you’re improving your money management, take it to the next level!