How to Budget with an Adult Allowance

Member

By Lacey2shoes
User-Submitted Article

Article Rating: (8 Ratings)

World Currencies

The adult allowance is a great way to budget, track your money and save more! Everyone is familiar with the concept of a child's allowance: parents give children money to spend so that they can learn how to use money appropriately. The adult allowance is very similar, in that you will work every month with a set amount of money and learn how to be financially flexible, yet limited with your resources. It differs from a child's allowance because you are still in control of the amount of money you spend, save and invest. The best part is, however, how easy it is to save more money than you thought you could. Here's how.

Difficulty: Moderate

Instructions

Things You'll Need:

Your pay stub
A list of all bills
Calculator

Step 1

Budget your monthly income. The first step is to sit down with a pay stub and all of your bills. You have to know exactly how much money you receive each month and how much you need to spend to cover your fixed expenses, such as rent/mortgage, utilities, car payment, and so on. Keep a calculator nearby and a piece of paper to track how much you are subtracting and where it's going. When you've "paid" all your fixed expenses, you're left with the extra money. Decide how much money you'd like to save and invest every month, subtract that too from your balance and put it in a separate category on your paper. Subtract any other categories you think are necessary (food, for example). What you are left with is the amount of money you have for "extras". The important part is to be honest with yourself about what is an extra expense.
Step 2

Put the money in the bank. Take all the money you've budgeted, either figuratively on the internet or physically, except the "extra" and put it in the bank. Separate immediately your savings from money you plan to spend that month on bills and expenses. A great way to resist temptation to dip into savings is to open a different bank account only for savings, if need be, at a different bank than you normally use. This is money you need, this month or in the future, so it doesn't apply to your allowance.
Step 3

Give yourself your extra money in cash each month. Take that "extra" money and give it to yourself, it's your allowance for the month. Give it to yourself in cash, so that you can look at it and touch it. Be happy with the knowledge that you have money in your wallet, but also realize that this money is what you have to spend for the entire month. At the beginning, it may be difficult to limit yourself to the cash in your wallet, especially if it is less than you normally spend, but resist the urge to go to the ATM for more. After a few weeks, or months, it will be easy to spend within your limitations.
Step 4

Stick to your allowance. Only spend what you have. If you find you can easily reach the end of the month with what you've got in your wallet, maybe it's also possible to save a little more each month. If you find it impossible and it's causing you a lot of stress, adjust your figures to give yourself a little more. The great thing about making your own adult allowance is that you're in control of your money and it can always be changed. Not only will it be easier to see how much money you have spent, and still have remaining, each month you will undoubtedly save more, too.