When we first merged our finances (which was very early in our relationship) I noticed that I spent a lot less than hubby did. At the time we had no concept of what we were spending or how to align our spending with our values. Money was something that we earned and spent at will. Fun money was never a category in our budget.
I had no problem saving up for larger ticket items, for example, vacations. Yet in my mind hubby had an addiction to coffee. He would stop all the time and pick up a coffee when he was out. It wasn’t that he necessarily enjoyed the coffee, it was just something he did, a habit.
Eventually, we did include a fun money category in our budget and its effects on our relationship have been long-lasting. This budget category truly changed my life.
What is Fun Money?
Fun money is a budget category that is often forgotten.
Most people will include some form of entertainment or eating out. But the fun money category encompasses anything that brings you the little joys in life. This could be coffee, chewing gum, or a new book.
This budget category is best used in cash as it is easily controlled. Because you are using it as cash, that is the only tracking that needs to be done. The point of this budget category is to come up with fun things to spend money on, not to overly try to control or track it.
How Much Fun Money to Budget?
The first step in determining how much fun money to budget is to look at your expenses for the past few months. You will want to get a handle on how much money you are currently spending in this category, and how much you can afford to spend.
When we looked at our budget, we decided to budget $200 each a month for fun money. This was an amount that we were comfortable with. Two-hundred dollars was enough money to have a little fun every month while not feeling deprived while we optimized everything else to hit our savings goals.
Each of us would receive that money in cash and could do whatever we wanted to with it. There was no tracking of this money, no judgment and it could be spent without consulting the other person.
This no tracking, no judgment zone is important. Each person has their own fun money budget. The other person cannot tell them what to spend money on.
How We Spent Our Fun Money
I have often identified as a natural saver. At the time it was very rare for me to burn through my $200 in a month. I began to stockpile my fun money.
There was no thought given to what should I spend money on – all I wanted to do was save it.
Sure, it felt good to save, but that wasn’t the point of this money. What I didn’t realize at the time was that I wasn’t doing anything for myself. I was valuing saving money over anything else. My fun budget was not adding any fun to my life. It became something else for me to control.
On the other hand, hubby religiously spent his cash every month. What he spent it on, I have no idea, that was the point of having cash fun money. What I do know is that he was finding fun ways to spend money.
Not only did he spend his money every month, he often wanted to spend more. So I did what any enterprising person did and I loaned him some of my fun budget money. And of course, I charged him interest.
This was a terrible idea.
How was he ever going to catch up? Every month I hoped that he would “learn his lesson,” but most months he still ran out of cash before the end of the month. I wasn’t acting like a partner, I was a dictator.
And had taken on the role of a payday loan provider, even though my interest rates were not nearly as high.
Now, not only was I controlling our budget and my fun money I had somehow found a way to control hubby’s fun budget too; which was exactly the opposite intent of the cash.
We continued with this system, which hubby called an allowance, for the 5 years it took us to pay off our mortgage. And then the damn broke.
After the Mortgage Was Paid Off
Once our mortgage was paid off, hubby had goals of relaxing our spending and “living a little.” I wanted to keep our routine and accelerate our timeline to financial independence. If we had survived like this for the past 5 years, surely we could keep doing it.
But that was the keyword, we had survived.
I was so obsessed with the bottom line and saving as much as we could that I didn’t realize that hubby had felt deprived and restricted during that time.
That he had put on hold a lot of things that he wanted to do. He was fine with it while we were working towards our goal. But now that we had achieved that goal of paying off our mortgage, he wanted to re-evaluate our budget.
He had never told me this which lead to many, many discussions once the mortgage was paid off. I really should have realized it though, while I called it fun money, hubby called it an allowance.
The connotations of the two are very different. For us, one was about freedom, the other, control.
We were caught in an endless cycle: I would try to restrict how much hubby would spend, hubby would spend more than I wanted him to, I would get frustrated and angry. And this happened over and over again.
I remember being so frustrated that hubby was not doing exactly what I wanted. Surely he could compromise and comply, I mean I had relaxed a bit and we each had $200 a month in fun money.
Never did I think of things from his perspective.
What I didn’t realize is that my need to restrict spending was about control and trust. I had this deep-rooted need to control money. I felt that if I controlled my money then nobody could take it away from me. Unfortunately, even though we had joint finances at the time I was still thinking of it as my money, not our money.
I also didn’t trust my husband. I didn’t trust that we had the same goals and that he could be in control of his own spending.
Reflecting back, this was a low point in our relationship.
The Fun Money Experiment
After many disagreements and tears, I decided to let hubby have his way for a change. For a few months, we stopped restricting fun money. We were both free to spend however we saw fit.
Our fun money budget was no longer constrained to cash, we could use our credit cards as long as we paid them off in full every month. This was in order to try and accumulate travel points which you cannot do with cash.
With this new free-spending I, of course, didn’t spend my money any differently.
The funny thing was, hubby, didn’t go that crazy either. When I went over all the expenses I noticed that he only spent money on things that he valued. Yes, the things he valued cost money. But he wasn’t wasting money.
Over time, this little experiment taught me that maybe we could still reach our financial goals and have fun along the way. I started to realize that maybe I was depriving myself.
I had never given any thought to what to spend money on, just that money was meant to be saved (and obviously not enjoyed).
Hubby gave me the opportunity and permission to think about what I wanted to spend money on. At times he even forced me to think about myself and spend on myself guilt-free. Now don’t get me wrong, I still didn’t go crazy. But I enrolled in some courses that I had wanted to take and it felt great.
This was a huge turning point. We were no longer sprinting towards financial independence. Our goal shifted to adopting a financial freedom mindset and enjoying the journey.
Who would have thought that a few hundred dollars of a fun money budget every month could have such a huge impact on my life?
Through our evolution with our money, I learned to trust my husband. He has never given me a reason to not trust him, but I always felt like I had to exert control over him and his money decisions.
Now reflecting back on our fun money experience years later I can see that it was about control and trust. I have since learned to let go and our relationship is stronger than it has ever been.
What is one thing you spend your fun money on?