The Curious Case of $20 and $200

You can spend $20 without thinking too much about it.

Lunch costs $20? Sure. Something you want is $15? Why not?

Then you spend another $20. Then another $10. Then another $25.

None of these purchases feels significant. They’re small enough that saying yes doesn’t require much thought.

Before you know it, you’ve spent $200.

But now let’s imagine a single $200 purchase. 

Immediate reaction—it feels too expensive. And you never end up getting it.

Here’s what’s weird:

All those smaller $20 purchases are very forgettable. 

But that one $200 purchase you decided was “too expensive”? It might have been something you really wanted. Something you’d use and enjoy for some time.

Either way, you’re spending $200.

So why are we willing to spend our hard-earned money on dozens of little things that don’t even register, while talking ourselves out of the larger things we actually want?

The Problem Is Guessing

The problem is we don’t know how much money we can responsibly spend.

We just make a guess every time we want to buy something.

$10? I can afford that.

$20? It’s only $20.

$40? I probably shouldn’t… but maybe?

You’re guessing. Obviously you’re going to err on the side of caution: saying yes to small purchases and no to big purchases. 

But small purchases add up fast. 

You might make twenty little purchases throughout the month, each one seeming completely reasonable. But by the end of the month, you’ve spent hundreds of dollars without ever making a single purchase that felt significant.

Do you ever look at your bank account and wonder, “where did all my money go?”

When you’re guessing with money, money goes quick even though it feels like you’re not spending much at all.

What If You Knew Exactly What You Could Spend?

Imagine starting each month with a set number to spend.

Let’s say it’s $100. That money is yours to spend however you want. No guesswork.

Immediately, something interesting happens.

Instead of asking, “Can I afford this?” You ask a much more satisfying question:

“Is this worth my money?”

Saying no doesn’t feel like deprivation. You’re not saying no because you can’t afford it. You’re saying no because you’d rather spend that money somewhere else.

And when you do say yes to something you really want, the purchase feels different!

There’s no guilt. No second-guessing. No buyer’s remorse. You know you can afford it because you decided ahead of time how much you could spend.

So you get to enjoy the purchase itself and enjoy the feeling that you’re spending your money responsibly.

The Allowance Method

This is the idea behind the Allowance Method.

At the beginning of each month, you give yourself a responsible amount of money that you are free to spend on whatever you want.

This is your allowance. This is the only money you need to keep track of. What’s surprising is that this one boundary does all the work for you.

You’re living within your means. That means your long-term financial goals (savings, debt, retirement) quietly grow in the background. 

At the same time, you enjoy spending your money without stress, guilt, or buyer’s remorse. And anything you didn’t spend can keep accumulating for something you really want later.

You don’t need to choose between enjoying your money and building wealth!

You can do both.

If you’re tired of wondering where your money went, or feel like you can’t afford anything meaningful, give the Allowance Method a try.

We’ve put together the full guide for free.

It takes about ten minutes to learn, and you can start putting it into practice immediately.

You might find that a simple spending boundary changes the way you think about money entirely.

And if it doesn’t work for you?

You’ve only spent ten minutes finding out.

But it might be the ten minutes that finally makes your money feel like it’s working for you.