Adults and allowances

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Quick question: Have you put yourself and/or your adult partner on an allowance? Do you limit the amount of walking-around cash you're allowed to take out of the bank account on a weekly basis?

We do. I can't recommend the practice highly enough. Here are the five reasons why having an allowance has been good for my family's financial health:

1. It forces me to question every little expenditure. The only reason I have not given into my impulse to have a peppermint mocha from Peet's every day is because that habit would seriously bite into my cash stash.

2. It gets us off the hook on tracking every single little expenditure. Rather than logging each purchase and adding them up, we have a line item for our walking-around money. So long as we're under that amount -- and we usually are, unless there are extenuating circumstances -- we know our spending on discretionary items is under control.

3. It helps us plan ahead and prioritize our little luxuries. I like getting pedicures. There's something indulgent about taking thirty minutes and sitting in the massage chair and reading while someone makes my toenails pretty. And in order to get a semi-regular pedicure fix, I have to plan ahead -- especially since my allowance also covers less fun expenditures like doctor-office copays. Figuring out how to swing both requires that I anticipate my expenses -- and that sharply curbs impulse spending. The same general practice goes for my husband, who has to balance his "I'd like a beer" impulse at Sharks games against the other expenditures that come up.

4. It helps us see whether or not we're spoiling ourselves or depriving ourselves. Right now, the yearly total for our allowance accounts for approximately 4% of our net income. At some point, we may decide to slice that and redirect the money to another goal -- or we may decide we deserve a bigger allowance. But we can make that decision only because we have the hard numbers on how much "play" money we have.

5. It keeps things equal. Because my spouse and I have the same weekly allowance, we've sidestepped the issue of one partner spending more on "fun" items or frivolous items than the other partner. We get the autonomy of having a chunk of money that's all ours, but we are still accountable to the family financial unit as a whole.

Are you and the people in your family on an allowance system, or did you toss that practice once you hit legal adulthood? Weigh in on allowances for grown-ups at dollarsandsense@sfgate.com.

Posted By: Lisa Schmeiser (Email) | December 29 2010 at 09:53 AM

Listed Under: Wallet-friendly habits