Fun element in budgeting

[Hector]

Hi guys,

In budgeting I am not clear on what to allocate for the categories like fun money, shopping, etc...?

For people who are successful in following their budget, how do you do that? By certain % or by certain amount? What are the guidelines for this?

[bjl584]

I've seen a lot of budgets where people will set aside a certain dollar amount per month for "blow off, fun, do whatever you want with it" money. But, that depends on your income, and on the status of your overall financial health.

Currently, I set aside $100 a month as money that I can spend however I want without losing any sleep over how I spent it. That amount will probably go up in the future as my other debts are paid down. But for now, that number works for me.

[Hector]

I've seen a lot of budgets where people will set aside a certain dollar amount per month for "blow off, fun, do whatever you want with it" money. But, that depends on your income, and on the status of your overall financial health.

Currently, I set aside $100 a month as money that I can spend however I want without losing any sleep over how I spent it. That amount will probably go up in the future as my other debts are paid down. But for now, that number works for me.

As far as financial health is concerned, I am almost 31 and married.

We have 4-5 months in emergency account. We should able to save around $2000/month from next month. We hardly have anything in retirement account. Plan is to put 10k in regular IRA towards 2010 by April 1st and 350/month in 401k (submitted paperwork for 401k this week). We would like to have 6-8 month worth of money in emergency account before contributing more into 401k(company doesn't match).

We rent and dont have any other debts.

[skydivingchic]

I pretty much took a stab in the dark as to the amount of fun money when I set up my budget, but this is one category where my initial guess was good and I have not changed it in the time since I first set it up (~4 years). I get $250 per month for fun money. It covers eating out, getting my nails done, entertainment like books or movies, coffee, etc.

For reference, I will be 34 next week, in a committed relationship with serperate finances, I max both my Roth and my 401k to IRS limits, have a fully funded 6 month EF, and no debt except mortgage which we pay extra on each month. Another ~$1000/month goes into personal savings for a new-to-me car, vacations, and other large one off purchases and I have sinking funds for periodic expenses like car maintenance that I contribute to each month. When I set up the budget orginally I had ~$4000 worth of CC debt, ~2 month of EF, was contributing ~12% to my 401k and did not contribute to my Roth.

[MonkeyMama]

I think the answer to that is very personal. (Varies from person to person, is what I mean).

For us, we have always had "blow money" as a line item in our budget. When we first married and combined finances, was just nice to discuss it and be on the same page. We lowered this amount when we had kids (& halved our income).

For now, we both get about $50/month. Over the years, we have chosen other household/joint luxuries over more blow money. & really, these are just for the things that benefit only one of us. I consider it the "no nag" money. We can do with it what we wish without input from the other. If there is anything more expensive we want, we can usually talk the other into it. If not, save up that blow money!

I know plenty of people who would not be happy with that amount. IT just works for us. Another friend of mine has maybe $300/month "blow money," but uses that for gas, eating out, etc., etc. My numbers may be similar if I counted every dime I spent every month, but gas is an auto expense we budget for otherwise, as is eating out, etc.

[littleroc02us]

My wife and I set aside $250 a month of allowance for each of us to do whatever we want with it. She has managed to save most of it and I have managed to spend most of it since I am the free spirit.

[Slug]

My wife and I set aside $250 a month of allowance for each of us to do whatever we want with it. She has managed to save most of it and I have managed to spend most of it since I am the free spirit.

This is me too. $250/mth (less than 4% of mthly net). My wife has over $2k in fun money saved. I barely stay above the account minimum. However, I like to drink mochas, buy electronics, and travel with the guys.

Luckily beer is covered under groceries.

[snafu]

A suggested starting point is the 50% needs/30% wants/20% savings to be further broken down by line items in your budget. If you have any previous spending records, you can base your figures on experience, or take educated guesses. What does 'fun money' mean to you? [meeting friends for drinks, Netflix/RedHat, concert tickets, hobbies, dues, subscriptions] How do you want to categorize eating out? It can be a subset of FOOD. Transport can include auto operation, maintenance, tolls parking,1/12th of insurance

It helps to divide a category like 'shopping' into logical groups with the two of you deciding what is a 'Need' and what is a 'Want.' Savings is likewise sub divided between short and long term goals. [Likely get a negative response here but except for $1K, I've invested Emergency money in a Balanced mutual fund. Yes, it went down for two months '08 but steadily increased since, again worth 6% more this year than last yr. + re invested dividends]

Utilities, housewares/cleaning supplies subset "Home operations,' while Home Maintenance funds repairs, replacements for example. Clothes are a single line item for we four.

[kork13]

I use a figure of about 3% of my gross income. However, this is a really just a nominal figure--I know fairly accurately what my monthly expenses are, have a healthy chunk of savings automatically taken from my account, and the rest is essentially free to use as I will, which can literally be anything. That said, I find that I rarely actually use even half that amount, so the excess goes into my general savings, which is there for any large, totally "want" expenses... travel, electronics, hobbies, or whatever else strikes my interest. At some point, I'll finally crack open that account and it'll be Christmas in whatever month I want

[cjscully]

The answer to this question generally ends up being one of personal choice or personal values. I believe some sort of "mad money" is necessary in any budget, but how much is the trickier part.

For my wife and me, we don't use a percentage of income, but we do make adjustments to the amounts when we've had changes to our incomes. In the leanest times the amount was about $20/mo each. In the best of times it was $160/mo each.

The main thing is that you find what works for you and your family, then stick to it.

[snshijuptr]

I follow the same budget an snafu, but we use 30% Savings and 20% fun. Our savings goals are ambitious and our fun is cheap. This translates into $920 of which $105 goes to cell phones, $12 goes to Netflix, and $200 to savings for a future want leaving $510 of flex money every month. This goes toward restaurants, gifts, shopping, etc.

[maat55]

We just pay our bills, fund a car fund and invest about 20% of our income. Anything above that we blow or put towards other wants.

[krantcents]

Hi guys,

In budgeting I am not clear on what to allocate for the categories like fun money, shopping, etc...?

For people who are successful in following their budget, how do you do that? By certain % or by certain amount? What are the guidelines for this?

My budget starts with deducting for savings (Min. 10%). I generally use a flat amount and identify it as miscellaneous.