Why we budget an adult family allowance

ice coffee family allowanceCASH TO SPLASH GUILT-FREE

 

Sometimes it’s better to have a family allowance or splurge money for those times that you least expect to spend money but have to.

Another reason you might want a family allowance category in your budget is when you really….really…. really want to buy something normally not on your spending radar that you just have to have.

I can remember a time where I really wanted a new pair of sunglasses and I’ll let you guess where the money came to pay for them.

That’s right the family allowance category in our budget. Although most times it’s myself who uses it the wife sometimes splurges on something she wants like a pedicure.

No we don’t put that under health and beauty because it’s not products we are purchasing nor does she really need it where a haircut might be a different story. Having pretty feet is nice to have so she treats herself once in a while to a relaxing day at the spa.

I know some of you might use your emergency savings for these times but for us they really aren’t emergencies nor are they part of our entertainment budget.

 

Family allowance

 

Just what does it mean to have a family allowance in the budget? I know what you are thinking and you’re probably right a family allowance really does mean setting aside money in your budget for the family.

The amount that is budgeted in the family allowance depends on how much money we have left after all of our bills are paid for. Our budget allows for $35 per month of family allowance to use which we have used this year. We use our family allowance for discretionary spending when we need to, something like a splurge account.

What is discretionary income? According to Investopedia……..

The amount of an individual’s income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money spent on luxury items, vacations and non-essential goods and services.
Discretionary income is derived from disposable income, which equals gross income minus taxes.

It’s great to have a family allowance category but if you can’t pay your bills you might want to hold off on trying to keep extra cash hanging around, especially if there is none to spare. If we don’t the use the full $30 we can save it up for the next month if need be.

Every so often we have a look at our budget from earlier months to see if we need to alter the budgeted number but mainly it’s a change we would make once a year. This may differ for you.

 

Allowance for kids

 

Growing up my parents never gave us an allowance and I can understand my parents reasoning behind it.

My parents wanted me to do the chores because I had to not because I was being paid to do it. On the other hand I can see how responsibility leads to taking home a paycheck and learning from a young age that if you are responsible than you can earn money to spend on things you want, such as toys.

So, just about every child has the need to make money at some point in their growing years and for myself taking on a paper route was the best way to earn money and learn responsibility.

Now that I’m older I can look back and say that earning money on my own was rewarding as I learned how to manage money because I was in charge of the paper route, not my parents.

A friend of ours has two kids and both kids are given allowances whether they finish their chores or not. Many times when we visit our friend complains that the job is half done or he has to push the kids to even attempt to clean their bedrooms.

I’m sure just about every parent has to motivate their children in some way or another but what they don’t need to do is give them an allowance for it as it’s not mandatory for a parent to do. I won’t say it’s wrong or right but I will say if we did you can bet the chores would be done before any payment was given.

The children are trying to see how far they can push the parents and still get that easy hot cash in their hands every week and it seems to be working. Parents get frustrated and are tired from working all week that they let things slide just so they don’t have to deal with their kids moaning and groaning.

 

Be a parental leader

 

Another thing to think about is setting an example. If your house is a pig sty and you expect your children to have a clean room they can see this. Most kids know the difference between a clean house and a unkempt house with dishes piling up in the sink, dirty floors and bathrooms.

I just don’t think teaching money to children means giving up when the going gets rough. I guess that’s why they say don’t hire your relatives either because the likelihood that you will go easy on them is pretty high over hiring helping hands that you don’t have a bond or relationship with.

I didn’t turn out so bad considering my parents never gave me an allowance to do random jobs around the house but as an adult things have changed. Now that we own our own home you could pay yourself for cleaning your house provided you would have paid a housekeeper to do it in the first place. If not, then paying yourself to clean and maintain your house seems a bit odd.

 

In your pocket

 

The pay yourself first theory is great too because before any money goes to paying bills you’re getting paid just for being you. Some people forget about this part of their budget but paying yourself first doesn’t mean that it is money you can go and blow. That money might get used for emergency savings or other investments but depends on how you divide the money.

In a way we do pay ourselves just not first it’s after all the categories in our budget are taken care of and whatever is left goes into our savings account. If we play by our budget rules we should have a healthy amount of money left over every month.

It becomes a problem for some people who don’t know how to manage their money let alone a budget where paying yourself first might actually be the best bet. The reason is you take the money and move it where it needs to go before the bills are paid, provided you have that money available. You can’t move what you don’t have. What I’m saying is you can’t fabricate a family allowance category and put money into it without sorting out all of the other “important” categories first.

 

Why a family allowance is important to us

 

Ever since I started posting our monthly budget on Canadian Budget Binder I’ve had a few people email me about my “Allowance” category. They thought it was a bit odd for adults to have a family allowance but we did this for a reason.

When we quit smoking we admitted that we enjoyed a few beers now and again and once in a while I’d hit up the drive-thru at Tim Horton’s to treat the team because we took turns at work buying coffee. Sure you can make coffee at home and I do every single day and I take it to work but there are times where you have bite the bullet (not all the time) and enjoy your hard-earned money provided you have that money set aside

I’m on the road quite a bit for work which means a cup of coffee from home only lasts me so long. We decided to set up the family allowance so there was money in our budget for those things such as coffee or food on the road or paying for friends when we go out with them. Plus, if you’re not careful you can easily blow your budget on treating yourself or buying “stuff” you don’t need.

How many of you actually keep receipts for all the “convenience” food and drink that you buy? Probably not many of you but we have and still do just so we can keep track of our expenses every month. Having a family allowance also lets us breathe a bit when it comes to spending money in our budget.

Sure we have an entertainment category in our budget but we keep that for dinners out or if we have gatherings with friends who want to go out for drinks or dinner. If we don’t use it one month than the money goes to our emergency savings although we’ve talked about making the two categories a projected expense which may change in the future.

