I'm going to share a secret with you - my allowance is $60 per month. That's right - $60 dollars to spend on dinning out, movies, coffee, and anything else I may want to treat myself to.
I wasn't always this frugal. In fact, my family can overspend with the best of them! Fortunately my wife and I decided to stop the crazy spending and put ourselves on a financial diet.
Should your allowance be $60? Well that depends. If you are putting 10% of your gross income into savings every month and have no credit card debt I'd say you could probably bump that figure up. If, on the other hand, you have less than 3 months worth of your income sitting in your regular savings account for emergencies, have any credit card balances, or are saving less than 10% of your gross income I'd suggest your number should be less than $60 until you can achieve those three benchmarks.
So how exactly do you get yourself on such a financial diet and then maintain? It's called "CASH ONLY." 
For all your personal expenditures you must pay with cash from your wallet or pocket book. The amount of your allowance is not the critical part of this diet, it is the use of cash that is key. Having a finite amount of paper in your pocketbook that you can see every time you reach for some more is the only way to reign in the spending.
Pay yourself the allowance on the first of every month and then have fun! Of course, when the cash runs out you are done for that month. No reaching for the debit or credit card when you run out mid-month. No cash, no play!
We implemented this for our entire family, including our 13 year old and 10 year old. It's amazing the choices each individual will make when it is THEIR allowance on the line. There will be times that we drive through McDonalds' because one person wants to waste their money on some fries and the rest of us will not order anything and wait to get home to snack.
For each of the last 6 months I've managed to spend $20 or LESS of my allowance.
My passion is my involvement with Spokane County Search and Rescue, so I put away $40 per month to buy my SAR toys (er...equipment!). I never realized I could be THIS frugal until I had a finite amount of cash in my pocket.
How low do you think you could get your allowance to?
Michael, I think your idea is absolutely genius!
Before I was in real estate i was a starving artist. One of my friends said that I could find a hundred ways to stretch a dollar better than anyone she knew. I paid everything in cash, ate at home, learned to make great soups, used coupons, etc.
Thanks for the option to reblog your post. I'd like to also share this with my clients through my weekly email newsletter if you don't mind with a link.
I should be on a diet too. It seems that I spend waste $60 or more every few days. Ouch! $60 a month would really be difficult- but manageable after awhile.
This idea is a good one. I will pass it on.
Great post. I am sure that I personally could manage this but my spouse on the other hand seems to think that they deserve to be spending on whatever they want. I have tried so many times over the years to budget but the other half doesn't get the clue any idea's?
Lizette, share away!
Molt - I realize $60 is tough (and not much fun I might add!) Our spending was so out of control we decided to make a dramatic cut.
Michael, I have some friends who were in serious debt that adopted the 'Cash Only' diet and in a matter of two years dug themselves out of a hole that seemed too large to ever dig out of. It does work.
With a little forethought and effort, it really isn't that difficult to save money. Just think twice before you buy an item -- do I need it or do I want it? Be honest with yourself -- need and want are distinctly different. ~ Evelyn
Wow, this is great. I wish I could get my wife to sign up for this.
Please tell how thisa works out. You may be the next Jared (Subway) craze, teaching us to do what we know we should be doing....
Michelle - I feel your pain. I was frustrated for a good 10 years before my wife got on board. She's a CPA so it's not like she doesn't understand money. Like any other addiction though, spending is tough to give up. I'm certainly no poster boy for saving money but I guess you have to start some time. We had to suffer a pretty tough financial calamity before she cut back.
Evelyn - I heard a great variation of the "think twice" idea. Just make yourself wait two weeks to purchase anything over about $50. If you still want it in two weeks, go for it. It's amazing how many times a two week cooling off period will make something nonessential.
Joseph - there are plenty of things I should be doing (eating better?) that I'm not. I just ran out of money so I had no choice.
I have Rick Ruby of Golden Mortgage to thank for my "cash only" idea. I realize the idea is not "new" but I do know I had never heard of it before attending Rick Ruby's CORE training.
Michael,
This is great! Kevin and I do the same thing. We allow ourselves a certain amount each month and once the money is gone, it's gone!
I have flagged this post. I know Lizette re-blogged and then it got featured. I just feel you should be getting the credit you are due!
Have a great day!
Maryellen
Now featured on "Spokane, Eastern Washington, North Idaho Real Estate Network" Group
Thanks Maryellen!
Michael, this is a great post, and so true. Liz's post sent me here.
Great post Michael. I admire the forward thinking, and wish more were as $ conscious as you and your family are.
Casey - I just wish I had this forward thinking when I was 20 instead of 40! Oh well, better now then 60.
Mike
Everything old is new again. (Saving, budgeting...) I'm going to reblog your post, thanks!
Glad you like it Janna!
what a terrific idea - I think I'm going to give this plan a a go!
Any updates on debt dieting?
Joseph, thanks for stopping by! No updates - I'm still managing to "save" $40 of my $60 every month. Once you stop the spending habits (mostly drive thrus like McDonalds or Starbucks) you can cut it down pretty easily.
Mike
Michael.
We have started the debt dieting at the office. We went from purchasing coffee twice a day for four people to buy our own.
We are saving about $6-7 per day depending on the coffee we buy. WOW, that's about $30 plus dollars.
Joe