How to Budget, Save Money and Still Have Fun

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Last updated on June 20, 2021

Setting and following a budget is critical to your long-term financial success. Without this, you’re simply hoping for the best in regards to both spending and saving.

While it’s important to create a budget and save money, it doesn’t mean you can’t still enjoy life.

Below, we take a detailed look at how to create a budget, while also living your best life.

What is a Budget?

A budget is best defined as a plan that helps you decide how to spend your money each month. It takes into consideration both your income and expenses to (hopefully) ensure that you don’t spend more than you earn.

There are three basic reasons to create a budget:

  • To understand what you must spend your money on every month
  • To understand how much money you earn
  • To pinpoint how much money you have left over after spending, which you can then save and use for fun

That’s right. Having a budget isn’t just about saving and restricting your funds. In fact, it’s the best way to free up your cash and feel confident to spend it on the things you love.

Why You Need Some Fun Money in Your Budget

There’s no denying the fact that your budget should take into consideration all your income and expenses. Adding to this, you should save a reasonable amount of money every month.

But there’s something else you need to know: it’s okay to include some fun money in your budget. After all, you work hard for your money so there’s nothing wrong with spending some of it in a manner that’ll put a smile on your face.

What fun money is and isn’t

This varies from one person to the next, but here’s the best way to look at it:

Fun money is disposable income that you use for things such as date nights, drinks with friends, concerts, and sporting events.

Fun money is not money that you’ve earmarked for important expenses such as utility bills and taxes.

Furthermore, your version of fun is likely to change as you age, so this can have an impact on how much you spend and save.

Examples of fun money spending

If you’re still uncertain as to the expenses that fit into the fun money category, here are some examples:

  • Movie tickets
  • Eating out at restaurants
  • Sporting event tickets
  • Video games
  • Concert tickets
  • Vacations
  • Subscriptions, such as for streaming services

As you can see, fun money spending has the potential to quickly add up. For example, if you go to dinner and a movie with friends or co-workers, you can quickly find yourself down $50+.

Why you need to plan for fun money

You know you have disposable income, so you assume it’s okay to spend a little bit on yourself now and again. The problem with this is that a little bit can soon turn into a lot. And when that happens your entire budget is turned upside down.

Budget for fun money, such as by setting aside a particular amount of cash each month for this spending category. When it’s gone, it’s gone.

When you know how much fun money you have, you’re more likely to spend it responsibly. And of course, you’re less likely to blow through this part of your budget and find yourself in debt.

How much fun money should you budget?

This depends on a variety of factors, such as your disposable income and what you consider to be fun.

For instance, some people would rather rent a movie on-demand than spend a lot of cash on dinner and a movie with co-workers.

Then there are those on the opposite side of the equation. They like to spend a sizable chunk of their disposable income on fun.

As a general rule of thumb, set your “fun budget” at 15 to 20 percent of your income. So, if you earn $5,000/month, consider if $750 to $1,000 per month is a reasonable number.

At the end of each month, review how much fun money you spent and how you can adjust your approach for the better moving forward.

Why You Should Budget

There are three basic reasons to create a budget:

  • To understand what you must spend your money on every month
  • To understand how much money you earn
  • To pinpoint how much money you have left over after spending, which you can then save and use for fun

For example, your budget might show that you earn $3,000/month (after taxes) and spend $2,000/month on expenses such as utilities, rent, and your car payment.

This leaves you with $1,000 for saving and enjoying life.

Conversely, your budget could show that you generally spend more than you earn. This should lead you to make immediate changes, as you don’t want to continue to take on debt.

How to Budget

A budget isn’t something that you should keep in your head. It’s something that you should be able to actively review at any time.

There are three basic ways to create a budget:

  • Pencil and paper: It’s the easiest way to get started, but it’s also the most unorganized.
  • Spreadsheet: It’s free and simple to set up. The primary downfall is the need to do all the work yourself.
  • Budgeting software/app: There are both free and paid budgeting software and apps. These come with various features, such as syncing to your bank account and credit cards, customizing spending categories, automatic calculations, and advanced security.

If you’re creating your first budget, pencil and paper or a basic spreadsheet is a good jumping-off point.

Frequently Asked Questions (FAQs)

The more time you spend on your budget, the more questions you’ll have. This pertains to spending, saving, the use of fun money, and more.

Here are some frequently asked questions associated with budgeting and saving money, all while having fun.

Do you earn enough money to pay your monthly expenses?

This is where it all starts. If you don’t know the answer to this question, you need to find out once and for all.

Once you know the difference between how much you earn and how much you spend, it’s easier to calculate your “fun money budget.”

Should you find that you spend more than you earn, consider the areas in which you can cut back.

How much money do you typically save each month?

There are bills that you have to pay every month no matter what. You should look at savings the same way.

A portion of the money that you have leftover every month should go toward savings, such as in a retirement account or emergency account.

Once you account for that, it’s clear as to how much money you can spend to have fun.

How much money do you typically spend on having fun?

If this has never been part of your budget, you may not know the answer. In that case, review the most recent month’s spending to learn more.

Maybe you find that you have been spending too much money on fun. Or maybe you learn that you could add more money to this budget category.

When was the last time you reviewed your budget?

Just because a budget worked for you in the past doesn’t mean it’ll do the same in the future. Regular budget reviews are a necessity, as your income and expenses have the potential to change over time.

For example, if you pay off your car, you’ll no longer have this payment in your monthly budget. What are your plans for the excess funds? Will you spend it on having fun? Will you save it for retirement?

What should you do if you don’t earn enough money to have fun?

There are several ways to approach this:

  • Take on a side hustle: For example, you could mow lawns after work and on the weekends.
  • Cut back on your current expenses: Eliminate your cable bill, refinance your car payment, or move into a more affordable apartment.
  • Seek out free activities until you have more money in your budget: This can include biking, hiking, and free movies playing in local parks.

Just because money is tight doesn’t mean that you can’t have fun. It simply means that you need to get creative with your budget and the experiences you seek.

Final Thoughts

At this point, we hope that you realize the importance of spending some money having fun. You don’t want to go overboard, so make sure you know how much fun money you have in your monthly budget.

As you settle into a budget that suits your financial circumstances, you’ll come to realize that you can create a balance between spending and saving.

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