We use the family allowance if we want to splurge on something special that we wouldn’t normally such as ice coffee at McDonald’s (my wife loves them for $1) or going on a surprise road trip and stopping off for a treat along the way. As you can see our family allowance tends to revolve around drinks and food but for others it may be gadgets or hobby accessories that they want to splurge on.

 

Share your secrets

 

I know some of you have secret hiding spots to stash your cash (yes some of you stash cash in your bra or tool box, admit it) that you use as your splurge money. You might get this money from finding beer cans and returning them for cash or re-selling items you picked up for free and made a profit from. Some people take the coupon savings that they make and set that aside for family allowance money as well. I think that’s a brilliant idea if your budget can handle that.

No matter how you budget your family allowance money having that spare cash around to do whatever you please helps when you want to spend guilt-free on things you don’t normally purchase.

Do you have a family allowance in your budget or a splurge account?

 

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Mr. CBB
Mr. CBB was born and raised in the United Kingdom who then moved to Canada where he is a permanent resident. He recently became a father to a very busy toddler who allows him to be a kid at heart. He bought his first house at the age of 21 after University and his second at the age of 24. Both Mr.CBB and his wife are Debt and Mortgage Free and they did it all in under 5 years using a Budget. Canadian Budget Binder is a place where he shares their financial experiences with his readers and hopes to learn about theirs. Welcome to CBB!
Mr. CBB
Mr. CBB

Comments

  1. My husband and I have our own separate “fun” money envelopes. But once it is gone, it is gone until the next time it is replenished on payday.

    • That’s a good idea. Essentially that’s what we do although my wife rarely ever spends money on things outside of the budget categories so I use it up lol.

  2. I make sure to budget my splurge allowance each month because I don’t like to have strict budget with no room for entertainment. It actually helps me control my spending because I sometimes want to have fun a bit with the money that I’ve earned, but then I know exactly the maximum amount of money I can spend.

    • As long as you know the max amount and don’t give in and go over it every month than you have some form of control which is important. Good for you!

  3. Ha! I guess you could consider our booze budget of $70/month of this type of category. We don’t spend it all until the summer months when we tend to go over. If we get cash from returning empties then that is sometimes used for fun money. We are so focused on debt repayment right now that luxuries are pretty minimal. I do budget for 2 pedicures per year though in Spring and Summer. 😉

    • You use the word budget so I assume you are tracking your expenses. If that is the case no matter what you classify your splurge category it’s important you have the money available and that you aren’t overspending. My wife does the same with pedicures. 🙂

  4. We don’t do allowances but we’ve been thinking about it recently. I have always been sort of against the idea, for no specific reason but i think it is just a mental block for me.

    • It’s worked out well for us and has helped me to control my out-of-pocket spending. I’ve had some fans email me to say that their husband buys x amount of cases of beer every month and it’s costing a fortune or drinking coffee and eating out every day. If there is an allowance and both parties agree than it’s much easier to control that aspect of the budget rather than just guessing.

  5. Christine Weadick says:

    I usually take $20.00 out of the checking account every week and that is my money for newspapers and what ever little things need to be purchased. We could save more by subscribing to the papers but hubby fusses about that one as he doesn’t usually read them. he goes online to read this and that, not always ‘news’ but that’s him. The rest of us enjoy reading the physical paper.
    Over the years I have stashed a couple of bucks here and there that were left at the end of the week in a separate section of my wallet for those deals i find along the way that can be used for Christmas and Birthday gifts when I find just the thing on sale at an off time. Like the leather tool belt I found in the summer at 40% off that hubby got for Christmas that year when we were doing a lot of work on this house. It also meant I could pay cash and not have to explain the entry in the bank book or on the M/C bill.
    That stash has helped make Christmas a couple of times when the kids were small.
    Our kids didn’t get an allowance as youngsters, nor did I. Hear tell hubby did but he had jobs to do to get it. Or so I have been told. I did ask his sisters once what he had to do for it but they couldn’t remember…….

    • Good for you keeping it to $20 a week and like you we do the same and it works. There are many people who like the feel of the newspaper especially those who grew up with the paper version as the only option. My wife is the same way although she doesn’t buy the paper she doesn’t hesitate to pick it up for free if she can and read it when she see’s it.

  6. Great points! Me and FB Hubby have a splurge account, which is usually from our side hustles. The extra work is rewarded with “fun”! The more fun we want to have, the harder we have to work.

    • What a brilliant idea and the best part is that you aren’t using your regular income to do it. We’ve done that with money we get from focus groups etc.

  7. We don’t have a category for it but rather give ourselves a weekly allowance for stuff like you mentioned. works for us!

    • As long as you know where the money is going and that you aren’t guessing because we’ve tried that and we’ve spent WAY more than anticipated lol.

  8. We do something somewhat similar except it’s not a joint allowance. Chris and I each have our own fun money for things like coffee, lunch out, pedicures, etc. So basically it’s our discretionary income to do what we please. Allowance is always a fascinating topic to me as seeing how other parents handle it also interesting. In our home, we have chores that we all complete as members of the family. Because I do believe the girls need to have an opportunity to earn money, they can select and complete additional chores from our Weekly Job List. However, I will not pay them if they have not completed the job or may reduce their pay for an incomplete job. On the flip side, if they do an exceptional job, they may earn a bonus. I am not believer in just handing money at request. There are occasions where it may make sense but I don’t want it to be habit-forming for either parent or child.

    • My wife hardly uses it so it’s mostly me. I agree with you. If chores are part of the allowance they need to be completed. Oh…. bonuses are great incentives! In the real world bonuses do exist for those that do go above and beyond in some careers.

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