For most of my life I’ve struggled with everything in the title. Much of the time we never had a budget, only a bank balance that we’d watch as we spent. When it got too low we’d slow down or stop until payday. Good habits and avoiding bad habits were, like our spending habits, simply intentions. “I should drink less coffee.” or “We should cook more at home.” but with no concrete plans beyond just a sense that that would be a good idea someday.

The first thing we got in order was our household chores. For probably the first 15 years we were together we didn’t keep up with cleaning. When it was bad enough that we noticed it, we’d have a blitz and then stop again. We felt guilty about it but mostly we were having too much fun doing other things to bother. Imagine: when we first got together we were 21 and 19, still at an age where spending a day playing Nintendo and eating pizza was a very attractive option. Over the years, the video games were replaced by other things – and those things weren’t cleaning the house. Now we would go to the library, to the mall, to explore a nearby town or just relax and read all those books we brought home.

We’ve always enjoyed playing games: card games, board games and if anything by the time we were in our 30s that enjoyment increased. However, after a while, Sage confessed that she didn’t feel so motivated to win because there were no stakes. What could we play for? We didn’t have tons of money and gambling for money felt weird and a little sordid. But we did have time. Thus “games for chores” was born. The idea has been refined over the years and now what it looks like is this: We sit down to play, say, a game of seep. Before we look at the cards, each of us writes a chore down on a small card and places it face down on the table. At the end of the game, the winner decides which chore they’re doing and which the loser is doing. There’s a bit of risk and strategy to this as if both of you put terrible chores down the winner will be stuck with something bad. If you both put something easy down then little gets done and the winner doesn’t get so much satisfaction. The best is when there’s a bit of disparity between them but you never know until the end of the game.

Meanwhile on the budget front we were still struggling. We made more money so we got in trouble less often but we still weren’t in control. There was no saving going on. We tried using apps like Mint to help but while it does a great job of classifying your spending, and lets you make budgets it doesn’t ensure you actually follow them. We’ve been using this to track things for a while now so we have quite a bit of data about how we’ve done over the years.

The next refinement was to add an “allowance” – this was a budget we’d each have for spending on whatever we liked. It worked well in theory but we also had other budgets like coffee, restaurants and books that we’d use in addition to this. And often we’d make “special exceptions” to allow us to go overbudget. Note that these never included additional income – just an excuse to spend more. It was slightly better than having no budget but now we just watched more closely as we carelessly spent.

The first big leap forward was the concept of “earning” one’s allowance. In this model we gave values to tasks we did to increase our allowance. We started our allowance out with a tiny amount – enough to buy a couple of coffees. But this time we could increase it by doing chores. Are you broke? No problem. Sweep and mop the house, do a little laundry and now you can get that lunch out!

As we started paying more attention to our other habits, both good and bad we refined it a bit more. Now, a pomodoro (25 min focused work block) earns me $0.32 so I can earn $5 or so per day just by staying focused. Small household chores also earn $0.50 each – larger ones earn $1. But make mistakes and you can be penalized also. For example, if I don’t stay focused on a block of work, say I take out my phone and check my email, I lose half of my money. Gone in an instant. To add a bit more fun to it we started tying it to one another to make it a little more competitive. Now if I lose half my money, half of that now goes to Sage. Yesterday I lost about $30 that way and she gained $15. Lucky her!

I recently added fitness to the calculations also. Originally I measured it in kilometres or minutes but that wasn’t great as I could ride my bike for 20 km at a leisurely pace and hardly do any work. On the other hand I could do a 20 minute time trial race and use a ton of energy. Fortunately Strava, which I use to track my fitness has a score called “Relative Effort” which takes that into account. Now I get $0.06 for each one of those. Exercise more often or harder and I can earn.

All of this is tracked in a spreadsheet. A bit of effort was required to make it but now it’s simple to fill in the blanks. For the curious, here’s what I’ve got:

Activities that earn: Work blocks, Strava exercise effort, chores, cooking dinner (per entree – new entrees earn double), bringing lunch to work (as I don’t have to spend money on lunch)

Activities that cost money: Failed focus work block, failure to log food in a food diary, excessive breaks beyond what I plan for at work, missing a to-do (including planned exercise), and eating in a way that is not in line with my intentions.

Then in that same spreadsheet I log spending. Buy a coffee? It’s deducted from my total. If there’s nothing left, then you can’t spend anything more until you earn more.

All of this worked beautifully except for one important thing: The activities that earn money above, with the exception of work blocks, are things that don’t actually earn money. In other words, the better I do, the more of a hit the budget takes. If I earned no penalties and worked really hard, I could end up having more to spend than intended – and as this budget carries over so it’s possible to save up lots of money that’s completely unbudgeted. If I then spend it, our budget takes a hit.

A few days back I figured out the missing link: looking at the budget in a slightly different way. I went back into Mint and got rid of the budgets for fun things I would spend that allowance on. Then I added two monthly budgets – one for Sage and one for me for our allowance. Now, instead of tagging a lunch out as “Restaurants”, I tag it as “Todd Allowance” and my budget takes a hit. When Sage buys books, they’re not tagged as “Books” but are “Sage Allowance”. That budget is designed to carry over so we can save up month to month and be aware of the impact.

That budget in Mint is the maximum we can spend regardless of how we’re doing on our tasks and what my spreadsheet says. However, I can’t spend more than I am authorized to by what I currently have available in my spreadsheet. In other words, my budget that I’m tracking may say I can spend $50, but if my spreadsheet only has $10, I’m going to have to pass on a lunch out.

So far it’s worked beautifully and I’ve felt more aware of where we stand than any time in the previous 30+ years we’ve been doing this.

So to summarize – if you’re interested in implementing this, here’s what I would do:

1. Figure out a budget for what you can safely spend on yourself and still meet your other commitments and financial goals.
2. List the habits and you want to focus on.
3. Keeping #1 in mind, assign a value to those habits for earning. Earning should be low enough that you can’t earn your entire budget in a day but high enough that you feel productive. I targeted about the cost of 1 coffee/day. Coincidentally I managed to set up my “Exercise effort” rate high enough that if I go out on an all-day bike ride, I can earn the cost of food and drinks on the road.
4. List the bad habits you’re trying to avoid. How important are these to you? How much negative reinforcement do you need? Calculate your penalty either in lump sum or percentage based on that. Little mistakes should not cost much. However, if it’s important to you in the same way focused work is to me, put the penalty up really high.
5. If you have an accountability partner in this project work with them on this so you’re both agreeing to what’s being done. This is especially important if you’re in the same family – everyone needs to feel that this is being fairly implemented.
6. Begin tracking. Until you earn the money, you can’t spend it. And if the budget is gone, you have to wait.
7. Important: Above all, you need to be honest with yourself and (if applicable), your accountability partner. “Close enough” or “Just this one time” are not compatible with this method. Believe me, I’ve tried!

What about you? What are some methods you use to keep all of these things in control?