This post is by staff writer Tim Sullivan.
This past Friday, I got an e-mail from my uncle letting me know the Sox were here in Seattle. Since leaving Chicago, it’s rare that I get to see my hometown sluggers, and it’s not an opportunity I would want to miss. But by the time I caught wind of the windy city being in town, the cheap seats were sold out, which meant that tickets for my girlfriend and me were around $50. Yes, I should have checked the schedule ahead of time and planned accordingly, but I didn’t. I took the cost in stride, along with the $6 Seattle dogs (cream cheese and grilled onions — so good), because I had money set aside for this very reason. Awhile back, I started contributing a small amount each month to what I call my spontaneity fund.
The Spontaneity Fund
We often hear that the first step of our personal finance expeditions should be to set up an emergency fund. A spontaneity fund isn’t the second step, or even the third or fourth, but I wanted a way to follow a whim or two and not feel guilty about it after. Whether it’s a concert I just found out my favorite band is playing down the street, or an impromptu evening out because my best friend had a terrible week at work, I want to be able to be there without breaking my budget completely. At my income level, without money set aside, there’s no way I would’ve been able to see my beloved White Sox at the ballpark the way I used to as a kid. This is exactly what I had set up a spontaneity fund for; it’s like an emergency fund for total non-emergencies. That said, where does the money come from?
The tweaked Balance Money Formula
Ever since coming across All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi, I’ve been using something quite similar to their balanced money formula, with a few tweaks to match my lifestyle. The authors say that out of each paycheck, 50% of your income after taxes should go toward needs, 30% to wants, and 20% to savings.
Check it out:
What drew me to this formula was its utter simplicity. I can pay my bills, have fun, and still be stashing money away for my future goals without making things complicated. The authors say that one of the greatest advantages of having your budget balanced in this way is that managing your money becomes automatic, so you can stop worrying about it. Awesome. Great.
Except that I didn’t stop worrying about it. I found that my wants category ended up being more like 15% of my paycheck, and not 30%. I couldn’t let myself relax and enjoy. I could afford to do things like go out for dinner, sure, but I’d worry about the long-term damage it would do and just end up staying at home. If I planned for a dinner, like a birthday or holiday, then great, but a Friday night dinner just because wasn’t something I’d allow myself. For some reason, my wants category meant planned wants that could be justified and not frivolous, why-the-heck-not wants.
I’m not saying that I should be less conscious with my disposable income, but in my case, I needed to loosen up. Being smart about money shouldn’t mean worrying about it all time. So I sliced a little bit off, just a tiny 5% to put into my spontaneity fund. It allows me money to just let loose every once in a while. This month, it went toward a baseball game, some bigger-than-my-head hot dogs, and overpriced stadium beer. I didn’t skip a beat when it came to paying for them, and I got to watch the game and enjoy one of the sunniest days us Seattleites have seen all year. Next month, who knows? Maybe it’ll go toward dance classes or a case of Snapple for my girlfriend.
Other ways to spend a spontaneity fund
I’ve also found a couple of websites and clubs out there that are worth my spontaneous funds. Here are two of my favorites:
- Fill A Seat. This site started in Las Vegas and has made its way to most major cities. How it works is that you pay for a yearly membership (usually around $80) and when venues have empty seats for shows, concerts, and sporting events, the seats are offered to members at no cost. It requires utter spontaneity, as often, you don’t know you’re going to a concert until the day of, but you can see some great live music at no cost to your monthly budget!
- Groupon Now. I’m sure most of us have had our successes and failures with Groupon and quickly realized that spending money never equals saving money, no matter what percentage you’re saving. That said, when an impromptu lunch or dinner arrives, I often find myself on Groupon Now, which is similar to Groupon, just on an hour-by-hour basis. You are only able to redeem Groupon Now coupons the same day and only during a given time period. Last week, I got a delicious $5 Ethiopian brunch while meeting a prospective client.
Although my spontaneity fund is for frivolity, that doesn’t mean I like to see it go away quickly. I still use it as wisely as possible to keep it healthy for the next month.
Finding the balance between being smart about money and worrying about money is hard. But I find the more I can clearly define my own limits, the less I worry about having a little unplanned fun in my life. Warren and Tyagi suggest that at the point that you continue to trim fun spending down to the quick, you “might be missing the point of money.”
Are you frugal to a fault? How have you given yourself permission to loosen up a little without guilt?
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