The average person has a long list of monthly expenses. From essentials like food bills and car insurance to incidentals like newspapers or online subscriptions, there are a lot of bills that need to be paid. Budgeting is a critical component in ensuring these payments are all met and that the individual has the funds to meet them all.

Effective budgeting means drawing up a list of all regular and occasional expenses and then setting aside money to meet those costs. And, you should never overlook the importance of setting aside some of your monthly money for entertainment and fun.

Key Takeaways

• Budgeting prevents overspending
• Experts typically advise setting aside 20% to 30% of your budget for fun and entertainment
• Your fun budget can include TV and gaming subscriptions, as well as going out with friends
• Set your fun budget aside every month

Fun Budgeting

We all have hobbies and pastimes we enjoy. Whether you prefer to go out and meet friends or stay in and have them over for dinner, and whether you prefer board gaming, watching the latest movie releases, or having a flutter at an online instant casino, you must have some fun, otherwise, it makes the serious day-to-day tasks like work and household chores seem even more difficult. As such, it is fiscally and emotionally responsible to establish and maintain a budget for entertainment costs and fun.  

It Prevents Overspending

Budgeting, in general, enables you to prevent overspending. The most common cause of overspending is not having a clear idea of how much you need to spend on what. If you just take money out of your single account whenever you need it, it can be very difficult to ensure your money lasts until your next income.

Having a clear and precise budget in place means you know exactly how much you have to spend on different things and it enables you to set money aside for later expenses.

By also including a contingency fund in your budgeting, you shouldn’t be surprised by any unexpected costs. And if unexpected costs do arise, you should have the budget to meet them without them leaving you faltering, financially.

Budgeting Lets You Plan Ahead

Having a strict budget not only makes it possible to plan for the month ahead, but it can help you hit long-term saving goals, meet your annual investment targets, and more.

For entertainment purposes, this can mean saving for an annual holiday, attending eSports conventions, getting a new backpiece tattoo, or paying for a new gaming rig. Some entertainment costs need more than a month of saving, and budgeting lets you put aside a small amount every month to help accumulate the cash to pay for these.

These larger purchases, and the money you put aside to accrue for those purchases, are still considered part of your entertainment budget, however.

Leave Enough For The Essentials

When formulating a regular budget, your essential costs should come first, as important as entertainment is. Be honest with yourself and determine how much your monthly bills are. Include bills for housing, food, travel, insurance, and any costs for your kids and their essential items.

One way to ensure that you’re setting enough aside is to keep track of everything you spend for a month or two. Even if you only spend a few dollars on something, record it, because you will find that a few dollars here and a few dollars there will add up to a more sizeable amount every month.

When drafting your budget, ensure these costs are the first on the list. By budgeting properly, you can ensure you have enough to meet all of your critical bills every month while still being left with some money for your Netflix subscription and your fortnightly Friday night out with friends.

Entertainment Matters

If we only concentrate on commitments like work and even caring for family members, without setting aside time or money to have some fun, it can become overwhelming. Fun helps reduce stress and anxiety. It can help us get a handle on depression and an improved mood can also make our commitments like work and household chores easier to manage.

Fun itself is, psychologically speaking, important to human existence. While it is possible to have fun without spending a cent, having even a relatively small budget to indulge in things we find entertaining can make entertainment even more entertaining.

Furthermore, fun memories are those we tend to hold on to more dearly. When times are difficult or we face challenges, it is these moments of joy we look back on as a means of escape.

Socialization

Socialization is important to all people. At a base level, it helps us learn societal norms and develop meaningful connections. Like entertainment, socialization also helps lift our mood and improve our general state of well-being.

We can socialize in our own homes, in friends’ homes, and outdoors or in other free venues. But, many people like to meet in pubs, bars, restaurants, theaters, and other venues. Meeting in these locations may also mean we have the opportunity to spark new relationships, develop new friendships, and meet new people.

You don’t have to budget a lot for going out socializing, but going for a coffee once a month doesn’t have to cost a lot of money.

How To Budget

Setting a budget doesn’t have to be complicated. It is beneficial to set one up digitally, however, and using a basic spreadsheet makes automatic calculations and frequent updates easier.

Set Aside Essentials

Before you spend any of your monthly income on entertainment, you need to ensure that all your essentials are paid. Essentials include costs like mortgage or rental payments, food, and other daily expenses, as well as any costs associated with dependents.

Build An Emergency Fund

It is generally recommended that we have the equivalent of three to six months of your monthly expenses. This means that, if the worst was to happen and you were unable to work, you would be able to meet all expenses for at least this length of time. Three months is easier to hit, but six months gives you greater protection.

Pay Off Some Debt

Generally, it is advisable to pay off high-interest, expensive debt before spending too much money. Credit card debt, and unsecured loans, have high monthly costs, and the regular repayments on these debts can become crippling if they are left too long.

Separate Your Fun Budget From The Rest Of Your Money

Generally, experts recommend spending between 20% and 30% of your income on expenses and items you want. This includes entertainment spend. When you get your wages or other income, separate your budgets and put aside your entertainment money. This way you know that once it’s gone, it’s gone.

Choose Your Entertainment

Choose your entertainment forms of fun carefully. Do you enjoy watching TV subscription services or prefer going out to the cinema? Do you want some money to buy the latest TTRPG miniatures or to pay for a barbecue and hosting area in your garden? By writing down your preferred forms of entertainment, it is a lot easier to budget for them properly.

FAQs

How much should you spend on entertainment?

Generally, personal finance experts recommend that you follow the 50/30/20 rule. This means 50% of your income should go on your essential needs like housing and food. 20% should be set aside for savings, including your pension contributions. The remaining 30% can be spent on things you want, which includes your entertainment budget. If you find you’re spending more than 50% on essentials, you can reduce the amount you set aside for entertainment.

What if you live paycheck to paycheck?

Approximately a quarter of US households live from paycheck to paycheck, which means they spend 90% or more of their monthly income on necessities and bills, leaving very little money for anything else. If you fall into this category, look for free or very nearly free events. Your local library and community center can be good resources for these kinds of activities.

How can you save money on entertainment?

Keep track of how much you spend and on what. Periodically analyze your entertainment spending. Take a look at your TV and gaming subscriptions. Do you use them all, or is there an ad-supported tier that could save you a little money every month? Can you cut your restaurant lunches down to once a month instead of once a fortnight?

What if you have an entertainment budget left over?

If you have an entertainment budget left over each month, you could consider putting it towards a holiday or saving up for a big entertainment investment. Alternatively, if there isn’t anything extra you want, add some of the leftovers to your emergency budget or put it in your ISA or high-interest savings account to spend later.