Having fun money in my budget came in handy 5 months after our baby Henry was born. I made an expensive impulse buy: a four-day yoga retreat. A little guilt free spending is what I needed.
Fun money is money that you use on anything you want – no guilt, no questions. After you pay your bills, student loans, mortgage or rent, and savings accounts for your goals, the money left over is your fun money. This pocket money can be for a yoga class, flowers, lots of lattes, or surprise date nights. Keep yourself sane by allocating fun money into your budget.
Fun money is 100% necessary. I’m not a fan of budgets. They are constrictive. Money shouldn’t hold you back from doing the things you love. By having fun money in your budget or designing your spending plan for a fun money account, you and your partner can spend guilt free.
Go out there and enjoy your money by following this guide on putting fun money in your budget and life.
Don’t feel guilty for spending money
My four-day yoga retreat wasn’t just any retreat. This was a yoga retreat set on an estate in the English countryside (think: Downton Abbey) with my favorite yoga instructor.
I slept in a four-poster bed, doing my best Lady Mary impression while sipping on green juice and doing 3 hours of yoga each day. (FYI, we were living in England at the time)
Immediately, I was beyond excited to go but I had 3 months to wait. And stew on my purchase.
The retreat was announced via Instagram and I knew it would sell out quickly. I clicked through to the purchase page, hesitated for a second with the price, and then proceeded to purchase the four-day trip.
I don’t usually make self indulgent purchases like this so quickly, but I was tired. Time away to do something just for me was what I needed. And I couldn’t imagine a better treat for myself than this.
Guilt washed over me
But almost immediately after purchasing, guilt washed over me. There are better, more responsible things that I could be doing with this money. The cost of these four days could have gone to Henry’s 529 Vanguard college fund. It could go to home renovations we wanted to do.
The cost could have gone to anything other than this self-indulgent purchase.
Sometimes I struggle spending money on things that are purely, selfishly, just for me. I know I’m not the only person who struggles with this guilt, and I worry about this guilt getting worse now that we have a mortgage, a dog, and a baby.
According to one survey of 3,000 mothers, 57% of moms feel guilty when they spend money on themselves. That’s depressing.
Everyone needs a little fun money
I don’t like feeling that tinge of guilt when I shouldn’t. To be clear, this guilt comes from no one but myself. Jordan would never make me feel bad about a purchase – he knows that we both work hard and sometimes we need to treat ourselves.
But I felt a little guilty about purchasing it. And if I hadn’t purchased it, I would have felt a tiny bit resentful about not going and putting all of our other financial priorities first. What a complicated catch-22 I created for myself.
A few minutes after purchasing I realized that this was a job for my “fun money”. I haven’t used it in months and I had quite a reserve built up in that account.
I logged into my fun money account, transferred funds, and immediately the guilt from my purchase was gone.
This was a great reminder of why, regardless of your situation, everyone needs a little fun money.
What is fun money?
Fun money is money that you use on anything you want – no guilt, no questions.
Fun money keeps you sane when you are working hard on meeting your financial goals or just dealing with the stresses of daily life. It is the pocket money you can grab when you need a break. When you say, “I deserve this” and proceed to jump into a spin class.
With your automatic spending plan setup, your bills are paid and money flows into your savings accounts from your checking account on auto-pilot. The money left over is your fun money in your budget. Spend as you wish!
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What fun money isn’t
Fun money is different than normal spending money. When allocating funds in budget buckets, fun money often gets put in the entertainment, restaurant, or other bucket.
Fun money is none of these things.
It is money you spend when the mood hits you. You spend it however and whenever you want.
I advocate for an automatic budget, which means you take care of all your savings and bill payments at the beginning of the month and spend guilt-free for the rest of the month. But when that happens, you usually spend all of your money that month.
With fun money, what you don’t use rolls over every month. It allows you to save up for splurges that you don’t yet know that you want. So if a yoga retreat that you really want to go on unexpectedly pops up on June 15th and you don’t have enough to pay for it that month, you’re not reaching for your credit card or dipping into savings to make the purchase.
How fun money helps
Guilt reduction
Depriving yourself stinks. It’s exhausting and can be counterproductive to reaching your financial goals. Think of it like a diet: always sticking to a strict program can leave you burnt out. A fun money budget is essentially your cheat day. It’s the little splurge you get to make every so often and not feel guilty about.
Self-control
Not only can fun money reduce guilt, but it plays an important role in what behavioral economists call mental accounting. By keeping different buckets of money, it is easier to use self-control. So if your fun money account is empty, it’s easier to walk away from purchases.
Independence
If you are in a relationship where you combine money with your partner, fun money can give you a little breathing room that you need. Rather than talking about a purchase with your partner, or in my case, having to think about how the purchase will affect the family, that fun money gives you the opportunity to do something just for you.
Also, no matter how in sync you are with your partner about money, you are each individuals who value different things. This helps you spend on the things you value the most, which is how you should be using your money.
Ease
Having fun money sitting in a separate account that is designated purely for your enjoyment and splurges is just easier. I like easy.
