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?
That’s a really interesting concept. We didn’t necessarily budget in fun money. It was sort of like whatever we had leftover. When we reanalyze our budget, I’ll be sure to include some fun money or look up free fun.
I think this is a pretty good idea! Shows the flexibility in finances and as long as everyones got as much as they need and they are still being frugal, everyone wins!
I don’t understand why you don’t just have a combined account for everything other than fun money? Why separate your gas, oil changes, pet meds, etc? Those would seem like family expenses to me…
I’m a fan of monthly fun money. Although mine usually evolves around one monthly fun event. Driving the the beach, camping, skiing, etc. It’s kind of like a “cheat” weekend in dieting.
$400/month is very austere. Hopefully Paul can stick with the new budget. It looks like he’ll have more breathing room.
My wife and I have used the fun money concept for quite some time. We actually have different amounts, as I don’t need as much.
I just don’t have the type of personality for this sort of budgeting. I subscribe to a strategy more like the one The Financial Blogger espouses for example. The idea is that I am fairly frugal all the time, but it’s not something I take pride in. My fiancée is the same way and we keep things simple. One account, both pay cheques go in, and we check with each other on major purchases. We pay for everything on a joint credit card account to take advantage of the points and simply use the bill (which we have never carried a balance on) to track our spending. We have always been fairly happy with the results and never begrudge each other small creature comforts that we sometimes really really want.
Sounds like you have devised a very good solution. Now if I could get myself a 25% raise.
Hello Everyone!
I am actually on vacation this week, but just wanted to pop-in and see the comments on my post. Thank you for reading!
What a great idea! Things are reversed in my home…I’m the frugal minded one and would expect (require) less per month for “fun” money, and my wife would need the handicap.
Thanks for the great article!
Amanda said, “…But you would be wrong; he had no retirement account at the age of 27….”
As awful as this may sound … at the age of 27, most guys want to spend money on toys, electronics, going to bars/restaurants, and whatever. I think having a goal is great … just remembering that it’s not a race to beat everyone else to the [end result]. but being way ahead of “the game” is what counts. Sounds like you are doing it. Yes, life is meant to have fun … as long as you still save some for that rainy day. If you save something today … and tomorrow, and the next day … next week, next month … it all adds up. And one day you have what you need to make it work “for you.” Outside of winning/acquiring a windfall amount of money, there’s no greater feeling than having what you need. But having the windfall would be nice to make things more convenient too, eh? LOL.
What MikeS said … “I don’t need as much.” (and then,)Save it. there’s (what I’m hearing him say ) more coming his way in the budget. basically free money (for the nest egg)
EVen if you do manage to squueze less expenditures out of ones mad money, that just means that whenever you do want to “play” you can do as you please due to a much larger slush fund from saving.
With our family, I am very lucky to have a wife who’s very near like me … we don’t spend money .. for the sake of spending, or because “our neighbors/friends have it.” Nor do we get those urges to just “go wild” and splurge. per the book Millionaire Mind (Thomas Stanley)(sorry for the plug), if both adults are not on the same page with budgeting, spending habits, and more … it will always be an uphill battle for most families. (I fully agree with that mindset too. NO exceptions either, it’s just economics) But, the good news, it doesn’t have to be genetic, or ingrained into ones presona that they have to spend to feel … that feeling that hyper-accumulaters/spenders feel while spending money. If one is on a budget .. and having trouble meeting it? Nothing wrong with tweecking it. We all know if we need to save more … if we feel our goals aren’t being met, due to enjoying not cooking at home more than we could/should an dother activities. (wink)
As time flys by … we’ve realize that things we used to consider necessary, and important … really aren’t as much anymore. And even realize that “other things” are better for our financial future anyway. but, the best way to change a (undesireable) habit into something more desireable is to…. ?
(ans: want it bad enough)
Nice post Frugal Confession’s. You’re doing great! (didn’t I meet you and hubby at Ms. BFS’ in the past?)
Thank you for the inspiring post you have shared us…This can help a lot of families having problem today…
I think, this must be an inspiration to all…Thanks a lot for sharing this…I hope a lot of people can read this blog…
I think you are right. A lot of people are neither spendthrifts nor frugal. They fall right in the middle (which is a very big middle ground).
Not only that, based on my own experience, I feel people can be frugal or lavish in different areas of life. Depending on what they are into or interested in, they could be spending a lot in those areas.
For instance my husband is a big time book lover. He would spend any amount on books without batting an eyelid. But when it comes to buying other stuff for himself, he is very very careful and value oriented. He still has the same watch that he had 10 years ago.
Very motivating post! I’m more of a spendthrift. I hope I’ll get more frugal with age.
I’d have a tough time spending only $400/month. For a couple months now, I’ve been withdrawing my budget from the ATM and then trying to spend only cash throughout the month. It’s not easy but it’s helping me get a better grasp on my finances.
Wowzers $400 (especially when you’re running a car) is tough. I’d definitely agree that there’s a middle ground in between the splurgers and the scrimpers. It’s where us aspiring frugal mavens reside!
Oh man, that is so my husband! We have a weekly budget and we both get paid on Thursdays. He tries really hard but he just chews through all our fun money by Friday night! I’m much happier with giving him more because he just isn’t as passionate about this stuff as I am. (But I try really hard to not push it on him too… promise!)
[...] speaking of Crystal @ BIFS… To make matters even more confusing she has Amanda guest posting about her spouse’s spending…(Amanda’s spouse not Crystal’s….) at least I think that’s [...]