How to Use an Adult Allowance to Stick to Your Budget

Quick Answer

You can use a weekly allowance for adults to stick to your budget by determining how much of your income will go toward discretionary spending, keeping that money elsewhere and remaining accountable.

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Many parents give their kids an allowance as a way to teach them financial management. The idea is that giving kids pocket money they can choose to spend however they wish will help young people learn to budget and save toward goals. So, for instance, you might be able to buy a new album now, or save your allowance to buy a skateboard later—but you won't be able to do both.

In adulthood, the lessons on delayed gratification and prioritizing your wants and needs are all the more important. For some people, the structure of a weekly allowance for adults can be a good way to stick with your budget and meet financial goals. Here's how.

What Is an Adult Allowance?

An adult allowance is a lot like a weekly allowance for kids, but you set it up yourself based on your own budget goals.

The key thing to note is that when you have an income, a bank account and expenses, you need to have full control of your money. Having access to things like credit cards and loans can make it feel as though you've got more money than you actually do, which can lead to overspending. Of course, that's very different from receiving an allowance as a kid and being strictly bound to that limit.

With an adult allowance, you aim to reproduce the sense of structure that comes from receiving a set sum of cash.

Benefits of Using an Adult Allowance

There are a few main benefits to using an adult allowance to manage your spending.

  • Set good boundaries. When you're a kid and have a set allowance, there's no way to overspend—you either have the cash or you don't. Once we've got our own incomes, bank accounts and access to credit, however, those boundaries aren't as rigid. It's not uncommon to slip into overspending as a result. Try to believe in your allowance as a true boundary, telling yourself that your discretionary spending can't balloon beyond it because the money simply isn't there.
  • Delay gratification. Knowing when to splurge and when to be frugal are key habits for financial stability. With that comes the ability to delay gratification by simply implementing a waiting period before you make a large purchase. If your weekly allowance isn't large enough to cover a splurge, then you'll have multiple weeks to think the purchase over.
  • Reduce accidental overspending. With your "fun money" kept completely separate from all the "adulting money" that sits in your bank account and covers your expenses and savings, it's easier to avoid tapping into funds earmarked for other things.

How to Create a Weekly Adult Allowance

Here are steps you can take to create an adult allowance that works for you:

  1. Review your budget. Ideally, you already know how much money you have for saving and expenses and how much disposable income you have. If not, crunch some numbers and come up with a budget now.
  2. Set a formal allowance amount. What will you make your limit for discretionary spending? Will you allocate your allowance so that you're bound to a weekly spending limit, a biweekly spending limit or a monthly spending limit? Consider factors such as when you get paid, when your bills are due and how much room you have in your budget.
  3. Decide where to keep your allowance. You could use a separate bank account or a prepaid card. You could also opt for a rewards credit card with points for spending you'll use your allowance for, such as dining or retail. Just be sure to set hard limits to stick to your assigned allowance.

The Bottom Line

When it comes to managing your money, the right moves are the ones that work the best for you. In addition to implementing an allowance, consider other ways to make budgeting more intuitive, such as automating your finances or embracing minimalism.

While you're getting your finances in order, make sure you're minding your credit for overall financial health. You can sign up for free credit monitoring through Experian to get clear on your current score. Then, you can look for ways to improve your credit score over time.