When creating a budget, you will quickly notice that your monthly expenses will fall into a wide variety of categories. Some of these will fall under normal monthly expenses, such as the cost of rent, utilities, and other household expenses. You may also have an individual budget for food, savings, credit card payments, and entertainment, just to name a few. The important thing to remember is, no matter how insignificant an expense may seem, it is essential that it is included in some part of your budget.
Once you have your budget laid out and each expense has been assigned to a category, you will need to add up the total monthly cost of each individual part of your financial plan. After totaling your expenses, compare your overall overhead compared to your net monthly income. Whatever you have left over once all your bills and expenses are covered is money you can allocate to other purposes, such as having fun, contributing to your savings, building a retirement fund, making 529 plan contributions, paying off a title loan or any other purpose you decide to spend on.
If you find that you do not have enough money to cover the cost of your entertainment budget, then you will need to make some adjustments. This can be easily accomplished by cutting the cost of certain parts of this specific category, or diverting funds from another part of your overall budget. For example, if your entertainment budget is coming up short, you could simply decide to eat out less, downgrade your cable package or reduce the overhead of another category to add more money to your entertainment budget.
To help keep room in your entertainment budget in the future, it is essential to closely track and monitor all of your monthly expenses. You can use the simple tips listed below to free up money to make extra room for the fun things that you work so hard to enjoy:
To find out how much you will need to effectively make more room in your budget, look at how much you have spent in all categories in the past 6 months. This is usually a long enough time to spot spending habits and trends in most of your budget categories.
If you determine that there are places you can make adjustments to your spending behaviors, try consciously monitoring your spending habits for a few months to see if the savings add up to more funds for your entertainment budget. Remember, anywhere you can cut costs could directly equate to more money for dining out, travel, a hobby, or any entertainment expense that is outside of your normal monthly expenses.
Using cash instead of a credit card on your night out will eliminate the temptation to spend more than your budget allows, as well as preventing you from further adding to your debt. To avoid this scenario, simply leave your credit cards at home and take only the amount of cash you have allocated for your night out.
Planning can prepare you for the expense that lies ahead. If you take the time to look at the dinner menu before dining out or the drink menu at a bar, then you have the ability to calculate the amount you will need to deduct from your entertainment budget before you enjoy your night out. It will also give you the opportunity to determine if the establishment is too expensive to squeeze into your budget. If that happens, you still have plenty of time to select a different establishment that is more in line with your budgetary limitations.
By knowing when to say when, you can avoid overdoing it in all regards. Overdoing anything is never a good thing, especially when it affects your bottom line. So, to avoid the temptation to exceed your budget during one of your nights out, go home when you have reached your financial or physical limit.
By following these simple tips, you will be able to create and live with an entertainment budget that allows plenty of fun without going broke in the process.