You agree that gambling is addictive. You describe yourself in a way that suggests you personally are attracted to financial gambling. Your question is exactly like asking how much anyone can safely spend on any addictive thing that has a strong attraction for them.
There are two questions I always ask, and to date nobody advocating “X% fun money” has actually answered them.
1) Can’t you get more fun for the same money in some other way?
2) What, exactly, do you do if you lose the money you have allocated to gambling? The usual unstated assumption is that this won’t happen. The unstated assumption is that what is at stake is only the psychological humiliation of underperforming the market.
The rationale for setting a limit is that you have limited yourself from doing serious financial harm to yourself. But the only way it can be a limit is if, after a loss, you never gamble again in your life. It does not seem likely to me that any human being who has a gambling urge, and has been feeding their gambling urge, really will do this. It seems far more likely that someone who has lost all of their X% fun money will gamble a second X% stake and try to recoup.
To put it bluntly, I don’t believe very many people can stick to a “nonnegotiable fixed percentage limit.”
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.