How Much Do You Budget For Entertainment?

[amastewa93]

My husband and I are reviewing our budget. He recently got a new, better paying job and we are looking to increase the amount we put towards paying off our debts. However, we seem to have found something we can't quite agree on - budgeting for monthly entertainment.

For both of us, it is important to have some sort of money set aside for monthly outings, etc. but how much should you be budgeting for this really? To me - his buying a bottle of scotch should go under the "entertainment" category. He thinks that is groceries (hard eye roll). But I wanted to take the budgeting question here and see what you all typically budget for outings, etc. throughout the month.

[disneysteve]

I agree with having money for fun, even when working on paying down debt. It's not what Dave Ramsey says, and he isn't wrong, but I think it's a little easier to stay on the program if you don't feel complete deprivation along the way.

How much? That's really up to the two of you to decide. Obviously, scotch doesn't go on the grocery budget. Yes, I know it's made from barley but I'd still have to vote against him on that one.

I don't know that any of us can give you a dollar amount or even a percentage without seeing your entire budget. And me telling you how much we spend won't help because our situations are entirely different.

What number have you come up with and what does he think it should be?

[kork13]

We budget for $450/mo between eating out ($250/2% gross) and entertainment ($200/1.5% gross), but almost never use that much in either category -- in reality, probably less than half that. With our two young boys, we've kinda become home-bodies of late. Other things, we already own what we need for fun, so they're effectively free -- bikes, camping, hiking, etc.We lost our go-to babysitter (family moved last summer), and alot of the entertainment stuff I/we enjoy isn't really appropriate for 2- & 4-y/o's (shows, snow sports, nice and/or new restaurants, movies that don't involve singing animals, etc...). We really need to do better about getting out!

If it helps, I see "entertainment" as anything beyond the basics of living life -- anything that you do for fun/enjoyment. Yes, I'd probably put his scotch in there, along with Netflix/Disney+, new gear/hobby stuff, and movie/event tickets. But overall, I don't track the expenses that closely & allocate every purchase to a category. I view the budget as a way to plan out our savings and fixed/regular expenses, then otherwise to provide some guardrails on everything else. As long as our budget/spending has "free space" & doesn't run over in the month, I try not to stress the details.

In the end, it just needs to be a discussion between you & your husband. Come to an agreement that works for you, and go with it. That could even be as simple as "$100/mo in cash as blow money"

[LivingAlmostLarge]

depends on how you structure your budget. Does your budget already include X, Y, Z? I mean some people (myself included used to have an alcohol line). I mean a case of beer a month for DH $30. I'm not saying you need to but I had something like $50 because a couple bottles of wine and case of beer. You know you want it. Or others had movies or streaming services as entertainment line item. It just really depends on how detailed you have your budget and what is considered part of entertainment.

Personally I try to follow the pay yourself first and everything else falls under spending. It works better for me. less to stress about.

[Fishindude77]

We absolutely include line items in the budget for fun. When I began planning for retirement a couple years ago I did a budget which includes; $20,000 annually for vacationing, hunting and fishing trips, $10,500 for dining out and another $2,000 misc. entertainment.
Was reviewing my stuff with my investment guy and he mentioned that I was the first client he ever saw with a line item in their budget for hunting & fishing.

[MaryKay]

We pay $9.74 /mo. for Netflix

[cypher1]

Not much of a budget for Entertainment, maybe a movie at the theater once a month. Live music/concerts is very rare, only a few times a year. Hobbies for collections is small. But Traveling/Vacation I feel is a separate category.

[Jluke]

Do you give each other an “allowance”?

like a no questions asked kind of amount. Maybe the alcohol goes there. I would put it under groceries though too

[amastewa93]

Thanks for the feedback everyone! Here's a little more information...

We are playing catch up with bills currently (if you've seen some of my other posts here - you know my husband had some crazy irregular pay at the end of the year but started a more stable job the last week of 2019). Our new take-home lands us around $7,000 per month (about twice what it was before, which is why we are revisiting our budget). Here is a breakdown of our major expenses (per month)...

Rent: $1,300
Electric: Usually around $100 - a bit higher in the summer
Wifi/Subscriptions (Netflix, etc): $100
Cell phones: $279
Car payment: $488
Insurance (rental and car): $200
Matco (tool bills for my husband): $80
Snap-on (anddd more tools): $350
Student loan payment: $289
Tax payment (installment agreement from 2018): $129
Vet (we have pet insurance): $56
Conn's (this will be paid off this month): $106
Groceries: about $400 per month or $100/week
Clothing/Extras: $150 - this isn't normally spent monthly
Entertainment: ?

We have only $500 in CC debt as well, which should be paid in full by the end of February.

If my hubby had his way, we'd probably spend almost all the excess cash on entertainment. He enjoys going out and, because we've only lived in Atlanta since last March, we do go out and meet new people, see new things, fairly often. I'm thinking about $500 for the month is a fair amount ($125 per week). Then, once we pay off more of our debt, we can have a little more play with that number.

Thoughts?

[kork13]

May not be the popular opinion (particularly in your home)... But I'd tell you to tighten it up rather than being quite generous with your entertainment spending.

