Are you finding the right balance with your budget and the things you love? Reporting to the 9-5 job, going to the dentist, getting those groceries? Making a budget? Do you have these in common? These are the activities you would probably not like to do. While budgeting or making a financial plan is not very exciting, understanding your money and spending behaviour can actually allow you to do the things you love and enjoy every bit of it.
Making a budget does not have to be very extensive. As you earn and grow, you will understand how much money you need to dedicate towards short-term and long-term goals. Apart from these goals, there is a way to budget for fun in 2020 too.
If you are already paying bills and following a routine with money and savings, you can find money left for relaxation and entertainment, or even a vacation too. ‘Say NO’ to restrictions, constrictions, self-deprivation and other such denial thoughts that come to your mind when you think of adding some ‘fun’ into your budget. Money management does not come without fun.
Once a budget is implemented, all the fun is added too. People who do not balance their budget well enough tend to avoid all the fun things in life. No shopping, no movies, no nights out with friends, nothing! But in actual terms, maintaining a well-balanced budget will allow you to do all the things you love, along with accomplishing your short-term and long-term financial goals giving you the freedom to have fun too.
A budget usually keeps your financial goals intact and at the forefront of any sort of planning you do. It actually reminds you to be very responsible with your money. With a well-planned budget, you can control your finances, it is not the other around. While planning, it is advised to keep money separate goals, prioritises and other expenses which can allow you to also use the budget for the things you want to enjoy such as going to the movies, happy hours with colleagues, shopping and so.
This way, you can avoid the feeling of guilt and overspending. Making note of your finances and allocating it to the specific goals can actually take care of all your needs allowing you to keep aside something for spending. Taking care and saving for your priorities is a mindset. Once you have mastered the mantra of saving – save a little here, spend a little there, you will know that it is okay to allow you some time to have fun too, without burning a huge hole into your pockets, when anyone asks you to join the fun.
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How much money you can budget for fun?
You may not be making millions per month. So, depending on your monthly income, current financial status, debts, short-term and long-term goals, the amount you consider for fun should be drastically different. If you have just started earning, working toward building the emergency fund or savings account will take some time. Keeping aside little money should be a bare minimum.
But, if you have no debts to pay, no EMIs toward car or house, you have additional room to spend on fun. Just make sure you don’t overspend your money abandoning your goals in the process. In the end, only you know how much you can afford for fun.
While you figure out how planning that budget can help balance your serious life with some fun, in this article I share tips on how you can make room for not just paying bills but also how to add the ‘fun’ in your 2020 budget. (These simple tips spell F-U-N.)
- Understand the budget rule 50/30/20 and find your balance
There are plenty of budget tips and techniques that can help you save, but this rule is the one and most specific, and effective to remember. Called the 50/30/20 budget rule by Elizabeth Warren, this plan typically takes into account your expenses against all the general things you do. From mortgage, rent, car payment to bills to discretionary spendings like vacation, streaming services and so on.
The 50/30/20 rule indicate the percentage of income you must dedicate to the needs of your living. For example, spend no more than 50% towards the needs and fixed expenses like a mortgage. Keep aside 20% of income for savings and debts or any kind of repayments. Use the remaining 30% on the wants, variable expenses you wish to have. If you are new to this budget model, you can use the budget calculator which can help you sort your monthly budget at ease.
- Keep track of your money flow
Once you have made your budget and know how much you will be spending towards each of the goals, it is recommended that you keep track of them. Have your bills accounted and your spendings too. This will help to identify if you have overspent on something and help you enhance the budget plan further. Maybe, having different accounts for separate goals is a good idea.
Usually, people like to keep everything in one place, but dividing your money between each of the goals – especially if you can name them can be very beneficial. For example, if you name one of your savings account your “housing fund,” you are less inclined to pull that money out from it.
Things like gas, groceries and other utilities can have another account where the amount may vary. If you find that you are spending a lot of your money toward ordering meals, dining out or shopping, remember that it is time to restructure your budget. Spend the next month on tracking your financial progress and spendings. The best thing to do is to write down the average amount you need for them every month and then keep the money aside accordingly.
This way, you can also track where your money goes by reviewing your bank and credit card statements and see how you are spending the money. You can also make use of budgeting apps which tend to auto-categorise your transactions, helping you to start out.
- Do try to have fun
Remember the rule of 50/30/20 and do have some budget kept aside for fun. The money is not an excuse to spend on vacations or shopping just because. It is more like following a budget structure or let’s say a cheat day – where you are keeping yourself self-motivated to follow the rest of the budget rule.
Imagine if your entire budget was only going towards debts, and serious financial commitments, then you will never have any fun and you will definitely not stick to this plan. Because it will unnecessarily allow you to break the budget rule, which is surely not a good sign.
The budget you plan is a work in progress document and really depends on your spending each month. Some months you may spend higher, some months you may save higher. For example, you’ll probably spend more during festivals such as in October or December than in March for etc.
The point is, once you have got the hang of budgeting, you can switch plans often to tailor your needs as per requirements. This will make you money-conscious, lessening excess spendings which might also make it easier for you to include ‘fun’ in your 2020 budget. Find out which budget method works for you and get going on it. Put aside a budget plan for sure and flow with it.
Aahna Gandhi is an enthusiast traveller, writer and a PR Professional. She likes sharing memorable moments from her travels and inspire others to live a life full of wonder. Known for her content, she has worked for travel, technology, lifestyle, health sectors as well as finance.
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