Wednesday, February 11, 2015

A Weekly Allowance Revolutionized Our Finances

2015 brought a lot of upcoming changes, dreams and plans, the biggest of this being the anticipation of welcoming our son in June of this year. It turns out that tiny humans cost an awful lot of money between the baby gear they need, hospital and medical bills, daycare, etc. In order to be prepared financially, we took a hard look at our budget and decided it was time to cut as much unnessecary spending and get serious about saving. By the end of January, we had put more in savings than any other month in 2014, and I can point to the one thing that has helped us do that: a weekly allowance.

Each Friday, I set aside $25 dollars for me, and $25 dollars for Ronnie. This is our "allowance" per say, for us to spend on whatever we want. I mostly spend it on coffee and lunches out with friends, and Ronnie usually saves his for bigger purchases. This amount might seem big to you or it might seem small to you, but for us, it was an amount that was realistic in our budget that would allow us to contribute more to savings while still having money for our own personal interests/likes. I also set aside an additional $50 dollars every other Friday, on paydays, for date nights that Ronnie and I can use when we want to go out to eat, to a movie, etc. The money in both our personal allowances and date night allowances does get to roll over if we don't use it as well.

This has absolutely changed our finances in a huge way. First of all, we both are 100% more cautious and careful about what we buy if we know its coming out of our allowance. One week I spent most of my allowance during the weekend, so I had about seven dollars left, and I was incredibly picky about what I bought. Before we had an allowance, I hate to admit that I wouldn't have stopped to think about grabbing an extra coffee or buying myself a small treat. But when you have a limited amount to spend each week, you naturally consider every purchase through the lens of "is this REALLY worth it?" 

Setting our date night allowance also has freed up so much extra space in our monthly budget. I didn't realize how much we were spending on eating out because when we did eat out, we didn't go out and spend forty dollars on a meal, so it never felt like we had a problem. What we did do was spend twelve dollars here, ten dollars here, and so on. We were especially guilty of this on the weekends when it was just easier to run out and grab something to eat or order in. With our date night allowance, it allows us to still eat out, but we definitely consider it more carefully if we know we might be out of date night money until our next payday. Our first week on the allowance system we did spend about $40 dollars on dinner and then we had to cook meals at home for almost two weeks, and it was tough! It really taught us a valuable lesson though, and now we eat at home even more than we did, and we plan ahead if we know we want to go on a nicer date versus a couple trips to Chipotle and Chick FilA.

These two simple changes to our budget absolutely changed our finances in a huge way. The principles and lessons I have learned from having a limited amount of money to spend on "luxuries" is something I carry over into all areas of our finances. We didn't realize the amount of money we were wasting on things that weren't necessary until we put a limit on them, and struggled to not go over that limit. It teaches us to live on what we have, and sacrifice in the now for a long term reward.

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