How much discretionary spending money should you allocate per month for fun activities and entertainment? This is a common question many people struggle with when trying to create a monthly budget. The amount of “fun money” that is reasonable can vary greatly depending on your individual circumstances. In this article, we will explore some quick answers about how to determine an appropriate fun money allowance, the benefits of having a fun money budget, and tips for saving money on entertainment.
Quick answers:
– As a general guideline, 5-10% of your monthly take-home pay can be reasonable to allocate for fun activities and entertainment. However, the exact percentage will depend on your income level and obligations.
– Take a look at your current spending habits and identify areas where you may be overspending on non-essential fun purchases. Reduce those expenses before determining your ideal fun money budget.
– Consider your financial goals and priorities. If you are focused on paying off debt or saving for a major purchase, you may want to keep your fun money allowance on the lower end.
– Look for ways to enjoy low-cost and free entertainment options in your city to maximize your fun money. Things like local parks, free museums, public libraries, and hiking trails can provide fun without spending a lot.
– Reevaluate your fun money budget every few months and make adjustments as needed based on your financial situation. Fun activities can be important for your mental health, but be careful not to jeopardize other financial goals.
The benefits of budgeting fun money:
Having a specific amount budgeted each month for discretionary “fun” spending provides many benefits:
– **Reduces impulse spending**: By knowing you have X amount set aside for entertainment and fun, you’ll be less likely to make impulsive purchases each time you have a desire for something new.
– **Encourages mindfulness**: Carefully choosing how to best use your fun money each month will encourage more mindful and intentional spending habits. You’ll really think about what brings you joy.
– **Aids financial goals**: Giving yourself a set limit for fun spending helps ensure you’re sticking to your bigger financial goals like paying off debt, saving for retirement, or building an emergency fund.
– **Reduces guilt**: When you know you have dollars allocated for fun, you won’t feel guilty about occasionally spending on things that bring you joy and boost your mental health.
– **Increases satisfaction**: Studies show that people receive more happiness from experiences than material goods. Carefully choosing fun experiences each month will lead to greater joy.
Tips for saving on entertainment:
Here are some great tips to maximize your fun money budget:
– Take advantage of free activities in your community like local parks, trails, beaches, museums, festivals, and library events.
– Consider lower cost forms of entertainment like hiking, picnics, board games, YouTube exercise videos, reading, and cooking.
– Host potlucks or game nights at home with friends instead of going to expensive restaurants or bars.
– Look for discounts and deals when possible – check sites like Groupon and LivingSocial.
– Be flexible – going to movies or attractions mid-week vs. weekends can mean big savings.
– Choose more casual, affordable restaurants over high-end places when dining out.
– Set a limit when going to things like amusement parks, arcades, and bowling alleys. It’s easy to overspend at these places.
– Take public transportation or walk when possible rather than using paid parking.
How Much is Reasonable for Fun Money?
So how do you determine what amount of fun money is reasonable on a monthly basis? Here are some guidelines:
Consider your income
As a very general rule of thumb, aiming to spend 5-10% of your monthly take-home income on fun activities and entertainment is reasonable for most budgets. However, you’ll want to consider your specific income level.
For example, someone earning $4,000 per month after taxes may find $200 – $400 per month to be reasonable. On the other hand, someone earning $10,000 per month after taxes could reasonably allocate $500 – $1000 for fun spending.
The exact percentage will depend on your income, obligations, and goals. Someone focused intensely on paying off debt or saving for a house may want to be closer to 5%. Others with more disposable income may feel comfortable with 10% or a bit more.
Account for non-negotiable expenses first
Before determining that fun money percentage, be sure to fully account for all your non-negotiable living expenses in your budget each month:
– Housing (rent/mortgage, utilities, etc.)
– Transportation (car payment, insurance, gas, etc.)
– Food (groceries and basic dining out for sustenance)
– Insurance (health, life, etc.)
– Minimum debt payments
– Childcare/child support
– Mandatory contributions (i.e 401k match)
– Basic self-care and hygiene
– Emergency savings
After those necessary expenses are covered, tally up what discretionary money is left in your budget. Then determine an appropriate percentage you want to allocate for fun.
Have reasonable expectations
It’s important to have reasonable expectations for fun spending relative to your income level and obligations. With lower disposable income, you may need to scale back expectations. With very high income levels, you’ll have more room for fun spending before hitting that 5-10% guideline.
