When some of us were kids, our parents gave us an allowance to spend on important items like candy and visits to the arcade. In other words, it was spending money to use as we please. But now as adults, we make our own money and we need to decide how much of it goes towards discretionary spending. For some, it’s difficult to distinguish between discretionary, saving and expenses which is the reason for the insane amount of debt held by individuals/families today.
The key to successfully implementing frugality as part of your lifestyle is to ensure that you never feel deprived. How do you save money but still spend money on the little things in life without feeling guilty for breaking the frugality rules? Give yourself a set monthly discretionary spending allowance!
Frugal Tip: Give yourself (and spouse) a monthly allowance to spend as you please.
As we advance in our careers and our salaries, it’s easy to spend more money as more of it is available to spend. Using this allowance system will help keep the frivolous spending in check and help increase your savings.
This strategy works great if you are in a relationship with combined finances. After household expenses are taken care of, it sets equal spending limits for both partners and allows buying items with no questions asked. For our family, we each get $100/month in cash to spend on whatever we please. Any unused cash can be saved for slightly larger purchases in the following months.
Do any of you use this strategy?
photo credit: John-Morgan