Guilt free spending without stress on your marriage
Guilt free spending money without the stress on your marriage
Shortly after getting married and setting up a joint banking account, my husband spotted a problem in the way we handled money. Any money we made seemed to disappear into our joint account. The issue we both had with this was a selfish one, but turned out to be a practical one as well. The problem was that we had no way to purchase non-essential items without guilt over spending our family’s money. The solution was something we called an NEI account and later, more lovingly, called a fun money account.
What are Non-Essential Items?
The term non-essential item (NEI) sounds more official than it really is, so what items am I talking about here? Fun things! It’s anything that you want for your hobby or for fun that your family doesn’t actually need.
Some examples of this would be:
2. New Purse
6. Laser hair removal
You get the idea . . .
You should spend money on yourself
This isn’t an article where I’m telling you that you spend too much on yourself because that is not the intent of this at all. It is healthy to spend money on yourself; we all work hard to earn money for our family, but it still is rewarding to be able to treat ourselves. For me personally, I like to go get a manicure or pedicure. This can be an expensive habit. It can anywhere from $40-$60 each trip. So how could I spend that much money out of our family account without guilt? I didn’t think I could so we needed a plan for how we handled this money.
The Great Equalizer
Surprisingly, the biggest benefit to planning for NEI money isn’t that it will enable you to set aside money for yourself; the best benefit of this account structure is that it will equalize the money that you and your husband spend on NEIs. If you have no structure or planning in place, what do you think the chances of you and your husband spending the same amount in a year are? In most case, not even close.
Whether we choose to discuss it with our husband or not, one of you spends more on NEIs and the other is taking note. I hear conversations through my husband of his coworkers at work complaining about how much their spouse spends. One thing that is surprisingly popular is spending money without the spouse knowing and trying to keep it a secret. For example, my husband hand a co-worker that would buy a gun, and put it in the gun safe without telling his wife. The wife apparently didn’t check the bank account often, and would never notice the gun because she didn’t go into the safe. Spending competitions or ‘spend for spend’ agreements are also common; this is usually an unspoken agreement where you want a NEI so you allow your husband to purchase something expensive just so you get the free pass to buy the item you wanted in the first place. I give all these examples just to point out that NEI spending will be a part of your marriage either way so you need to plan for it to avoid some of these common spending traps for couples.
Just like an NEI account gives you an avenue to spend on yourself, your husband will also have funds to spend on whatever he likes, and you can’t say a word about it. For example, he could go buy a $500 pistol, which would normally make my head explode, but I don’t care because he spent money out of his own account.
Structure = Managing Expectations
If you haven’t spent much time budgeting your personal bank account, it may feel odd to have this much structure in your personal account, but structure is your friend. Setting rules will make the expectations crystal clear on how you and your husband’s account will work; this will prevent any animosity between you and your husband about disproportionate spending. Of course, you will need to tweak the structure to ensure you are both satisfied and committed to it.
The gray area
I’ll admit that there is certainly some gray area that you and your husband will need to sort out in terms of what qualifies for NEI and what qualifies as a family account expenditure. A good example of a gray area would be shoes. We personally treat shoes and clothes as necessary items, and those are purchased with our joint account. However, some people like buying 10 pairs of shoes every year, and at some level you might need to consider those as NEI purchases. We also treat haircuts as a joint account expenditure, but if I want to treat myself to highlights or color, then that expense will come from my fun money account.
Let’s talk specifics
You already have a joint bank account, so you will need to add 2 new accounts that will be linked to your joint, one for you and one for your husband. Banks usually have a free ‘echecking’ account or something along those lines that will be perfect for this application. Our bank is a national brand, and they do this without any fees. We don’t have any checks, but we both have a card that is linked to our account. You may have to add a $100-$300 dollars right from the start to open the account. My husband and I actually call these our fun money accounts because calling them NEI accounts all the time gets boring.
Now set up a scheduled transfer from your joint to each fun money account for every Friday. The amount you transfer weekly is highly dependent on your situation. We started with $10 every week because we were poor and had $55k in student loans. Ten dollars every week doesn’t seem like a lot, but it starts to add up fast; that is $520 a year. We actually still do $10 a week because it has been plenty to keep us satisfied with our extra purchases.