For example, a weekend ski trip may be reasonable fun for someone earning $100,000 annually but not for someone earning $35,000. As income rises, so does the ability to spend more on entertainment while remaining financially responsible.
Factor in your financial priorities
Your fun money allowance should also align with your broader financial goals and priorities at this season of life.
For instance, if you are aggressively trying to pay down student loan debt or save up to purchase your first home in the next 1-2 years, limiting fun spending to the 5% range could be wise.
On the other hand, if you have minimal debt, an emergency fund established, and retirement savings on track for your age, allocating closer to 10% of your income for fun may be reasonable.
Think about your top financial priorities and how they should guide your fun money spending. The amount reasonable for you may shift over time as financial goals and seasons of life change.
Creating Your Fun Money Budget
Once you’ve determined the percentage of income that is reasonable based on your financial circumstances, here are some tips for creating your fun money budget:
Start tracking spending
Use budgeting software or a simple spreadsheet to track your current spending for several months. Be sure to categorize expenses like:
– Restaurants
– Entertainment like movies/concerts
– Alcohol
– Hobbies
– Sporting events
– Vacations and travel
– Electronics/streaming services
– Personal care or beauty treatments
This spending data will reveal if you are currently overspending so you can make adjustments to align with your ideal fun money percentage.
Figure your fun money amount
Using the percentage you determined reasonable above, multiple it by your monthly take home pay.
For example:
Monthly take home income: $5,000
Ideal fun money %: 10%
10% of $5,000 is $500
So $500 per month for fun spending would be reasonable here.
Split into weekly allotments
To make your fun money easier to budget, consider splitting it into weekly allotments.
Using the above example of $500 per month – that would be around $125 per week for discretionary fun spending money.
Having that set weekly amount makes it easier to plan fun activities and stick to your budget.
Use “use it or lose it”
Rather than allowing unspent fun money to roll over month to month, employ a “use it or lose it” policy.
This encourages you to get out and have fun experiences each week rather than letting the money accumulate without enjoyment.
Any unspent fun money should roll back into general savings at the end of each month. Then you get a fresh start with your weekly allotment.
Watch for lifestyle inflation
As your income rises over time, be very careful about lifestyle inflation with your fun money. Just because you can theoretically afford to allocate more for entertainment does not mean you should.
Focus on intentionality with your fun spending rather than allowing it to arbitrarily inflate. Think through how any income increases could be better utilized for goals like paying off debt or increasing retirement contributions.
Making the Most of Your Fun Money
Here are some great ways to get the most enjoyment out of your monthly fun money budget:
Brainstorm low-cost ideas
Think beyond just dining out and movies when planning fun with your allotment. Here are some low-cost ideas that can maximize your entertainment dollars:
– Local parks, trails, beaches – pack a lunch or snacks and make a day of it
– Invite friends over for game nights – cheaper than going out
– Grill or cookout at home vs. restaurant dining
– Take advantage of library events, free museum days, city festivals
– Hiking, yard games, free fitness classes on YouTube
– Rent movies to watch at home for a fraction of theater costs
– Research concerts and shows at low-cost venues
Find recurring activities
Having regular activities you enjoy is a great way to consistently use your fun money each week. Here are some ideas:
| Activity | Estimated Cost |
|---|---|
| Join a recreational sports league | $10-15/week |
| Take a weekly group fitness class | $5-10/class |
| Join a book club | $0-5/month for book |
| Take a weekly art class | $10-20/class |
| Attend trivia or open mic night | $0-10/night |
Having ongoing activities in your routine will ensure your fun money gets used consistently.
Research deals and discounts
Take some time each month to research current deals and discounts for entertainment options in your city.
– Groupon, LivingSocial, Goldstar – these sites offer heavily discounted local experiences like restaurants, shows, massage, axe throwing, escape rooms, etc. You can save 40-50%+ on fun activities!
– Check entertainment sites and venues directly – many offer promo codes, discounts for early ticket purchase, student rates, reward programs, and more.
– Sign up for email lists – this gives you access to presales and exclusive deals for concerts, theater, sporting events, etc.
A little effort researching deals will stretch your fun money significantly further!
