Part #2 of What To Do With Extra Cash - Funny Money

As I mentioned before, my hubby and I work really hard to stretch those extra doses of income we get throughout the year, like bonuses and tax returns.  We really want them to be as effective as possible to our financial goals.  Although I do some childcare on the side, 90% of our income comes from my husband's job.  Over the years, we have casually developed this list of things to do with our extra cash.  A couple days ago I shared the first thing we do is tithe (see blog here).  After that first step, we pick and choose how to spend the rest of the money based on our current financial goals. 

One thing we almost always do is what we have come to call funny money! Basically, we set an amount (somewhat proportional to the amount of extra cash we have) that each of us gets as expendable income.  We usually go out to dinner an extra night, maybe something nicer than just ordering pizza.  But we set aside money that each of us gets to spend - no questions asked.  So, I can get my nails or hair done, buy as many mochas at Starbucks as I want, or buy a new shirt/shoes, etc.  My hubby can buy a record, put money into his "picking" business, etc.  It might only be $40 or it might be $100, but we each get the same amount and get to have fun spending it!  In short, it's fun money or funny money as we've come to call it!

The point is this: by determining in advance what we get to spend, we don't splurge on some big item that we don't need just because it looks like a good deal.  We also don't feel bummed out that we had extra money and didn't get to do anything fun with it.  By spending a little on some fun, we feel better about spending a lot on our long-term goals. 

At tax return time, I limited our amount of funny money.  My hubby was kind of bummed, but went with it because I made such a good argument for needing to save and all that.  Well, we did put some into savings (which I'll talk about next), but we also had a kid-free, weekend trip to Chicago for our anniversary.  We ate at some great restaurants, stayed in a nice hotel, and (most importantly) got to see a Bulls game!  With the economy as tight as it is right now, don't forget that it's okay to have a little fun with you're extra income.  Set your funny money budget and stick to it!  In the end, you'll feel better about what you're accomplishing with your money if you don't feel like you have to sacrifice everything all the time to get there.

Stay tuned tomorrow for Part #3 of What To Do With Extra Cash - Emergency Hotline!