There are a variety of ways to spend your budget’s so-called “fun money.”
Two options are to plan a family vacation or to attend live entertainment. You can spend your fun money on things like eating out, going to the movies, or participating in recreational activities.
Having a budget does not imply that you do not set aside money for the extras and things that bring you joy.
What it really means is that you’re strategic about your spending and saving in all areas, including the fun stuff and the extras
Below, we discuss the importance of having a budget, as well as why and how to include money for life’s little luxuries.
What Is the Value of Having a Budget?
When it comes to personal finance, the importance of having a budget in general cannot be overstated.
This is especially true now that we’re experiencing high inflation and essentials like food and gas are becoming more expensive. If you don’t have a budget yet, or if you already have one, now is a great time to make one.
People frequently believe that a budget will not help them, or that they do not earn enough money to afford one.
Budgeting, on the other hand, regardless of your income or spending habits, allows you to be more aware of where your money is going. You will not only be able to avoid overspending, but you will also be in a better position to save money and make wise decisions in general.
Using a budget forces you to compare your income to your expenses and identify areas where you could save money.
You may prioritize your goals with a budget, and instead of spending carelessly or wastefully, you can be assured that every dollar is going to something you value and that is important to you.
If you’re on a budget, it doesn’t mean you can’t have fun. You’re merely determining how much of your income should go toward your leisure activities. You won’t feel guilty then.
A budget does not imply that your life is no longer enjoyable. When you manage your money well, you can actually generate more opportunity to do the things you enjoy.
Why Should You Include Fun Money in Your Budget?
A rigid budget may work in the short term, but it may set you up for failure in the long run. Crash dieting is a similar approach.
You’ll have a pent-up desire to spend money if you don’t allow yourself any money for extras or things you enjoy in your budget. If the dam breaks, you may find yourself in a deeper financial hole as a result of rebound spending.
Restriction can, and frequently does, lead to rash and excessive spending. When you put too much restriction on yourself, you may resort to emotional spending. If you’re extremely stingy with your money, you might acquire a bad attitude about it. Budgeting may become associated with thoughts of scarcity, causing you to feel bad when you spend money.
If you don’t have enough money for the fun stuff, you could lose motivation to achieve your other objectives. It may result in burnout.
If you budget with a partner, too much limitation might lead to arguments and troubles in your relationship. One partner may believe the other is being overly controlling, which can lead to resentment.
When you set away a portion of your monthly income for things you like, you’ll not only feel financially secure, but you’ll also know you’re making wise choices.
Fun money doesn’t imply that you’re going crazy with your spending, nor does it imply that you’re being wasteful. You’re also not slashing your financial ambitions.
In a good budget, every dollar needs a job, and some of those jobs will be leisure activities like travel or dining out.
That being said, once the fun money for the month is out, that’s it—gone. it’s
How much money should you set aside for fun in your budget?
Because everyone’s income, expenses, and interests are different, there is no one-size-fits-all answer for how much fun money you should include in your budget.
Examine your budget and see what’s left after you’ve put everything else to work as it should.
If you have a lot of other goals to achieve, your fun money budget might be smaller. Then, as you achieve some of your objectives, you can gradually increase it.
Steps to Incorporating Recreational Spending into a Budget
Remember the following when allocating a portion of your budget to leisure:
Consider your most important values. What makes you truly happy and gives you joy in life? If you enjoy live music, your budget may contain funds for concerts or events. It could be that you enjoy nice wine or food, or that you have a strong desire to travel.
Remember that your fun money does not have to be spent on a monthly basis. Instead, you may set aside money on a regular basis to save for something bigger, such as a vacation.
Examine your spending. This is crucial for budgeting in every aspect, and you should examine it every few months because your expenses fluctuate frequently.
If you stick to the traditional 50/30/30 budgeting method, you’ll set aside 30% of your income for discretionary expenditure. That is where your leisure and entertainment money would come from.
Set aside some money for leisure in a separate account. When you dig into it, you won’t feel bad, and you won’t risk overspending. You’ll be able to tell whenever you’re using that account that it’s simply for fun.
Finally, you may always take money from other areas of your budget and put it toward pleasurable activities, but be aware that you will have to make sacrifices in order to do so. For example, if you want to go on a fantastic vacation, you might avoid eating out entirely and put more money into your fun account.