Have you ever considered how much it costs you to enjoy some entertainment packages and programs every month? Are you aware that entertainment expenses can take a larger percentage of your spending if you don’t properly plan for it?
It may surprise you to know that an average American family spends a little above $2,000 annually on entertainment and over 5% of their earned income. Entertainment expenses may look insignificant and can be overlooked.
However, it can add up quickly if you don’t track them with a budget. Fintech companies like Swissmoney understands this and has the expertise to help you integrate entertainment spending into your financial plan.
Like all other expenses, entertainment costs are essential to monitor so it won’t be hard to pay off some bills and debts. These expenses, though seem insignificant, need to be given a proper place in your financial plan.
Creating an entertainment budget means cutting down and tracking how you spend money on pleasures and entertainment.
However, drafting a budget for your entertainment expenses doesn’t cut down fun completely. Instead, it will help you stick to it and enjoy the best form of entertainment without depriving yourself the joy and pleasure.
How You Can Plan for Entertainment Expenses
Choose your Fun
The first step you take in planning for entertainment expenses is to create a list of engagements that you want to enjoy. It is certain that not every form of entertainment tickles your fantasies.
There are many entertainment activities and events, but it is obvious you can’t engage in all because you need to cut costs. So, the first thing you do is to prioritize your entertainment activities by creating a list of those you can’t let go of.
Set Realistic Goals
After creating a list of entertainment activities, you like, the next step is to categorize them under long- and short-term plans. This is important you can achieve everything at once considering your finances.
Budgeting for entertainment can either be for the long-term or short-term. Entertainment expenses that can wait for you do others are regarded as long-term entertainment expenses.
They include planning for a big event or concert. These are considered to be long-term goals because they require time and more money while the short-term entertainment expenses have to do with immediate entertainment expenses, such as paying for your sport, games, and video subscriptions.
Remember, your goals don’t have to be set in stone, but recognizing them can help motivate you to stick to your budget. For instance, it will be easier to cut spending if you understand you have to save for a particular entertainment event.
Count the Cost
Experts agree that a person’s entertainment expenses shouldn’t exceed 5% of their total income in a month. In other words, if you are earning $4000 monthly, your entertainment expenses should be around $200.
This percentage is a good way to start with considering the number of bills you’ve to pay monthly. Having an entertainment budget doesn’t mean you cut down on everything because they’re expensive, it simply means being on the path to less debt and more life can be as pleasurable as splashing out on your enjoyment options.
So, after you have decided what’s fun for you, then add how much you will be spending on these fun activities. However, don’t exceed the 5% benchmark to avoid being financially strained.
Have a saving target
Achieving some financial goals may require setting financial targets. In other words, financial goals and milestones may sometimes be difficult to attain if you don’t have a target in mind.
If you have an event, you are anticipating attending, or entertainment equipment you want to buy, or a movie to watch, but don’t know how to go about the financial implications, you set up a separate account where you keep a certain amount daily or monthly.
Having a saving target mainly for entertainment is one of the ways to ensure you don’t spend all your earnings without considering a budget for pleasurable moments.
Stick to your budget/plan
Once you created a list and allotted 5% of your income, the next step is to ensure you stick to your plan. The fact that you have allotted a certain percentage for entertainment doesn’t mean you will stick to it.
Many people do so and still fail because of impulse spending. Sticking to your budget will mean you don’t purchase any entertainment equipment or attend events not captured in your entertainment plans.
Review your budget regularly
Setting your entertainment budget is not all there is to navigating your entertainment expenses. You need to ensure you do a regular review of your budget to be sure you stay on track. Some essential elements of your budget are set in stone.
You may get a raise, your goals and expenses might change, and want to plan for a new one. However, no matter what your reason may be, you should get into the habit of doing regular reviews of your entertainment budget.
Stretch your entertainment budget
Regular reviewing of your entertainment budget gives you access to know what needs to be removed or added. An entertainment budget is a strict exercise that requires no adjustment. You can make necessary adjustments if you discover certain entertainment games or activities that make you exceed your budget. Look towards your ‘wants’ as the first area to cut down.
Can you skip a concert in favor of a game at home? If you have won the war against your “wants”, then you proceed to any other activities that engulf more money than necessary. However, ensure you cut down your ‘needs’ in entertainment because they provide the exact enjoyment you need, and therefore, are hard to part with.
In summary, it is important you budget for bills, including your desire for fun. Avoid spending free-for-all by setting aside a certain amount of your income for entertainment. This is a good way to curb impulse spending and save for the things you enjoy in a way that matches your financial goals and income.