Originally published on May 2nd, 2021
Question of the Week
"Hey Treyton, how much should I actually be spending on fun stuff?"
"Fun stuff" is the purpose of having money.
No one wants to focus on budgets or interest rates on debt - but those are essential foundations that do need to be addressed.
However, once you get the numbers under control and going in the right direction, personal finance can get fun real quick.
But to answer the question, whatever your budget allows. I know that's not the clearest answer, so let's dive a little deeper.
The key part of figuring out the answer is knowing where you're currently at.
If you have debt, you're behind on savings, and don't have any investments - you may have to prioritize debt pay off and saving for a little while and not be able to spend as much on fun stuff as you'd like.
However, it's generally recommended to spend 10% of your monthly after-tax income on "fun stuff". So for example, if you bring home $4,000/month, $400 could be spent on going out to restaurants, bars, shopping, etc. That number can feel low at times so if possible, I like to aim a little higher if everything else is taken care of.
An example budget for $4,000 after-tax monthly income may look like:
50% ($2,000) - Essentials (Housing, utilities, groceries, insurance)
20% ($800) - Savings/investing
15% ($600) - Fun stuff
15% ($600) - Misc. (may be add'l savings, unexpected expenses, fun stuff, etc)
It is important to note that everyone's situation is different, spending priorities are different so while this can serve as a general recommendation, it's important to evaluate your own situation and figure out what works best and makes the most sense for you.