Sunday, March 28, 2010
Dissect Your Budget - Part 9 - Entertainment
Tip #245 - Dissect Your Budget - Part 9 - Entertainment. When we began dissecting our budgets at the start of this series, we were dealing with mostly necessary items. After food, clothing, shelter, utilities, transportation to and from work, the bottom of the budget list starts to become more and more optional. Obviously, if you need to come up with another $20 per month to buy milk for your children, then taking a weekend at the beach becomes a distant second choice as a way to spend that money. Only you know your financial situation. The more leeway you have, the more you can spend on optional items. The tighter your funds, the less you can spend. Keep that in mind when dissecting your budget. But remember, even with a budget of $0, you can still entertain yourself and "take a vacation" - even if it's just camping out in your sister's living room for the night.
Entertainment is definitely a budget category that has a lot of give. The budget can range from almost nothing per month for some to probably in the thousands of dollars for others. Your job is to analyze how much you are spending in this category and how you can reduce that amount in order to put that money toward more needed categories such as paying off debt or saving for retirement.
I generally think there are about three levels of costs for entertainment for most people. On the high end, we can buy tickets to professional sports teams, play expensive sports such as golf, go to professional theatre, eat out at fancy restaurants, and go to privately run swim clubs.
But what if you want to do these sorts of things but don't have a lot of leftover money in your budget after spending on more necessary items? For less money you can buy tickets to minor league baseball games, buy a tennis racket and play on public courts, go to community theatre, eat out at inexpensive, local restaurants, and swim in county-run pools.
But for some even those types of costs might be too much. On the budget plan, entertaining yourself or your family can be nearly free. Watch a local high school football game, exercise by running in the neighborhood, attend a play at a local elementary school, cook a special meal, and turn on sprinklers in the yard.
Even if you live in the middle of nowhere, there should be free or very cheap entertainment options available around your house, if not in your neighborhood and community. Entering homemade jelly in the county fair won't cost much but might bring a day of fun to a family who gets to enjoy the sights of the fair even if they can't afford rides or games. Play old board games that are lying around the house, travel in your favorite armchair by watching a travel video or reading a travel book or blog.
As long as you don't feel like you have to see the latest concert, buy the newest bestseller, or eat at the nicest restaurnats, you can keep your entertainment budget at a minimum if it's necessary. Be realistic about how much you have in your budget for this category and spend accordingly.
In Real Life (IRL) - I always loved the phrase "champagne taste on a beer budget" because I think many people are guilty of this. Watching how others "live" on television makes us think that everyone is out having a good time, going to parties each night, dining on steak, and joining country clubs. And if we try to emulate that lifestyle without having the funds to back it up, then we will fall into debt very quikcly or get way behind on our financial goals.
I have several "real life" friends who are in similar positions as my family - we live in the same town, have 2, 3, or 4 children, and the husband works, while the wife stays home with the kids. I haven't looked at any one of their bank accounts so I can only guess at how wisely my friends are spending their money but I'll take a stab. At one extreme, one friend buys all of her children's clothes at hip stores, takes them to the latest concerts, does frequent expensive vacations, buys the latest expensive toys and gadgets such as Wii and American Girl dolls, and eats out at nice restaurants, paying for babysitters each time. Everytime I turn around I hear some other great place they are going to, thing they are doing, or item they are buying. As far as I know they do not come from wealthy families, although the husband does seem to have a good job (hopefully a very good one!).
On the other end of the scale is my family who buys clothes at consignment sales, takes my kids to see plays put on by local high schools, goes on a budget beach vacation each year and a very cheap trip to Florida, staying with family, does not own anything like Wii (although my daughters are currently pooling their money to save up for one - they are up to $48), looks for American Girl items at thrift stores and Craigslist, and goes out with husband only when parents are in town to watch the children.
I AM NOT JUDGING! I AM JUST WONDERING? Does my friend's husband make that much more money that they can afford all of this entertainment? Or are they not putting the maximum per year into their IRA and 401(k) plans and not putting money away for their kids' college funds? Do they have an emergency fund? Or are they racking up debt? It's not just this one friend. She is probably the extreme. But many of my friends will go out to eat at a drop of the hat, spending $50 for dinner and another $30 for a babysitter. Tickets to Dora Live are bought for $50 per person including the 2-year old without much thought. Is this kind of entertainment spending appropriate for them?
I don't think we all need to be waiting for grandparents to visit so we can go out to a nice dinner, but we should make sure our entertainment budget makes sense within our family's income, expenses, and debt. If in any way, shape, or form, you need to pay down a loan, save more for retirement, or add more fruits and vegetables into your diet, seriously consider analyzing your entertainment budget and finding inexpensive ways to keep you and your family amused. (You can always find last year's fad at the thrift store anyway.)