After we became debt free and we had a 6 month emergency fund we backed off a little on the gas. I was starting to feel deprived and it was hard to stay motivated. After reading some other blogs I found many people had fun money. Money to do whatever you want with.
I suggested to my wife, Ms Blue Ribbon, that maybe we should take an allowance. Nothing much, just $15 each a month. She was good with that and almost immediately I started feeling better.
More questions than answers
Where things started getting interesting was when we tried to figure out what money covered what expenses.
It was clear that $15 wasn’t much and there were things that should be covered by this allowance and things that should be paid for by something else. Quickly we realized there were separate financial entities that were existing under one big umbrella.
And the groups are?
The family as a whole or what we called the “house”. The house was going to be paying for all the core items like the mortgage, insurance, food, utilities, etc. We also figured the house was going to cover retirement contributions so it should also be the one to add to the 529 plans.
My wife and I would use our money for fun stuff like video games, clothes, and any other things we would want for ourselves. While she was pregnant Ms Blue Ribbon tried to use her allowance to buy maternity clothes.
This is one thing we didn’t see eye-to-eye on.
I ended up winning arguing that is was a “house” budget item because it was both of our faults and had to do with one of the kids. (I can hear some of you in the audience say it’s mostly Mr. BoaS’s fault.)
The kid’s money would be used for toys and clothes, etc.
No method is perfect. We haven’t determined how school supplies work into this. How are the kids going to earn their money when they get to the age where that is applicable? Will we have to modify the method when it comes to Save/Spend/Share? (<- NOT an affiliate link)
Maybe that’s where you come in. Should the kids cover items like that? What exercises did we not cover? Do you take an allowance?