Balance small pleasures with big experiences
Aim for balance between small fun purchases and big occasional splurges:
– Small pleasures: Enjoy a nice coffee once a week, see a movie with friends, get ice cream on a hot day, download an app game for your phone. These smaller treats add up but don’t break the bank.
– Big experiences: On occasion, use your accumulated fun savings for a bigger experience like concert tickets, a hot air balloon ride, ski lessons, a couples massage, or ziplining.
Mixing small frequent fun with bigger periodic excitement will bring you joy.
Should You Increase Your Fun Money?
As you establish your ideal fun money budget, you may be wondering whether you should increase the amount. Here are some signs it may be reasonable to allocate more:
You aren’t spending it fully
If you find you aren’t able to use your entire fun money amount most months, consider increasing it slightly. This indicates you have room in your budget for more entertainment spending.
However, first examine your spending habits to see if you are having trouble spending due to busy schedules or difficulty choosing activities.
You’ve paid down debts
If you’ve recently paid off loans, credit cards or other debts, those freed up funds could be directed towards increasing fun. Be sure other financial goals like savings are on track first though.
You got a raise
After getting a pay increase, allocate a small portion such as 20-30% of the extra income towards elevated fun spending. This prevents lifestyle inflation while still enhancing fun.
Major life changes
Big life stages like marriage, having a baby, or needing elder care call for revisiting budgets. Consider modest fun money increases during major transitions to cope with stressors.
Strong financial footing
If you have an ample emergency fund, retirement savings on track, minimal debt, and solid income, you may have capacity for more entertainment spending while remaining responsible.
Signs You Should Decrease Your Fun Money
On the other hand, consider cutting back your fun money allocation if:
You frequently exceed the budget
If you find yourself blowing through your monthly fun money allotment quickly, decrease it to an amount you can realistically stick to. Spending above your means prevents financial goals progress.
Debt obligations increased
When you take on additional debt like a new vehicle loan or home mortgage, it generally calls for reducing discretionary expenses including fun money temporarily.
Want to accelerate financial goals
Increasing retirement contributions, saving for a down payment, or aggressively paying down debt are all good reasons to redirect extra money from entertainment budgets for a period of time.
Facing unexpected expenses
If you have a job layoff, medical bills, home or auto repairs, or other surprise expenses, minimizing fun spending ensures you get through the crisis without accruing debt.
Lifestyle inflation
As income grows, it’s easy to succumb to inflating your lifestyle and fun spending without thinking. Reassess entertainment budget frequently to ensure it aligns with financial goals rather than inflating along with salary.
Fun Money Alternatives
For those facing very tight budgets, a more flexible approach to fun spending may be needed. Here are two options:
No specific budget – but follow principles
Rather than allocating a set amount for fun each month, simply stick to principles:
– Only spend surplus money on entertainment – don’t pull from true needs
– Limit fun expenditures to a reasonable percentage of income based on your situation
– Focus on low or no-cost activities as your primary entertainment
– Research deals to make dollars stretch further
– Avoid impulse purchases and carefully consider each fun expenditure
This flexible mindset requires discipline but can work with very tight budgets.
Save up for periodic fun
Instead of regular entertainment funds each month, save up for periodic fun experiences. For example:
– Save for 3-6 months to take a weekend camping trip annually
– Set aside small amounts weekly to enjoy a concert once or twice a year
– Occasionally splurge on a sporting event after saving up a few months
This alternating saving and splurging approach allows fun experiences periodically without monthly allocations.
Final Thoughts
Allocating “fun money” in your budget takes some careful consideration of income, existing expenses, and financial goals. But having a reasonable amount set aside specifically for entertainment, hobbies, and discretionary spending is important.
Fun activities provide joy and boost mental health. By carefully budgeting fun money each month, you can enjoy guilt-free expenditures that enliven life – without sabotaging other financial priorities.
Start by analyzing your current entertainment spending and establishing a percentage of income that seems reasonable based on your financial circumstances and obligations. Develop a specific monthly or weekly fun money budget.
Maximize your entertainment dollars by seeking out low-cost activities, recurring fun experiences, and discounts when possible. Finding balance between small pleasures and occasional big splurges will bring satisfaction.
Revisit your fun money budget frequently and adjust as needed to align with changing financial seasons of life. With a reasonable fun spending plan in place, you’ll be on your way to more joyful living!