Why your budget needs "blow money"

When you’re trying to save money, one of the first things you do is look through your expenses and try to cut unnecessary spending. You’ll pull back on eating out, you’ll think about cutting the cord with the cable company, switch to generic brands for a while, stuff like that. This is the natural impulse, and it is a good impulse. Overall, doing this can save you hundreds, if not thousands, of dollars every year. 

But, there’s one area of your spending that you should not cut but you’ll be sorely tempted to. That area is your "blow money". 

Once more, for the people in the back.

Once more, for the people in the back.

What’s blow money? That’s the amount of money you spend on whatever-you-feel-like with no consequences. It’s your fun money, your discretionary fund, your “me money”. Whatever you call it, you need it. Blow money is an important part of a healthy budget.

Wait, isn’t that exactly what I should be cutting first? 

A few years ago, I would have said yes, emphatically, cut that first. That’s the advice you’ll hear from countless other personal finance folks. “Cut unnecessary spending!” they wail. Here’s the rub, though: I don’t think blow money is unnecessary. 

Now, if you’re in a situation where you look over your income and expenses and there quite literally just isn’t enough money, then yes - you should probably (temporarily) cut blow money from your budget. But in my work over the years I have found that for every person that legitimately doesn’t have enough money coming in to pay their bills, I hear from at least twenty who think they don’t earn enough but actually just spend too much. 

So for the vast majority of you, I’ll say this: your problem isn't that you spend too much money, your problem is that you spend too much on things that don’t matter. You get to decide what matters in your life and in your budget, but without even meeting you or seeing your budget, I can confidently say that this is a significant drain on your finances. 

What does that have to do with blow money, you ask? The beauty of blow money is that it puts boundaries around your unnecessary spending. For example: allowing yourself $100 of blow money each month can prevent you from spending $300 or even $500 on small splurges that help you get through your day, without eliminating them completely.  If you put a cap on this area of your spending, it can't become a runaway, invisible drain on your overall budget. 

I, The Wiser Miser, formally give you permission to give yourself a set amount of money that you get to blow on absolutely anything, starting right away. You can spend this on fancy coffee drinks, yoga classes, expensive makeup and shoes, drinks out with friends, a hobby, a splurge gift for your partner - whatever makes you happy and that you wouldn’t otherwise budget money for. 

But (you didn’t think that was going to be that easy, did you?) you have to stick to that number. The purpose of blow money is to put a fence around your spending and to keep it from bleeding out into other areas of your budget. So give yourself a number, and then stick to it. One way to do this that works for a lot of people is to withdraw your blow money into a separate bank account each month and then when the money’s gone, it’s gone (or, you can let it build up a little bit over time so that you can spend it on something bigger). 

Have more questions about blow money? Click below to download my "Blow Money FAQs" where I answer questions about how much to give yourself, what to use it on, and more.