If you’re like me – a penny pincher – you need to know it’s okay to have a little fun every once in a while.
But how much should you spend on entertainment and fun?
The answer is different for everyone, but here are a a few ideas that can help you figure that out.
How Most People Spend Money
The very first step to saving money is determining that you have a problem with spending. If you do have a problem shopping and spend way more than you every should, you’re not alone.
Many people budget based on how much they have in their checking account. They figure if there’s money in there, and they can still afford their mortgage, they might as well spend their money without thinking about other expenses or the long term effects of their spending.
It is better practice to spend money in the context of a comprehensive budget. After budgeting for necessary and responsible expenses, you can choose to spend some discretionary money. How much is that? Here are some ways to determine that for you.
How Much Discretionary Money You Should Spend
Here’s the short version: enough to keep you sane, but not everything you can.
You’re going to want to save some of your discretionary money for long-term financial goals. For example, you can put some extra money toward:
- Your mortgage.
- Miscellaneous debts.
- College education.
The more you want to get out of debt or save for retirement, the less money you’ll want to spend on discretionary fun. For our family right now, we’re spending what we consider to be a reasonable amount of fun money every month: $60.00 per person in our household (just my wife and I).
Trust me, that number used to be lower. Before we completed Dave Ramsey’s 3rd Baby Step, we only spent $20.00 per person.
The gradual increase in spending came as we started to experience success with our financial plan. We didn’t increase our spending to hundreds of dollars – just enough to keep us sane.
I recommend you try the same.
If you’re in debt and need to pay off your credit cards, keep your fun money spending low. Get intense about spending less money and paying off your debt!
If you don’t have an emergency fund and any hiccup in your financial life would cause a nuclear explosion, you might want to hold off spending too much money. Wait until you have a fully funded emergency fund, and then increase your spending.
The last thing you want to do is get ahead of your current financial situation when it comes to allocating fun money. Spend responsibly, think frugally, and be smart.
Define What Expenses Fit Your Fun Money Category
One of the best things you can do for your budget is define what expenses fit your fun money category.
Here is our definition of fun money:
Any expense that is not required for survival or for maintenance of our home should be considered a fun money expense.
This definition worked out pretty well for us, as it prevents us on cheating with the larger purchases.
Let me give you an example. I’ve wanted an iPad ever since Steve Jobs took the stage and introduced the device that would take a necessary place between the iPhone and the Macbook. But was it really necessary?
Nope. Because iPads are not “required for survival or for maintenance of our home.”
Sometimes the larger and more infrequent purchases might be justified if we didn’t clearly define what “fun money” expenses really look like.
I trust that you can figure out how much you should spend on entertainment. Follow these guidelines and you’ll be well on your way to figuring out the best amount for you.
By the way, if you’re new to budgeting, start with my Budget Category Brainstormer – a printable budget category worksheet with over 80 categories to start you off on the right foot!
How much do you currently spend on entertainment and discretionary items? How much will you spend now? Meet us in the comments and let us know!
My wife and I set aside a portion of our budget for spending money each month. Currently that is $90 each, but we’ll probably be adjusting it down soon as we shift our focus to knock out some debt.
That personal spending money covers visits to the coffee shop, eating out, most dates, and nonessential clothes purchases.
Mike D. says
My wife and I have money for each of us, and another envelope for both. If we go out and do something together, like the movies, or if there’s an item we both really want, like a game, it comes out of the both envelope. We don’t use that a ton. We put $20 in there a month and there’s a good amount in there right now. For each of use we’re currently spending $40/month after recently backing that down from $50 to help bump up our savings goals a little.
[email protected] says
I like the definition of fun money. How do you budget for gifts, including Christmas gifts? Is that included in the fun money? So any gifts have to come from that? It’s important to get that kind of spending clear.
In talking with couples, I call this the Adult Allowance or the Freedom Fund. Most like the Freedom Fund name because it gives them permission to spend that money on anything – as long as it’s only that amount of money!
It’s amazing how limiting your personal spending helps you find more joy in what you purchase.
Reminds me of a story someone told me about having too many things: If you have one pair of scissors in the house, you take care of them and always know where they are when you need them. If you have 6 pairs of scissors in the house, you can never find a pair.
I personally have found things like the special coffee drink to be like scissors. If I have one as a rare treat, I appreciate it and enjoy it…every single sip. If I have one every day, I take little notice of it and probably can’t even remember the experience at the end of the day.
Stacy Makes Cents says
Fun money is almost a MUST….if you don’t have it, you might go crazy. Yes, you should be dedicated to the cause (debt free), but you also need a little money for enjoyment now and then. The key is moderation.
Fabulous post. 🙂
WOW! Good timing on this post. I was putting together a 2012 budget and was wondering how much to budget for “fun” money. These amounts seem a lot lower than what I was thinking; just going out to eat alone I think I’d spend more than $60 in a month per person! Hmmm…
I’m curious to know, John, whether you saved up for the iPad and have gotten one by now. Would you only be able to save for a fun item using only your fun money? Perhaps, your wife will be using her Christmas funds to surprise you with an iPad!
I suggest having little financial goals along the way to your big goals and rewarding yourself as you reach those smaller goals. By letting yourself satisfy a little ‘want’ when you reach a milestone, you reinforce the idea of a payoff for sacrifice and it’ll help you stay motivated for the long haul. You’ll probably attach a little more value to whatever it was that you rewarded yourself with as well.
yeah… its important to have a clear idea about the portion “required for survival or for maintenance of our home.”… pretty useful article… Spending responsibly, being frugal and smart are becoming important now a days…
[email protected] says
I use fun money a little differently than my wife. I work in the an office staring at my computer for 8hr. I like going out to lunch. So IF I go to lunch and eat out, that is fun money, because I enjoy doing that, and I could pack my lunch…
She views as lunch as a necessity, (which it is) but no matter if she packs or eats out, so that comes out of the main checking account….
My husband and I have $220 each per month, which seems really really high compared to everyone else, but that includes EVERYTHING that we want (including lunches out, movies, all clothes, beer or wine if we want to purchase it, or saving up for anything that we want). I tend to try and save half of mine, and have given up my morning coffee at work, instead preferring to have a coffee at home before I go. We enjoy having lunch together at home on the days I don’t work, and appreciate good food & company rather than spending $10-15 each on eating out.
Agreed. As it stands now my fiance and I are on a tight budget because we are saving for a wedding in October. However, once we are married we plan to live below our means, save around 25-30% of our combined income (401k, Roth IRA, House Fund, Emergency Fund, General Savings Fund). That will leave us still with about $75 a week each for fun money spending. I get a bigger thrill being able to buy things and living in a 1 bedroom apartment then not.