I attended Eagle Creek Elementary School. It was a lovely place. I have very fond memories of my time there, even when Jessica Mink accidentally spilled water on my Walter Payton poster project. The orange paper-stock couldn’t handle the moisture. The ink ran. I ugly-cried in front of my entire fourth grade class. I forgave her late last year. I digress.
One of the most important lessons I learned at Eagle Creek Elementary was that pleasure should come after doing what you are expected to do, and not before. Allow me to explain. At Eagle Creek, you had to finish your entire lunch tray prior to becoming cookie eligible. It worked like this: once you ate all of your food, or hid it in your milk carton, you would show the teacher that your food was gone, and then you would be able to buy a cookie for $.10 or Wacky Cake for $.25. Like you, I don’t know what made the cake wacky. It was moderately wacky, at best. The point is that you had to take care of business (eat your lunch) prior to enjoying some of the finer things in life, like a institutionally-produced cookie or a cake of whack.
As a kid, I knew that this natural order of work and pleasure made sense. I didn’t like it, but I understood. And like the rest of my classmates, I vowed to disrupt this hierarchy as soon as I was given the chance to. I believe this principle is responsible for one my biggest financial pet peeves: the adult allowance in the face of debt.
Debt, as you might know, disrupts your present, and your future for that matter, if you don’t get it under control. Dealing with debt can be a frustrating process, especially when you’d rather enjoy the present. One of the most obvious signs I see which indicates someone is trying to enjoy the present, is the presence of an “allowance” line item in the budget. Whereas you might think having a budget is a good enough strategy to get you out of debt, premeditated irresponsibility via the adult allowance line item, is not good. In fact, a week doesn’t go by that I don’t see an adult in debt that refuses to stop spending money on random crap that pleases them, and justifies it by budgeting it as an allowance.
Don’t get me wrong, you always have the right to waste money. I’m not here to tell you how to spend your money, especially if you choose not to care about your financial life. However, if you want to improve your financial life and want to stop worrying about money, then I am here to tell you exactly how to spend your money. And spending your money on random crap, while you are in a debt, is a really bad idea. Even if you budget said crap.
Many couples assign allowance, fun money, or some other cute word for no-questions-asked discretionary spending. I personally don’t have a fun money account. It’s just not my style. Again, feel free to divvy up your joint income into individual pots, but I think it makes it harder to accomplish your financial goals. And the point of this entire post is that giving yourself fun money when you have any sort of debt, other than a mortgage, is really a bad idea. I’m not suggesting you don’t ever dine out, buy shoes, or go to a concert, I’m just suggesting that having a monthly excuse to make poor decisions seems like a really bad idea. It seems that way, because it is.
In my opinion, albeit a ridiculously expert one, allowances can work, but they never work when you are trying to get out of debt. You must eat your entire tray before you have the opportunity to purchase Wacky Cake.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.