Budgeting For Blow Money
Eddie wants to know if Dave has a percentage rule of thumb for blow money. Dave says no.
QUESTION: Eddie on Twitter wants to know if Dave has a percentage rule of thumb for blow money. Dave says no.
ANSWER: No, I don’t. That’s just your miscellaneous pocket money. It should be a very small percentage. It really shouldn’t be much. Every dollar in your budget should have a name, but everyone needs a little bit of miscellaneous pocket money. You ought to have that as an envelope, and then you need to stick with it. It doesn’t need to be lunch money. You need to have money designated as lunch. That’s food money. That’s a separate category. That’s not blow money. You don’t buy your gas out of it. That’s a gas category.
It really does narrow it down that you don’t need a lot if you detail out a full-on budget where every dollar has a name before the month begins. That’s how you do a budget. It’s called a zero-based budget. Income minus outgo equals exactly zero. Every month before the month begins, and if you’re married, you agree on it with your spouse. Give every dollar a name, and break it down. When you first start, go ahead and have a lot of categories. It’s okay to detail it out. Then go step by step from there and you can kind of lighten it up, like we used to have groceries and restaurants. Now we just have food because over the years, we’ve gotten very good at this.