Monday, October 4, 2010

Giving myself an allowance

I'm in charge of the bank accounts and finances in our household. I am not an excessive spender by any means - we live firmly within our budget and also save money for our family's future. However, despite being responsible -  I've noticed that some of my spending behaviour is not rational. In particular - I feel guilty about buying expensive items. For example, I might *love* a $100 bracelet, but I'll think it's too much for me to spend. Then I'll go out shopping and buy four $25 bracelets that are mediocre. In the end - I'll have spent $100 anyway, but ended up with 4 "okay" items rather than 1 stunning item.

Source: Google Images
This is why I've decided to give myself an allowance. By allotting myself a fixed amount to spend each week, it will force me to re-think the small items that I buy, and help me save for what I really want. When I do treat myself to an expensive item, I won't let myself feel guilty about it, because I've saved up for it. Hopefully this will result in less "mindless-shopping-when-I'm-bored" and more gorgeous designer bags.

Source: Balenciaga.com
Another benefit of an allowance is that it will provide a check to my spending. Although I'm conservative and debt-averse by nature, I know that it is easy to go overboard when shopping for luxury items. After a while, you could get desensitised to prices and think "I must have this...and this...and this" and before you know it you've squandered away a small fortune!

I'm thinking of budgeting $100 a week. Any spending on clothes, beauty items and salon treatments will be deducted from this amount. The leftover money will be saved and used towards wish list items. I'm also giving myself a $20 bonus for any home-cooked weekend dinners. I cook every weeknight dinner, but we're usually so busy on the weekends that we grab take-out for dinner. If I can find the time and energy to cook on the weekends - I've saved us at least $20, so I think it's fair to keep it. (I don't know how often I'll take advantage of this bonus though - takeout can be such a lifesaver!) I will allow myself extra spending during holidays. We don't go away that often - but when we do, I want to take advantage of the opportunity to get items that aren't available locally.

Hope my savings plan works! Do you have any wish list items at the moment - how do you plan on saving for them?

4 comments:

  1. I love this idea! I've been thinking I need to start doing something similar, because-well, I will end up with 5 pair of Target shoes instead of the awesome ones I wanted originally. It makes no sense! I'm in it with you :)

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  2. Yup - the 5 Target shoes versus the 1 pair of dream shoes is a scenario I can identify with LOL! Glad to hear you're in it with me - can't wait for our first awesome splurge :-)

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  3. Excellent idea! I'd say I'm on board but I'd fail, miserably :(

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  4. LOL Lena! I'm not sure how easy my plan will be to stick to - one of the reasons I wrote it all out here was to make it "more official" and help me stay on track.

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