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		Why Budgets Fail Don Mize © 2005, Don Mize In the previous article (How to Get Ahead Financially), a basic budget plan was presented to help you better use the cash that actually comes into your possession each month.  In order to make this basic budget work, however, each family members needs a personal weekly allowance.  Rather than a luxury, a personal allowance is essential: a weekly allowance releases the emotional energy necessary for success. Simply put, most budgets fail because the emotional need for recreation overpowers reason.  By limiting recreational spending to your personal allowance, you satisfy your emotional need while limiting your spending.   Thus, be sure your budget includes a weekly allowance for each family member. Even a small child can receive a dollar a week in order to learn about money.   In our family, we started giving our son a dollar a week in dimes.  He could see ten dimes: one went into his piggy bank (savings), one was for church (a tithe), and he could spend the other eight dimes as he pleased. Adults also need tangible experiences with money.  By limiting recreation to your reasonable allowance, you create a tangible experience: you watch your personal money grow or disappear.  That experience helps you deal with other forms of money by reminding you that every number represents cash.  Our son soon learned to evaluate the momentary whim against disappearing dimes.   Sometimes he enjoyed the new toy he bought for himself, and sometimes he found the new toy failed to meet his expectations.  The weekly allowance allows learning without total defeat. We will have fun.  Recreation is indeed re-creation.  We actually need an emotional safety valve to release frustration and restore the balance of pleasure and pain.  We need a sense of control.  However, recreation costs money.   Simple pleasures like going out to eat, shopping, or renting a movie all involve some costs.  The money will come either from our weekly allowance or from the family budget.  A personal allowance allows us release and fulfillment within the context of financial responsibility. The personal allowance limits recreation expense while maintaining personal freedom.  You decide how to spend (or save) your personal allowance.  If that new truck is not in the budget, and if you cannot buy it out of your personal allowance, you need to put it off.  You are free to choose whether you would rather take your family out to eat or save your allowance/recreation money for something else.  Like hiking in a wilderness, you cannot go north and south at the some moment.  You must make choices.  In fact, you will make choices.   Following your budget is like having a compass in the financial wilderness to keep you on track. Someone pointed out that we can write a check for $5.00, $500, or $5,000 in about the same amount of time.  The same is true for signing a credit or debit card.  No matter how much your income, if you spend more than you take in, you are about to walk off a financial cliff.  No matter how much your income, you can find a way to spend it.  No matter how much your income, you can go broke. Financial numbers represent tangible assets, whether cash, your home put up as collateral, or your future income.  The same people who tell you that the debit or credit card gives you freedom will also repossess your home, hound you with ugly telephone calls, and pass laws to prevent you from declaring bankruptcy.  Money is reduced to numbers, but in the end your creditors expect to possess the tangible assets represented by those numbers, whether cash, your home, or whatever other collateral you possessed to gain that line of credit. How much weekly allowance should each family member receive?  Judgment is involved where children are concerned, but the weekly amount for each child should not be excessive and should fit the context of the family budget.   Expect your child to take care of his/her own recreation, such as a movie a week, extra fad clothing, or the latest music release. The amount of the weekly allowance for each adult should be decided in the context of the family budget.  At times, the amount may be small, but the emotional satisfaction of having some pocket money is not tied to the amount.   As you increase your income or pay off some debt, you can increase your personal allowance (recreation) money.  The important thing is to make the decision in the context of the basic budget. One warning to keep you from defeating the whole process: no advances on the weekly allowance to anyone in the family.  Borrowing on future cash for an expense like recreation is not smart.  The weekly allowance teaches judgment and self-control.  If we blow it, we wait until the next weekly allowance.  If we want to go to a Dallas Cowboy Game, we save the allowance money in advance.  This approach creates a situation where we balance emotional needs with reality.  An advance on the weekly allowance defeats the whole process. No matter your income, you can find a way to spend it.  The secret of financial success does not lie in how much you make but in how well you use the cash that comes into your possession.  A weekly allowance in cash gives you emotional fulfillment, limits your recreational expense, and motivates you to stay with your basic budget plan.
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