Life has become expensive worldwide, with some countries like the UK more than others. However, the cost of living depends on the individual or household income, so each situation differs.
Most people turn to budgeting to stay afloat and live a decent yet balanced lifestyle.
Accountants and financial planners refer to the 50, 30, 20 rules. The rule categorizes your expenses into three major categories, which include needs (necessities – 50%), savings (any investment plans or personal savings – 30%), and wants (entertainment and lifestyle – 20%).
What can you consider entertainment?
Living on a budget does not mean living a boring life. Budgeting can be used as a tool or guideline to live a fun and balanced lifestyle.
Entertainment can be sub-categorized into aspects such as music, live streaming events, going out to the movies, visiting sites like those on an offshore sportsbook guide to place sports bets, eating out, video/mobile games, or even going out with your friends.
So, you might want to set aside a certain amount for meals out and some for entertainment at home like streaming and gambling, for example.
Top tips to consider when working on your entertainment budget
As with anything we implement in our lives, the purpose of a budget is to make your life easier and stress-free. Before you start working on your budget, you need to identify your gross income (income after deductions) to know exactly how much money you have available.
Most households depend on one income stream, whereas quite a few have two, and some even have multiple income streams like using TikTok to generate an income or other options for passive or side incomes.
Here are a few top tips you need to work on to budget for your entertainment needs:
Ensure you set aside enough funds (at least 50% of your income) to pay for your utility bills, rent/mortgage, car payments/transportation, medical expenses, and any other important bills that need to be paid.
Many people are in difficult financial situations simply because they don’t prioritize necessities and spend recklessly.
Save, save, and save
Be smart about your money and set aside a minimum of 10% in your budget towards an emergency savings account.
Eventually, you can gradually increase the amount and look into opening a few investment accounts for your future needs. Again, this decision is based on your available amount and circumstances, so try to save as much as you can when you can.
Being smart about how you spend on entertainment also means staying safe and not making any risky decisions and going over your budget recklessly.
When your necessities and savings are sorted, you can allocate your leftover funds towards entertainment and lifestyle wants. Experts recommend using at least 5 to 10% of your income, but this amount depends on your circumstances. Make a list of all the entertainment items you would like to allocate funds to and divide up the funds accordingly.
You can adjust the amount periodically by reviewing your budget and making necessary changes to help you stay on track.
Track your expenses
Having a budget is but only partial to the plan, and now that your budget has been established and you know how much you have to spend on what, the next step is to track your expenses.
Doing this will ensure you spend your time and money wisely and stay accountable.
You can either go old school and create a spreadsheet or be modern about it and get a dedicated app to help you.
You can use a budget and expense tracking app like Goodbudget, Expensify, EveryDollar, Personal Capital, etc. You can choose an app that best suits your needs; make sure it has all the features you need to make tracking your finances simple.
List and prioritize your entertainment choices
Not all of us have the same entertainment preferences. Some enjoy reading a book or streaming the latest series or movie, while others may enjoy listening to music, gambling, or playing video games. You can list what you enjoy doing to help you save time and money.
To help with your list and to gain a better understanding of your entertainment needs, you can ask yourself these questions:
- What type of entertainment do I enjoy?
- How much time am I willing or going to spend on each?
- How often will I make use of each platform?
- Are there things, services, or subscriptions I can live without?
You can also prioritize your entertainment types by rank of importance. You can rank from most important to least important; anything below a certain threshold can be excluded from your list.
Making the list can help you get the most out of your entertainment choices.
Education is not only about learning math or English or getting a degree/certificate in a specific field; there are also options to gain education on living a better life without studying accounting.
Educate yourself on making better financial decisions to avoid having to cut down on living your best life and save yourself from any financial crisis.
Many platforms like banks and certain tertiary level schools offer courses on the importance of financial education which can be useful for adults of all ages.