An allowance is a mini-budget but looser. An allowance can be greatly mentally freeing, even as it constrains.
Like a budget, it gives you a budget constraint. That forces you to make choices and to prioritize. However, this prioritization is only for the set of discretionary purchases. The regular non-discretionary purchases are set separately and hopefully automated. That focus on a smaller choice set makes the allowance much less overwhelming than a budget, and since allowances are generally only over fun money (what you *can* spend rather than what you *have to* spend), they can even be kind of fun.
Weekly allowances are also helpful for people with time inconsistent preferences. It may be difficult to wait a month until payday to purchase something, but most people can wait a week. And a week’s reflection can help decide whether a potential impulse purchase is worth the impulse.
Allowances are also good for people who have a hard time spending money. If you have a specific allowance, it allows you to spend a certain amount guilt-free on whatever you want. You know you can’t go over a certain amount of money and this money is the money that’s earmarked as ok to spend. It allows people to loosen up those tight chains a little bit to buy little luxuries (or whatever else it is that money can help ease).
Still, allowances aren’t for everyone. We don’t really feel like they add to our happiness, but they definitely add to many people’s, including at least one of our partners.
What are your experiences with allowances? If you’ve used them, have they helped, and if so, how?