Saving Money For Fun
This time of year many folks are thinking about making New Year’s Resolutions that may impact their pocketbooks. This could mean paying off debt from the holidays, or simply a commitment towards better monthly budgeting for the new year ahead. Some may need additional planning to ensure adequate money is set aside for things such as family vacations, weekend getaways, or other fun things that may not otherwise be budgeted for. After a season of spending, the message to budget for “enjoyable” items may be far from the mind. Paying off debt, and saving money for things like medical emergencies, job loss, and retirement should still be top of mind. Without lessening the importance of those items, it is also a good idea to set money aside for enjoyment items as well. Doing so will give more control over your finances. Putting together a monthly budget and testing it for a couple of months will give you an idea about how attainable your entertainment and enjoyment goals are compared to where you are today. It will also allow you to spend your “fun” money without guilt once you get there.
Those who desire to be responsible with their money will want to know how much “fun money” they are spending on a monthly or yearly basis. It’s a good idea to have a separate savings account for your enjoyment money, especially if you’ll be saving larger sums over a longer period of time. On a monthly budget, fun money can cover entertainment and small things each month such as movies passes or trips to the ice-skating rink. Ideally, making purchases or attending events that are for entertainment shouldn’t come from an “emergency” savings account. However, having one savings account that does it all is better than none at all.
Who Budgets? Who Saves?
Over the years, many studies have been done to learn more about the demographics of who maintains a budget, what they budget for, how they budget, and so on. One recent survey from Bankrate.com found that A18-29, (millennials), are actually better at saving than any other age group. They are not saving more in quantity, but they are in the habit of saving in smaller amounts, and at a younger age. Another recent study conducted by U.S. Bank, concluded that only 41% of Americans use a budget. This leaves a lot of room for improvement. You’re never too young or too old to start saving. For any savings to grow there must be a budget. For a budget to be successful, it will take commitment, fiscal responsibility and reasonable expectations.
A household that is financially responsible will have a budget, regardless of the income that household may be. Nobody wants to have to deal with the stress and anxiety that comes with overspending; budgets are going to ensure that finances stay on track with both short and long-term enjoyment spending goals. It is the financial tracking document that shows what limitations you may have based upon how you’re allocating money. Once finances are tracked in a monthly budget, you may be surprised at the findings. It’s possible that there may be places where you can cut back to save a little extra, or you may find that there is more currently being spent on enjoyment than what can be afforded. After you’ve identified your current situation, you can make adjustments accordingly and possibly begin contributing to your long-term savings account for enjoyment.
If you’re not saving currently, then there may be an easy fix for that problem. Budgeting apps are available for nearly every kind of phone. From our website, you can download a free budget template.
How Much To Save For Fun Activities
The answer to how much savings should be designated into your enjoyment savings fund is a little more complicated. The answer lies in a variety of variables, based upon your personal situation. If you’re expecting work bonuses, or commission checks, maybe those could go towards your enjoyment fund. In any case, small discretionary items such as movie night, a night at the Dells or new bike purchase…all the way up to the purchase of a new boat should be planned for. Once a budget is established, you’ll know more about where your hard-earned money is going. In addition, it will provide a good indication of how much money is left over every month after bills and other obligations. That amount that is left over is what you have to work with. If your discretionary income is only $150 a month after all of the bills are paid and food is on the table, then that is what you have. Keep in mind that “fun money” is really not “fun” to spend unless you know that the important things are taken care of anyway.
Breaking down the average annual expenditures: (According to a study from the United States Bureau of Labor Statics) (Info here taken from https://www.creditloan.com/blog/average-american-spends-on-entertainment/) (updated Jan. 2017)
- Housing – 33.9%
- Transportation – 17%
- Food – 12.8%
- Personal insurance and pensions – 11.1%
- Health care – 5.9%
- Entertainment – 5.6%
- Apparel and services – 3.6%
- Cash contributions – 3.4%
- Education – 2.%
- Miscellaneous – 1.7%
- Personal care and services –1.2%
- Alcoholic beverages – 0.9%
- Tobacco products and smoking supplies – 0.6%
- Reading – 0.2%
When Saving Money Is Difficult
At Debt Advisors, we understand that following a budget can be especially challenging for some folks who struggle with debt. If you have very little discretionary income due to debt overload, please contact us. We help people with debt-related issues that may be resolved with chapter 7 or chapter 13 bankruptcies. Paying off debt is always going to make saving money easier, and more fun. Have more questions for us? We’d love to help! Ask for a free Debt Advisors consultation.