Help! Where to put "Fun Money"?
I know that the ultimate answer to this is what my priorities are, but for the life of me, they all feel like equal priorities! I'm having a bugger of a time deciding what order I should be saving or using "extra" money. It feels like I've rearranged things at least a thousand times. At the moment, we don't have any fun money, or giving. Giving especially is a priority, and I feel so bad for my children that we don't have *anything* for fun money (we still go to parks, walks and whatnot, but especially for the older kiddos...). But where am I supposed to fit those things in? My plan for "extra" money - beyond immediate needs, true expenses, and whatever savings end up being more important - is:
- 25% Giving
- 25% Savings
- 25% Fun Money (Kids); Camp/Youth Events (Kids)
- 25% Fun Money (Us); Fun Money (Husband); Fun Money (Me)
So at what line does money become "extra" in order to delegate it to those things? Here are my savings goals (in the meantime before these are filled, they will be WAMed from a $1k Unexpected Expenses category if something comes up):
- Repay Borrowed - Dental (no dental insurance except base cleanings and I inherited terrible teeth no matter how well I care for them); Car Repair; Home Repair
This is money that I want to put in on a monthly/yearly basis, but don't have the buffer I would have at this point because I've used it for higher priority things. So Car Repair should be at $1200 right now, but is actually at $0, because I need that $1200 for my true expenses. So repay the $1200. But these ARE true expenses... just ones where I don't know when they will hit.
- Husband Conference (reimbursed, but need it upfront); Bike Repair (main mode of husband's transportation. We're a one car family.); Heating Oil (our home is mainly electric, except for the playroom where we spend a lot of time); Car Insurance Deductible
These are only different from the above in that they're capped. They WILL hit. Well, hopefully not car insurance deductible.
- Healthcare; Kids' Counseling
I debate how far up these should be. They are things we owe money on NOW, but it's money that technically CAN be put off...
- Yearly Savings: Dental; Car Repair; Home Repair; Healthcare
Same as the Repay Borrowed from above, just budgeting for them in advance like true expenses
- Friend's Line of Credit Repayment (we lent money to my best friend out of our line of credit, not our actual money. She's paying the interest as well. But just in case she falls through, I want a plan for paying it back); Doctoral Robe (my husband is choosing not to walk, so we can save this until he needs it for his job); New Car (technically a true expense, but so far off it will always be pilfered from for more immediate expenses)
- Income Replacement; Husband's Roth IRA Max Contribution; My Roth IRA Max Contribution; Husband's 401k Max Contribution; Extra Loan Payments
All the lovely extras for when we have enough money...
These can absolutely be rearranged if it makes more financial sense. I vacillate between putting the "extra" 25% splits at the very top, or right above Income Replacement, etc. But I'm an extremist, so again, if it makes more sense, "extra" can go in the middle somewhere.
So help? Please? I'm changing this every day, falling asleep at night second guessing it, and changing it again. I need help! 😜
The problem with putting it at the top is that then it will take four times as long to save anything, and I'm not able to save much as it is, so if things come up, I don't know if it's sustainable. The problem with putting it near the bottom is that it will be years before we ever get to have any extra money. I'm so split.
I'm going to focus on the philosophical and ask when you say they all feel like equal priorities, does that mean that maybe what you're using to measure priorities isn't very systematic or logical? If it keeps you up at night then maybe its because you know that you're forcing things to be equal when they really aren't. It becomes extra in my opinion when you decide it to be. I could go and say I never have any extra because my emergency zombie apocalypse fund has to be maintained...but that would't be realistic. You can't plan for every contingency and still expect to have extra. Is car repair really a true expense? It is if you know your engine has a leaky gasket and a life expectancy of 3 months. It's not if you're thinking your engine is just going to blow up for no reason one day.
As predicted, between the time I went to bed last night and the time I got up again this morning, I changed my mind and revamped the whole budget. Aaaaargh! Curse OCD brain. Actually ended up talking to my counselor about how much it frustrates/comforts me to play around with numbers.
For now - and hopefully it'll actually stay this way - the way I've decided to do it is (in order of priority, fill up the top before moving on to the next)
- This month's expenses
- Unexpected Expenses fund ($1k)
- Non-monthly expenses filled so on target for goal date
- Not Our Money (I forgot to put this in above - money my parents give for the kids' education fund & monthly downpayment loan repayment)
- Other savings
I decided to move healthcare up so it's taken out of unexpected expenses and to make sure our definite needs are taken care of before using my parent's money how it's intended. That feels a bit squicky, but I know they don't want me to pay them back at the expense of incurring debt. But that definitely goes above fun money. I moved all the "will probably happen but don't know when" savings down to the bottom. Hopefully, none of those will go above $1k, and I can WAM from unexpected expenses, because with fun above savings it will take 4x as long to save, and that's going to be a loooooooong long time. I'm fairly nervous, but giving and letting my kids have at least a little leeway is more of a priority. I think. I hope. I really wish I felt comfortable in what our priorities are and would stop going back and forth.
Still definitely open to suggestions if anyone sees a flaw in this.
It sounds like a lot of this is temporary, while you're paying down debt. I would give yourselves and your kids a small amount of fun money every month (like $10 or $15) so that you have some breathing room. That can accrue or it can be used for a fun outing like getting ice cream. You can always increase it after your debt is paid. We increase our charitable giving by 1% every year, so you can always start with a small amount and know it doesn't have to stay that way. I would wait on the doctoral robe and new car and just add them to your wish list or create those categories but hide them for now so they don't stress you out. And have some conversations with your husband and friend: how fast is he reimbursed for those conferences? If it's just a few weeks, can you just put them on the credit card? Where is your friend at with her finances and should you put away the amount in case she falls through? Etc. It sounds like your husband is in grad school and you have kids and you're maxing out retirement, which is pretty amazing. Don't stress; you're doing an awesome job.