The following is a guest post by Amanda at Frugal Confessions. I really love this topic since we all have our own money habits and tricks, right?

I’ve tended to categorize people into succinct, tidy black and white boxes my entire life: you were either a socialite or a recluse, successful or a wannabe, right or wrong, a dreamer or a realist. In recent years I have softened this up to include an ever-expanding gray area where most of us actually reside. By opening myself up to this, I’ve come into contact with some of the most colorful dichotomies I would have otherwise dismissed, such as my friend the redneck-hippie (who both enjoys a good hunt but is also a vegetarian…guess she gives the meat to others to eat).

My Husband Falls in the Middle

Until marrying Paul, I categorized people into two financial categories as well: frugal or spendthrift. In the last several years I have learned that there is actually an entire continuum of financial behavior in between these two extremes, ranging from frugal millionaires to rich homeless.

And guess what? My husband falls somewhere in the middle.

As a bachelor he was not wasteful with his money and diligently paid off his student loans many years ago. But he also spent a decent amount of it on bachelor-type activities like going to bars, the movies, renting housing off-base (he was a cryptologist in the Navy and lived in Japan, then Bahrain).

He came out of Bahrain (his last tour of duty) with about $10,000 in the bank and his only debt was the new car he gifted himself for his service. You would think that his diligence with money and aversion to debt is behavior characteristic of a person who also has a retirement account. But you would be wrong; he had no retirement account at the age of 27.

Combining our Finances

When we first combined our finances we decided to put me in the driver seat because it’s a subject I adore and have a particular knack for. I devised a budget for us that included money siphoned to two retirement accounts plus his 401(K) at work, emergency savings, vacation savings, large expense savings and all of our bills. The savings amounts were pretty high (right now we are attempting to save 50% of our take home pay for 2011, and achieved 44% in the first six months). The high amount of savings was achievable because I budgeted a small amount of money for each of us to cover gas, groceries, any extras (medication/doctor visits, pet stuff, clothing, etc.) as well as fun. The number I decided we could both live on was $400 per month. Boy was I wrong.

Paul and I both tried our hardest to live off of this $400 per month for gas, groceries, and everything else. I was used to the semi-ascetic lifestyle as frugal just comes second nature to me. And we were able to achieve great things, like paying off our combined debt of $25,000, putting a down payment on a home, and paying cash for our wedding and honeymoon all within one year (while still saving in each saving account).

Yet Paul could never make his budget. If truth be told, I was struggling a little bit myself.

We typically spend $100 on groceries every other week, and with rising gas prices our individual gas tanks were eating away about $200 per month. Right there is $300 of the $400 spent out of each of our budgets without including any extras or fun.

This is where things got a little shady: with my extra leftover $100, I was able to stretch the living daylights out of it because I was a skilled couponer, a master of sales, and a clearance diva. While Paul was mindful of his money and picking up on my frugal habits every day (you should have seen his excitement the first time he came home and held up a 2 liter bottle of coke he had scored free with a coupon), his frugal skills were far less than my own. After about two years of this we decided it was time for a change.

The Financial Handicap

Paul needs a financial handicap. He is truly not in my same league as far as frugality is concerned. Just like in golf when you are playing with a person who has less golf skill than you do, it was time for me to up his part of the budget and save him from flailing confusedly in open water. What we decided to do was to set aside $300 in a jar each month for groceries (a buffer was included for rising food costs and the occasional restaurant), which should free up $100 from each of our individual budgets. We further upped Paul’s spending budget by another $100, giving him $500 to spend on gas, the ‘other’ category, and entertainment. That means that after gas, he has approximately $300 per month to spend on clothing, gifts, pet meds, doctor visits, oil changes, entertainment, and anything else that may creep up. I have approximately $200, which I am comfortable with.

The Result

As a frugal person, I must admit that I resisted the temptation to raise Paul’s budget for quite a long time. To me, saving money is a game. It’s all about how much of our paychecks we get to keep while still satisfying our needs and wants (note: my needs and wants are much less than others’). But after two years of a bit of a struggle, after seeing us pay off our non-mortgage debts, and after a bump in our income from raises, bonuses, and my blogging, Paul and I decided that it was time.

And you know what? It is working out beautifully. Paul is no longer playing the endless game of catch-up and holding his breath until the beginning of next month, and I have learned to live a little and loosen my purse strings.

I guess my biggest lesson from all of this is that money is not made to limit us but rather to give us opportunities. Life is too short not to have some fun, right?

Crystal’s Comments: My husband and I get a monthly fun money allowance of $120 each (for just fun) and I seriously think my husband needs a bit more. We’re holding off on changing anything in the budget until next year, after we see what effect quitting my day job will have on our overall finances…

What do you think of a financial handicap or a monthly fun allowance at all? Is it something you use too? Or does this all sound way too restrictive for you? What does work for you?