On top of the weekly transfers, you should be rewarded for any raises or bonuses you receive because this is beneficial for the entire family. For raises, transfer a one-time payment from your joint to your fun money account of 10% of the annual value of the pre-tax raise. For example, if you get an annual raise of $2,000 then transfer $200 dollars to your fun money account. Apply the same rule to any bonuses you may receive, but feel free to tweak the percentages as needed.
Proceeds from selling any of your personal items will also go to your fun money account. So if you sell that some shoes or wedding veil, that money will go to your account. Similarly, any money that is given to you during the holidays or birthday is also yours and you can deposit that money into your fun money account.
Overall, the amount of money you transfer each week and the percentages aren’t important. If you can afford to transfer $100 per week, then that’s great! Go for it! What really matters is that you work with your husband and make a plan that you are both excited about.
What about stay at home parents?
What if I am a stay at home mom and don’t get raises or bonuses? Great question, we had to tackle this very issue. The fixed transfer per week is the same for both of you, so you are good there. If you are a stay at home mom, then you should get the same percentage of your husband’s bonus and raise that he does. You play a huge part in your husband’s success at work because you are handling the home/personal work load so he can concentrate on his professional work load. I am a stay at home mom right now, and we have been doing 10% for each of us; so if my husband gets a raise of $2,000 then we both get $200 for a total of $400.
My raises are much bigger than my husband’s raises or vice versa
The odd of you and your husband having the same potential for raises and bonuses is low. My husband and I overcame this same obstacle by increasing my payout percentages. The payout percentage needs to be biased to equalize the payout potential based on earnings potential. I am currently a stay at home mom, but was previously a school teacher at $35k, and my husband was an engineer at $60k a year. Obviously, he had a larger opportunity for raises and bonuses than I did. We decided to increase my pay out to 25% and leave his at 10%.
Ultimately . . . it’s about saving money
At the core, setting up a fun money account is all about creating a way for you to save money. If all you have is a joint account and no other plan or segregation of funds, then there is no avenue for you to save money for a big purchase. Let’s say you wanted to make a large purchase so you were really frugal for 6 months and didn’t buy any NEIs for yourself--what would you have to show for it? You can’t then say to your husband, I’ve been good for 6 months so I can buy that $700 pair of earrings that I want. Well sure you can say that, but why 6 months? And why $700? Does 6 months of being frugal equate to a $700 reward? Now you are making unbudgeted and uncalculated decisions. Purchases like this will cost you more money in the long run.
Is there no other way?
Sure there are other ways to achieve the same concept! You could do this plan with 2 jars of cash in your bedroom. You could do this plan by adding the money to your savings account, and keeping track of how much money is yours/his with an excel sheet. There are many ways to do this, right? I chose the 2 small extra banking accounts for a few reasons:
• Scheduled weekly transfers that require no work on our part.
• Having a fun money card in my wallet is convenient.
• I buy most things online so the cash option seemed like a hassle.
• Account balance is easily viewable on my banking app.
• Transferring money between joint and fun money is easy and free.
6 years later . . . how has it worked for us?
Great! We recommend this to friends (especially newlyweds) all the time, and believe it has saved us from many arguments. After 6 years of doing this, I have just over $2,500 in my fun money account, and my husband has around $2,000. We certainly aren’t excessively rich, and have never combined a salary of over $100,000, but there is a certain amount of comfort and freedom in knowing I can go out and buy most anything I would want right now.
There have been times where friends poke fun at the idea of a weekly ‘allowance’ (as they call it), but I’ve later heard that same person wish they could buy a $300-$1000 item; however, they didn’t think their spouse would allow it. As I think about it, I might be the only wife I know that can go out right now and spend $1000 without any notice to my husband or have any arguments thereafter. There is certainly some power and freedom just in knowing I have that option available.
Even as the best mom in the world, you are allowed to buy things for yourself, and try to enjoy some of the money you have earned. Instead of governing this spending with the occasional cost check or some general rule of thumb, invest the time and make a deliberate decision on how you want to handle your own fun money.
Benefits of a Fun Money Account
• Budgets your spending on non-essential items.
• Gives you a way to splurge and buy something for yourself guilt free.
• Prevents stress and resentment over spending inequality.
• Extra incentive to earn a bigger raise.
*I need to give some credit to my husband. He is a bit of a budgeting nerd and wrote this original article and I adapted it to work for the wife perspective. FatherhoodFitnessFinance.com