This is the first article in the “guest blogger experiment” for Money, Matter, and More Musings. Read on.
I am 23 and yes, I have an allowance. Not too long ago, I was an ATM junkie. Almost every time I was out, I ended up at the ATM withdrawing money. It started with $20, then moved up to $40 and even $60. It seemed no matter how much I withdrew, it was gone almost as fast as I took it out. Soda, lunch, and small impulse buys ate away at my mad money. Yet I kept taking it out as though the ATM card was a magic wand that produced funds from a bottomless pit filled with good old green backs.
My merry spending rampage went on for well over year, during which time I was also accumulating large sums of debt. After all was said and done, I could not remember where all of that money went. I averaged $300 a month on nothing. Thirty six hundred dollars in a year that just disappeared. It was then that I realized my ATM junkie days were over. I am not sure why so many of us treat the ATM like a fun house of unlimited money, but I know that I was not alone. The habit to just withdraw what you want is strong with many of my friends and fellow net dwellers.
So what was my solution? I put myself on an allowance. It might seem a bit extreme to some, but this was a big step for me. It was the first step in learning how to budget my money. Each paycheck, I take out $50 in cash for miscellaneous expenses. No more, no less. Since I am paid biweekly, it means that I have about $100 a month being spent on personal and miscellaneous items. It does not end there though. I have learned to keep all of my receipts, and I use those receipts to analyze where my allowance is going. Gone are the days of throwing vast sums of money into the black hole of “I want”.
Looking back, it is hard to believe I was that careless. Now I keep my debit card tucked safely away in my pocketbook. I don’t purchase anything outside of my budget that my cash on hand won’t cover. Every once in a while a special circumstance will come along but that is an extremely rare occurrence. I have been sticking with my allowance plan for over 6 months, and it is paying off. The money that I am keeping is going toward paying down my debt and I feel much better knowing where my financial resources are being used. So if all else fails, consider putting yourself on an allowance. It worked for me!
About the author: Jessie manages her own blog at The Art of Debt and sometimes sells swords to pay off her debt 
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That sounds like a great idea - but once I get it in my head that I want something, I HAVE to have it, especially if it’s on sale. I know better than to run up something I can’t pay off (and I only use debit, not credit), but still. I know what you mean about the black hole!
Hi Jessie,
You are so right,, possession of an ATM/debit card can make you think you have unlimited funds! The convenience of an ATM/debit card gave me freedom to buy whatever I wanted, and I would keep a running total of my checking account in my head. Like that was even close to being accurate. Ha! I too went to cash only for discretionary spending setting a limit per week. AND I started using my checkbook register instead of relying upon memory. AND I set up a budget for the rest of my financial obligations.
It is amazing how much money I have “found” by keeping better track of my cashflow. Who knew?!
Wanda: I know what you mean. I simply had to quit giving in to my “have to have” habit, cold turkey. It was tough but I got to the point where I felt better when I didn’t buy something, because I have that money to use for other things. Looking at those items we want and passing them up is tough.
Lisa: Sounds like you were able to get it under control. I like the idea of using your check register. I guess I am still too lazy for that, but I balance my items against my online statement. It is really what works for each person. And yeah, it is pretty interesting to find your own money :).
Honestly, when I look back to the time when I was 23 and think about what I was doing with my money then…I don’t feel any good. You are doing a nice job here at your age with this kind of accountability. Keep up with the discipline and things will only get better from here on.
Great Post.
When I got married in February my wife and I decided to each pay ourselves an allowance every month. Not only would it eliminate arguements about what we can spend money on, but it helps in tracking finances and planning monthly costs. We were fairly generouse with the allowance amount but it definetly helps control spending, and we don’t have to feel guilty about buying “junk” with our allowance money.
Funnily enough - I’ve set it up so that my spouse has a passive investment account that generates her “allowance” but also has enough set aside that there is growth in the account, so much that when the time comes for the “allowance raise” due to higher living expenses, inflation, or just the need for more money, the passive income can increase bit by bit to the point where I never have to make another deposit again.
On my side, I have my own limits set, but most of the time a lot of the money goes back into the business anyway. It’s nice when your hobby and your business are heading the same direction, and it’s fun no matter which way you spend it.
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