Friday Financial Tidbit-The one budget item that is easily ignored

Today I want to talk about the one special line item in your budget that can be easily ignored and forgotten when doing a budget, especially for first timers. That’s the “spending cash” line.

Credit: 401(K) 2012

I’ve heard people call this many things; blow money, fun money, free money, etc.  But essentially it is cash that you take out of your account each month that you spend on miscellaneous items. The best thing about this cash line is that you don’t track what you spend it on. You are free to do with it whatever you choose. It might be a candy bar at the grocery store, lunch at work, or some activity you like to do.

It’s important because this cash allows you to take a little breather from your budget and not make you feel like you are tracking everything you spend your money on. It allows that free spirit inside of us to be released, not confined. The best part for us nerds is that this spending is part of the budget! It’s a set amount each month, not random ATM withdrawals, that allows you to relax and enjoy spending on guilty pleasures.

The saver in us might think that spending money is a waste. But to me the cash category is the oil in a well balanced budget. Now the amount will depend on your income and financial situation but do find a way to include it in your monthly budget. I think it is the right recipe for keeping things on track financially.

How do you guys do “spending cash” in your budget?

This entry was posted in Budgeting, Friday Financial Tidbit, Personal Story and tagged , . Bookmark the permalink.

4 Responses to Friday Financial Tidbit-The one budget item that is easily ignored

  1. Brad Kinder says:

    very good points, Jon. I tell people all the time about the advantage of not having to track a category if using a cash system and the spending money category definitely does make budgeting better.

    • It really does Brad. It’s a lot easier to just spend $10 bucks at the store and not have to go back later and divide it between food, entertainment, and whatever else I spent it on.

  2. We have two blow lines in our budget, for me and my wife. It’s roughly $100, and we can spend this money on whatever we want – the only rule is that I don’t buy fast food with it 🙂 Other than that anything goes. If I want something frivolous, I can save up my blow budget over the course of few months (as it accumulates), and then buy something really nice for myself without feeling guilty.

    • That’s a good way to do things. Our only rule is that we don’t spend it on something that is illegal or what we judge to be immoral. It’s freeing and we don’t have to look over our shoulders and wonder what our spouse will think.

Comments are closed.