- $300/mo for 2 cell phones is ludicrous. You could very, very easily take that in half, even assuming that you purchased your phones on payments (not a great choice either)
- I'd have your husband looking for ways to purchase the tools he needs (likely second-hand) to eliminate or at least reduce the cost of leasing his tools.
- $500/mo car payment is alot of car, especially having as much debt laying around as you do.
- Have you figured out your taxes properly to prevent ever owing the IRS for back taxes again?

With all that, plus the other debts I left alone.... I really don't think $500/mo of entertainment money is responsible. I'd focus on clearing your debts & maybe allow just $100-$150/mo (no, you won't go out every weekend) while you deal with the debts.

Apologies if that comes across as harsh. I just subscribe to the idea that life is alot more fun when you don't have tens of thousands of dollars in debt hanging over you.

[LivingAlmostLarge]

Okay so now bigger picture you are spending at least $4027/month on $7000. I would probably do $100/month each entertainment and then the rest to clearing debt. You have to build an emergency fund still, you have a big car payment, and how much is the IRS debt? Why is there so much spending on your husband's debt? My answer changes because you have a lot of things.

Also you might want to buy a home, so maybe start earmarking $1k/month to save for downpayment and larger mortgage note. I guess a full budget and full list of debts and % would work. I would definitely want to pay off the IRS ASAP

[disneysteve]

You're taking home $7,000 and you listed spending of just over $4,000. I'm guessing what you listed isn't complete so let's say $4,500. That leaves you $2,500 that you need to decide how to allocate. Given just that info alone, $500/mo for entertainment might be reasonable, but that's not the whole story. Over $1,400 of your monthly expenses are debt repayment. Plus you've shared before that your EF has been depleted. And I'm not sure how much you guys are contributing to retirement accounts.

You need to focus on cleaning up the debt. Can you list the balances and interest rates on each of your debts for us?

If you truly have $2,500 or more per month free, it seems to me you should be able to replenish your EF and wipe out a lot of your debt in fairly short order. That should be a much higher priority than blowing $500/month on entertainment. Without knowing any more, I'd say a couple hundred tops for now and everything else going to clean up the debt and firm up the savings. Just think what great shape you'll be in when you don't need $1,400/month for debt payments.

[Jluke]

We have only $500 in CC debt as well, which should be paid in full by the end of February.


Thoughts?

this stood out to me. This mindset needs to change. CC debt is not ok. This should be paid off ASAP.

you are definitely working the monthly payments in life.

as disneysteve alluded to, there are probably other items not included where money is slipping through your fingers untracked.

And your budget NEEDS to include line items for savings, retirement savings and IRA savings. Treat them as an Expense.

finally I know you had some tough times recently so I know you are trying to right the ship at this point. Don’t let the $7000 per month go to your heads and justify excess spending. Get out from under all of those monthly payments.

hopefully all of this advice helps.

[LivingAlmostLarge]

amastewa93 do a budget post. And list everything and have people gives suggestions you can take to DH and you'll see the plan for EF and irregular income etc. I think now with the new income of $7k, so you make around $10k/month gross together $120k/year now is the time to get serious about it. Rent is awesomely cheap!

[amastewa93]

Thanks for all the feedback everyone! We sat down and talked it out last night and both agreed paying down our debts should be our #1 priority (after our EF is re-established). The expenses listed above are currently all of the expenses we have. However, when he was only bringing home $400 to $500 per month, our finances took a bit of a dive. I'm thinking if we focus on it we will be able to cut our debt in half (maybe more) this year. That's our goal anyway.

Here is the debt info I have on hand (I'll need to get his interest rates for his tool bills)...

Capital One - $477.64 (18%)
Conn's - $318 (interest-free)
Navient Student Loans - $24,548 (around 6%, it is broken down into different loans)
VW Car Loan - $20,490 (13.5%)
Matco/SnapOn Tools - $7,449
Taxes (2018) - $8,839.14 (25% - this one is the priority after the two smaller accounts are paid off)

Total: $62,121.78

As far as cutting current costs (i.e. the phone bill, etc)... our phone bill is for unlimited data (which is pricey). I need unlimited for work purposes. If I'm traveling, have to work outside of the house, or am away from the office, it is necessary for me to have a good connection in case I'm needed. It is also helpful if I need a hotspot for any reason.

Car wise - we have one car we are sharing right now and one that needs to be sold. The (estimated) $2,000 we get for that car will go directly to paying off debt. When I bought the car, my finances were a bit different and I desperately needed a reliable car. We will keep it until it dies and it still has under 60K miles so we should have it for quite some time with no reason to purchase a second car.

We have had offers to refinance our vehicle - thoughts on this?

His tool bills - these are needed for his line of work and, unfortunately, he'd lose money trying to sell them back at this point. However, he has started getting what he can used or through stores like Home Depot if he needs something.

Savings - we both need to think more about how to budget for this. We both technically work on a 1099 so neither of us has retirement savings through work and, until now, we've been scraping by with the transitions we've been going through over the past year (getting married, moving twice, and about three job changes). Before that, we'd spent some time living in a motel. Our finances simply haven't been a priority - keeping our heads above water has been. I'm definitely excited about having the resources to improve where we are financially.

Taxes - We are better preparing for this so we don't owe in the future. We are also going to use a tax professional this year to be sure everything is how it needs to be. In 2019, we are hoping to start paying on the quarter.

Again, thanks for the feedback! I know we are definitely nowhere near where we need to be financially so your thoughts are helpful!