How much money is fun a month?
How much fun money to spend each month could be $10 to over $500 a month. As it is special money to use for special occasions, one shouldn’t put a price tag on it. The appropriate amount to budget depends on your income, savings goals, and your sanity. Spending money on yourself is your decision.
Think about what brings you joy and spend on those things. Here is some structure, if you need it, to allocate fun money in your budget.
Fun money budget allocation
As Johnny says, “Nobody puts fun money in a corner.” But personal finance pundits and budget fanatics like to put a percentage to it.
Financial planner and accountant Tom Corley of Rich Habits Institute, recommends 10 percent of your monthly net pay. So if you take home $1,500 a month after taxes and other deductions, you have $150 for fun money.
For Tom, that under-ten-percent figure includes going out to restaurants, bars and the movies. It would also have to cover the real fun money splurges like a special occasion date night, a massage, or manicure.
You can use the 10 percent rule to give yourself a self-indulgent benchmark. That 10 percent has to go a long way though. It requires a lot of sacrifices. That isn’t a fun way to look at money. Don’t put your fun money in a bucket. Since I don’t define fun money as entertainment, regular dining out, and the movies then a figure less than 10 percent may make more sense. If your splurge is a latte once a week then less than 1% is more than enough. If your splurge is a yoga retreat to an English estate, than allocate 2 or 3 percent and save for a few months. Fun money in a spending plan
There’s no right or wrong amount for fun money – it’s completely based on your goals, your money situation, and what feels right. If you’re aggressively paying off debt or saving for another goal, your fun money might not be much each month. It may just cover a latte out on the weekend.
When you’re in a more comfortable position, you might increase that fun money.
Trial and error can help you find what’s right for you.
If you have a habit of splurging too often, you can setup a separate fun money account. This fun money account will be part of your monthly automatic transfers from your checking account (where your paycheck is deposited). We set up our fun money account using personal checking accounts described below.
How we set up our fun money budget
Jordan and I have combined almost all of our accounts, but we do each keep one separate checking account specifically for fun money. Every month we have an automatic transfer from our combined checking account to each of our personal checking accounts.
That money is there for us whether we want to spend it or not. We usually spend it on clothes, presents for each other, or big splurges. I used it for the yoga retreat and Jordan used it once to fly back to the US for a bachelor party.
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When we review our goals each year (or more often), we’ll look at how much we’re giving ourselves for this fun money. We’ve changed the amount over the years.
When I was paying off my business school loans, the fun money amount was a little smaller. Once those were done, we gave ourselves a little more. But now that we have some other life goals that are important to us, we’ve cut back on that fun money just a bit.
How to spend your fun money
Fun money is for when the mood strikes you. You’ll know, when you know.
But if you are looking for some inspiration to spend your hard earned dollars because you deserve it, then look no further.
If you are feeling stressed then check out this list for ideas on how to spend your fun money. These splurges will motivate you to start your own fun money account.
Fun money ideas
- Be active – jump into a spinning, yoga, or a CrossFit class to let off some steam. Be active and have some fun doing something new.
- Explore your inner artist – Jordan signed up for an online travel photography course using his fun money. Creativity is good for your health. Find an online or in-person class to attend like pottery, painting, or website design.
- Go on a retreat – obviously this one is my favorite. Find a yoga, meditation, or spa retreat outside your city. A change of scenery with some structure is a great way to spend your cash.
- Give to your favorite charity – buy a ticket to a charity event. A dinner, show, or a talk is a way to contribute while enriching yourself.
- Attend a music festival or concert – your favorite singer is in town so buy a ticket!
- Go on a solo trip – a trip may take a year to save up for in your fun money account, but the freedom of having control over your itinerary is breathtaking.
- Surprise date night – surprise your partner or your friend with a night on the town. Check out my 20 fun, cheap date ideas.
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Managing your fun money budget
Creating a fun money account means another account to manage. Even having fun money in your budget can create another thing to think about.
When looking around for an option to make life easier, I stumbled upon Personal Capital. They have a free tool that was designed to make you more knowledgeable about the overall picture of your money.
(note: that is an affiliate link, but it’s a free tool I use and love and really wanted to share. For more information on affiliate links, see how we make money.)
I signed up for an account, connected all of our bank, investment, retirement, and mortgage accounts, as well as our credit cards. It was simple, other than the fact I had to track down all of the passwords I’d forgotten. It’s amazing how quickly you can amass so many accounts.
Now that everything is connected to Personal Capital, either one of us can log in and get an instant snapshot of our accounts and balances, all in one place.
I honestly really like being able to log in and see how much is in our fun money account. If I’m tracking to a specific fun activity like another retreat, I can see it on my Personal Capital Dashboard. If you want to a full review and video tutorial for Personal Capital, you can get that here.
It’s cleared away so much mental clutter for me that I haven’t had to go on another yoga retreat.
Fun money may seem pointless if you feel like you have your money under control. Or it may seem excessive if you’re struggling with your bills. But the psychological aspects of having money that has no restrictions, no guilt, and no strings can be huge.
