We have a very strict monthly budget for all of our spending, for the simple reason that if we didn’t limit our spending very carefully then we would be running in the negative each month. But, we have a few tricks up our sleeves to avoid feeling deprived, and one of those tricks is budgeting for fun money. Before I get to that, let me describe our budget- it’s comprised of monthly spending limits on things like groceries, dining out, gas, and shopping, plus estimates for recurring payments like garbage pick-up, electricity bill, gymnastics classes, Netflix subscription, cell phone bill, retirement contributions, etc. Each month we also transfer money into savings “funds” for things like gifts, travel expenses, and yearly expenses (insurance, solar panel maintenance, property tax, computer anti-virus software, and other bills that come up once a year).
Anyway, back to the budget- I use an Excel spreadsheet that adds up all of these monthly expenses. I also have a column for our monthly income, and I make sure that the expenses aren’t more than the income. Usually, the end result is about $5- in other words, as long as we restrict our spending to the pre-set limits, we’ll have $5 left over at the end of each month. That’s not very exciting, and definitely won’t buy me lunch when a friend spontaneously invites me out. So… what do we do to make that spontaneous lunch a guilt-free reality? We’ve set up additional monthly funds for individual spending. Each month, a pre-set amount of money is transferred from our joint checking account to individual “fun money” accounts- one for me, one for my husband, and one for our daughter. Each of us has complete control over our own accounts (well, our daughter’s not actually using hers yet- she’s only 5). Only my husband knows the balance on his account, and he can spend the money on anything he wants, without checking with me first. The same goes for my account. The only thing we know is how much money is transferred into the accounts each month- what happens to the money after that is only the business of the person holding the account.
The amounts that go into these accounts is small- mine currently gets $25/month, but I honestly think that it is these fun money accounts that keeps the budget as a whole working, because without them we might feel so deprived that we’d compulsively spend on something we hadn’t budgeted for, or be plagued with guilt for indulging in an “unapproved” purchase. And, it keeps my husband from rebelling against the budget because he feels like he still has some freedom to do what he wants with his money. It might feel counterintuitive to budget for fun money when you’re trying to be frugal, but it may just be what keeps you frugal in the long run.
Do you budget for fun money?
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