Adam brought up two good points. First, dedicate “extra” money to one specific goal. Second, allocate a certain percentage of extra money to simply spend as your whims direct you.
This is great advice. But what do you do when you have joined your finances with a partner? There are several variables to take into account. For example, do both partners have the same ability to earn extra income? Or do your goals align?
What if Mr. Frugal works and Mrs. Frugal stays at home and Mr. Frugal is able to earn extra money from a hobby.
In this case, my best advice is to have a common goal that both of you are happy with. Instead of a new item (such as a new LCD TV or a new couch), perhaps you should look at taking a vacation together.
Whatever the case, I would strongly suggest that the person who has brought in the extra income should make more of an effort to yield his or her partner’s desires.