It sounds incredible, right? No more money fights with your spouse about who’s spending how much on which purchases. Believe it or not, if you’re willing to deal with a bit of work and accountability, it’s possible.
Call it an allowance if you will or a “fun money budget.” Either way, giving each other permission to spend an agreed-upon amount of money guilt-free has the power to change your life for the better.
Don’t believe me? Listen to how fun money budgets changed me and my husband’s lives.
FUN MONEY BUDGETS ELIMINATED OUR MONEY FIGHTS
When my husband and I got married 12 years ago, we didn’t have a budget. Each time the other spouse bought something that the other one didn’t agree with, a small amount of resentment would build up.
I didn’t like my husband spending my money on video games, hockey equipment, or woodworking tools. At the same time, he didn’t like me spending his money on yarn, online language lessons, or books. Eventually, we’d start fighting, and even worse, we started hiding purchases from each other.
All that changed when we started budgeting and set aside specific line items for “fun money.” The rules were simple: we could spend our money on whatever we wanted with no judgment from the other person. We couldn’t overspend, and if we did, we’d have to carry that negative balance forward to the next month, when we could bring it back into the black again.
It sounds simple, and it worked. We’ve completely stopped hiding purchases from each other, we buy what we want without stressing about it, and we haven’t had a money fight since 2017.
WHAT EXACTLY IS A “FUN MONEY BUDGET”?
“I love this conversation because I think one of the most important things for anybody in their budget is to have some fun money,” says Bobbi Olson, a budget coach and host of the Centsable Chat podcast.
“A lot of people, even though they want to get out of debt, they’re really not completely comfortable with going ‘gazelle-intense’ as some people suggest,” says Olson. “And so having just a little bit of fun money in there that they can still breathe while they’re trying to accomplish their financial goals really works.”
A “fun money budget” can take many forms:
- An agreement between you and your spouse where you’ll discuss any purchase over $X
- Separate line items in your budget
- Separate bank accounts that you use just for spending your own individual money
Most people who budget choose the second option. Just like how you might have a line item in your budget for “groceries” or “pets,” so too you can have a line item in your budget for “his fun money” and “her fun money.” That way, you’ll still keep a cap on your spending, your spouse can still make sure you’re not buying anything totally shady, and you don’t need to go through the hassle of keeping a separate account.
GOOD COMMUNICATION IS KEY
Managing a fun money budget is one of the more challenging areas of budgeting to decide on. It’s not as simple as your rent, mortgage, or internet bills which generally stay the same from month to month and may not be easily adjustable.
Choosing how much you want to set aside for fun money — and deciding whether that amount is working for you both or not — touches at the very core of who you are in relation to your spouse. It’s how you can literally afford to maintain parts of your individuality within your relationship according to Jay Williams, a financial strategist with McKinley Carter Wealth Services, who often helps younger couples learn to budget for the first time.
“It really is so customizable to each individual situation, but it has to be talked about it,” says Williams. “None of it can be assumed or brushed aside. It has to be specific. It’s like a goal. It has to be measurable and attainable, but really, really specific.”
HOW MUCH SHOULD YOU BUDGET FOR FUN MONEY?
Are you sold yet? Good — the next thing you need to decide is exactly how much you’ll set aside.
“I think if you can isolate somewhere between 5% and 10% of a monthly budget, that is usually a good place to start,” says Williams “Of course, if there’s significant debt, then that 5% number may be even smaller. But if there’s less debt and more income, the 5% may turn into 10%.”
This is the first big question in a series that will force you and your spouse to make some tough decisions about what you value in your life together. Remember, every dollar you allocate to fun money (or anything else, for that matter) is one less dollar that you can spend somewhere else, such as your retirement, a vacation, or your kid’s college funds.
DON’T BE AFRAID TO CHANGE YOUR FUN MONEY BUDGET
The good news is that you don’t have to get it right on the first shot. Just like anything else in your budget, the amount you allocate to any given thing is negotiable. You could — and should — take a step back with your spouse periodically and ask whether the amount you have set aside for fun money is working for both of you.
“I can dole out conceptual financial advice all day long, but when it comes to putting it into practice and following those rules, that’s really up to the person,” says Williams. If something’s not working, then don’t be afraid to take another look at your budget to see how you can address the problem.
Setting aside some money for each spouse to use on their own is a great idea, but it doesn’t always go according to plan. Here are some of the most common situations that arise when things aren’t quite working, and what to do to fix them.
ONE SPOUSE KEEPS OVERSPENDING
“The math is one thing,” says Olson. “Usually, we can make that work. But the discipline is the other thing.”
In other words, it’s easy enough to agree to stay within a set spending limit. Still, one person may be constantly overspending and throwing the rest of the budget off-kilter. Maybe one spouse is more of a spender, and the other’s more of a saver. That’s pretty common, actually.
“I would think that a conversation could be had about, ‘Okay, if that’s not enough, first of all, why are you overspending?’” says Olson. “If you have a shopping addiction or something like that, then that could be something else to look at. But maybe it’s just a question of raising that maximum a little bit more.”
One solution is to consider changing how much you have set aside for each spouse so that one gets more than the other. Maybe instead of a 50/50 split, it’s more like 80/20, or something else. Of course, then you have to ask if you’re really comfortable with one person getting more than the other — again, a tough question with an answer that’ll vary from couple to couple.
If you’re not willing to do that as a couple, you’ll need to have some frank conversations about how you feel. “That’s where my job turns into more psychology than finance,” says Williams. “When they start to realize that breaking that budget limit is hurting their significant other the same way lying would, then they start to realize that, ‘oh, my actions impact both the life and the wellbeing of someone I really care about.”
NOT ENOUGH FUN MONEY
Maybe both of you find that your fun money budget isn’t enough to tide you over and you’re both habitually overspending. Again, it’s another common occurrence.
In this case, you’ll need to decide: should you allocate more to your fun money budget, or should you both really rethink how you spend your money? Both are valid options.
If you decide to bump up your fun money, you’ll need to find the money from somewhere else in your budget. Is it worth foregoing cable TV so you both can get more fun money? What about extra debt payments? Retirement savings? There are no easy answers here, but keep in mind your decisions will have impacts in other areas of your life.
Another option is to simply supplement your income by doing a side hustle or some small job. For example, I enjoy filling out surveys in my downtime so that I can earn a little bit extra per month to supplement my own fun money account.
FUN MONEY BUDGETS PUT THE “PERSONAL” IN “PERSONAL FINANCE”
When it comes to managing your money, fun money budgets are just about as personalized as they come. It can be a great tool, but remember — at the same time, you need to make sure you’re totally committed to keeping the lines of communication open with your spouse.
If you’re able to do that, you’ll not only have a strong financial foundation, but you’ll have a strong marriage as well.