Why I Have Started to Like the Idea of Allowances in Family Finances

iStock_000006883856SmallAs part of our qualifying to marry at our dream venue, my fiancé and I were required to attend pre-marital counselling through the church that the venue is part of. We did so willingly, as our friends had been through it and spoke highly of the experience.

One the inevitable things that we spoke about during our session was finances. Specifically how we are planning on dealing with money as a couple and how that differs from how we deal with money as individuals.

Our finances are not currently combined, but since we became engaged, we have been taking small steps toward at least partial pooling of our money. At counselling, we discussed how we would manage discretionary spending.

The counsellor asked if we had ever considered an allowance. My knee jerk reaction was that I would never support an allowance for discretionary spending in my marriage. The counsellor found this interesting and dug a bit deeper.

She asked some questions to dig into why I was so resistant to the idea of an allowance. I’ve always felt that allowances are restricting, childish, and for people that couldn’t control their money.

The counsellor gently made me see another perspective when it comes to allowances.

Allowances Quell Resentments

Allowances, or having a certain amount of money that each member of a couple can spend with discretion, can help even out the playing field. Resentments can build up if one person is always spending more on things that they want to spend on than the other person, or if somebody’s hobby takes up a large portion of the discretionary spending budget.

Something that I love to do is travel, and my fiance isn’t as enthusiastic about it as I am. If we had allowances of say $300/month to save for something or spend, then it would give me $300/month to put away for travel, whereas he could spend his $300 on something he wants or likes to do.

They Get You on the Same Page

Another point that our counsellor brought up was that allowances can get you on the same page. Not all couples are on the same page financially. Some are made up of a saver and a spender, and while that partnership seems doomed on the face of it, with an allowance, that difference wouldn’t matter. If you, as the saver of the relationship, want to save yours for a rainy day, that’s completely fine. If he wants to spend his on coffees out and sporting event tickets, that’s fine too.

Allowances can allow for certain things rather than restrict them. Imagine that – they can actually live up to their name!

Controls Spending

I never doubted that allowances were effective for controlling spending. Spending can get out of control quickly, especially without a budget, and allowances are a great way to establish the budget of spending money each month.

If you know that each member of the couple gets a $300/month allowance, then the discretionary budget is $600/month. Easy peasy!

No “One-Upping” Each Other

This again can go back to quelling resentment. On the show ‘Til Debt Do Us Part on Slice, I remember watching an episode wherein the couple were trying to always “one-up” each other. One would go to the spa, and the other would want to spend his share of the money to make it “fair” and go out and spend that amount. It was a never ending cycle. This is an unhealthy mindset, but on top of that, an expensive one!

 

We haven’t implemented the allowance system yet, and we probably won’t call them “allowances” when we do (because I’m not 13!), however, we are seriously considering using the allowance model to manage the discretionary budget in our marriage.


Comments

Why I Have Started to Like the Idea of Allowances in Family Finances — 14 Comments

  1. I love that you are doing pre-marital counseling and that y’all are addressing financial matters. We did the counseling, but I am pretty sure money was never brought up! It was 10 years ago, and all I remember us discussing was chores and that I disliked his shoe choices and how much he called his family!

    I like the idea of a small allowance and we’ve tried to use that in the past. It definitely keeps resentment at bay. My hubby is prone to resenting the budget unless he can have a little fun money.

  2. I’ve given my son an allowance since he was about 8 years old (he’s now 15). He’s learned lesson after lesson regarding saving, spending, priorities, etc through the process. I think he’s also learned a lot about work ethic, being paid requires work, etc. I’m a huge supporter of the allowance when it’s done right!

  3. I think the allowance is a good idea and especially better than uncontrolled spending. Here’s how I would think it would work well and maybe not work so well:
    – if you’re saving money for travel (that will include him) but he’s spending his money all on things for him only (i.e. video games, hobby stuff, golf). It might still work, because as you say, travel is your priority and you want to have him with you but this means you have to pay for the whole thing?
    – you are saving for a rainy day (which will benefit him) and he is spending on coffees (for him only) and sporting (for him only). As long as your rainy day fund is always kept entirely for you this should work. Otherwise, if he buys concert tickets and you both go, then you are getting some of the benefit from his allowance, likewise he will get to benefit from your rainy day fund.

    Very tough topic and I think it must be really hard if couples are not on the same page. It could lead to frustration and resentment if not dealt with appropriately.

    I saw that show on Til Debt Do Us Part. Sadly, I think we did a bit of this, but not that blatantly. Great post!

    • Most of my travel won’t include him; my career is quite a bit more flexible so I have a lot of freedom compared to him. He’ll only be able to go on one trip a year and it will be paid for by his credit card rewards.

      Both of our goals benefit both of us in some small way, but besides that, we both have an entertainment bucket that we spend out of, both together and separately.

  4. I agree that the part about travelling (above) could be tricky…unless you plan on travelling by yourself!
    Also, you mention a $300/month figure. If that’s for each of you that’s $600/month, $7200/year. That seems a little steep for newlyweds, unless you are already maxxing out on things like IRA and 401K contributions. Just my two cents worth…

    • Not by myself, but not with my husband, most of the time.

      The $300/month was an example, but we are high earners. It’s all relative.

    • Hahaha. Well, I think that’s exactly what I am talking about. Allowances being saved to go toward goals.

  5. I totally love allowances in marriage. My wife and I have our own set amount of money to spend on whatever we want, each month. It’s great to not feel guilty about making purchases for yourself. I think this is important when people are getting out of debt too. It helps them to realize they can still spend some money on whatever they want.

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