Adopting an Adult Allowance

Generally, when we use the term allowance in a financial sense, we are referring to money we provide to our children weekly or monthly as a source of spending. However, allowance can be a healthy tool for adults as well. Creating a personal allowance or “fun money stash” can go a long way to help us avoid over-spending on discretionary items and activities. One of the most common causes of financial strain is simply spending beyond our current financial resources. There are many other issues that we may face which can create financial challenges. However, simply spending beyond our means is certainly a common practice, particularly in our culture of ease of credit and material abundance.

I too enjoy the experience of purchasing the things I desire and attending wonderful social events. However, we can create a level of discretionary spending that is within our means at the moment. In a prior post “Plan What You’ll Spend and Spend What You Planned”, I talked about the importance of creating a personal budget. Once you have taken the time to create a thorough and honest budget and you have a real handle on your income and your total expenses as well as having established your desired savings or investment strategies, it will be much easier to determine the amount you have available for discretionary spending. Once you establish your monthly allowance then you don’t have to concern yourself with what you are buying. If a daily latte is your thing, enjoy! If you want to treat yourself to a little shopping each month and it’s within your allowance, then go for it.

We all need some space in our lives to just indulge to some degree in those things that bring us joy and pleasure. But, if we indulge beyond our means over an extended period of time, the joy we may have experienced in the moment will turn to stress and anxiety over the resulting financial strain that may result. Regardless of our income level, establishing some amount we can afford at the time is still an important part of our financial management. So, as you think about improving your financial health, consider the idea that many of us use for our kids and create for yourself an adult allowance. And, once you have established the amount that is right for you, happy spending!