COMMENT:

To save you need to splurge.

Cutting all non-essentials out of your weekly or monthly spend is a recipe for failure for most normal, rounded human beings.

This is the real world and none of us is perfect. We need little treats. If we don't get them, sooner or later there's a big blow out, or some hidden spending.

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That could be spending hidden from your partner, which is a dangerous thing to do.

That's why everyone needs to have "me money" in their budget, whether you're single or in a partnership.

Here's why:

To outsmart Mother Nature

We're hard wired to spend. Neuro economists have found that our spending decisions are based on irrational thinking. Do you say to yourself: "No, I'm not going to buy that chocolate/book/pair of shoes", then hand over your card at the till five minutes later?

It adds a dose of reality to our budgets

If your spending plan/budget is unrealistic it will die a death.

So we don't need to lie to each other

Lying kills relationships. Me money takes away the need to lie for most people, although it won't help pathological liars.

So both partners are equals

If one partner is working and buys lunch out or has work treats, the other partner can become resentful.

To fantasise about

No matter how small your me money, it gives you something to fantasise or dream about.
That fun money might only be enough for a splurge on a couple of beers or a new nail polish. But the anticipation and joy of that purchase will be far greater if it's budgeted for.

To balance the sacrifices

Those few dollars give you hope and make up for the big sacrifices of budgeting. It's impossible to stick to a budget if you feel deprived constantly.

It helps curb small purchases

It gives you a reason not to fritter other small amounts of money on a daily basis. If you have a set amount of me money then you'll get much better at avoiding those endless indulgences that add up big at the end of the month and push you into the red.

To knock guilt for six

Guilt isn't good for mental health and relationships. Me money takes the need for guilt away.

To make it work you need to:

Spend it how you want when you want

Hands off. This is your partner's money. Don't set rules for each other about what this money should be spent on. It's a "no questions asked" sum of money.

Avoid moralising or criticising

Me money is meant to be spent frivolously. Even if your partner buys cigarettes with it, gets a manicure, or gives it away to undeserving relatives, that is his or her choice.

Think of it this way: having me money prevents even more dough being frittered away in the same way. Your partner is fulfilling a need that is now ring fenced.

Choose a realistic figure

If you're not on the breadline then 5-10 per cent of your monthly budget can be a good figure to choose for me money.

But don't worry if it's less. It's not unusual for Kiwis to only have $20 or $30 a month me money each, but some could have hundreds. With a bit of an imagination you can really enjoy every cent of that money however big or small it is.

Use cash

It's too tempting to swipe your EFTPOS, credit or debit cards and conveniently forget how much you've already spent or overspent of your me money that week or month.

Withdraw your me money in cash and once it's gone, stop spending until the next regular withdrawal.

Consider spending it together

Perhaps you're both into drag racing, or garden gnome collecting. If you love the same things then you can spend some of your me money together, or at least take a shopping trip together and buy different things.

Knowing it is a limited reservoir of money can help you appreciate your partner's interests rather than get hot under the collar about them.

Take time to plan your me money and other spending. If you haven't got a budget then start by working out what you spend now and break it down into categories under the headings or wants and needs.

Even better, if you're part of a couple then do it together.