Fun money - why you need to give it a special place in your budget

I know that some people can manage never ever to spend money on non-necessities. They do exist, and many of them write personal finance blogs about how you don't NEED anything other than basic food, shelter, and medical care, so you therefore shouldn't really be spending on anything outside those categories.

That's not me.

In my budget, there's always room for fun stuff. I'm lucky enough that the amount that gets paid into my account (my salary) is higher than the amount that's going to come straight back out (mortgage, bills, groceries, and a generous chunk of savings). When I write up my little budget every fortnight, there's a set amount allocated to "discretionary spending". You might call yours fun money, mad money or even your allowance. Whatever you call it, it's your you money.

While I spend plenty of this money on lots of fun things every fortnight like a coffee with friends, a packet of lemon sherbets, the occasional dinner out and even "stuff" like books and DVDS, generally I don't spend it all. I let some of it accumulate in my account. Then when I want to spend a larger chunk than I would normally allocate to fun in the budget, I've already saved up my discretionary funds for whatever it is I want. Like the Star Wars Xbox I bought this week - it's awesome! And I had the *cough* $550 *cough* all ready and waiting to pay for it, out of my very own fun money. That's what it's there for.

Why do I think fun money is so important?

• I'm not willing to completely give up my social life / leaving the house, and while there are loads of ways to have fun without spending money, sometimes you have to spend a little money to have a lot of fun. And that's okay.
• I like buying presents. Today, for example, Perfect Boyfriend wasn't feeling well so I picked up some of his favourite English chocolate as a surprise. I like that part of my personality, and with a fun money fund, I can indulge it.
• I think I would, quite simply, go CRAZY if I never got to spend some money spontaneously / on things I just want. You need a little freedom and spontaneity in your life occasionally.
• I'm not perfect, and neither are you. If you're covering all your necessities and saving towards your future, why can't you buy some things you want along the way? To me, getting to spend a small proportion of my income on nice clothes, books and yarn (oh, the yarn) helps keep me on track with saving forty five per cent of my income.

Han Solo loves fun money so much, he's breaking out in a song and dance routine that both horrifies and delights me.