I’m going to go against the wave of budget gurus and others on this post. They all say to not worry about fun when you’re in debt. I totally disagree with this. The more you do away with fun, the more you leave room for worry and stress. You have to have some way to take your mind off of your debt even for a moment. Then there are those who would tell you fun is okay, as long as you plan it out, as in movie nights and trips. Again, I disagree with this theory as well. Yes you can plan certain things, like a movie you would like to see.
But what if you are someone who goes on the spur of the moment? What if there is a book on Kindle you want to get? What if, like me, you found a tool for your hobby, and you have just enough fun money to get it why wait? I bought a wood burning tool this way.
My theory is this:
don’t budget out fun, but don’t plan it to death either
Simply put, make a certain percentage of income to put aside for fun – the end, no plans and no further budgeting. In this way you can save up any amount that you are suitably able without risking hardship. I’m an advocate of the 3:3:4 budgeting ratio. Here’s how the ratio works:
Find out the total amount of money you can safely set aside each month for savings. Yes, this requires a savings plan. You must plan to set aside a set number or percentage of money for savings out of each pay – no exceptions!
Then do the following:
1.take 30 percent for a savings account
2.take 30 percent for investment
3.take the remaining 40 percent for fun
Since you put 60 percent of your savings into earning vehicles (accounts that earn a return for your money), you should be allowed to use the remaining money for fun. Any type of fun is fair game with this method because there are no rules.
Any level of income and savings can be used for this; just adapt the level of fun to the level of savings you have available. If you want more fun, then roll over the 40 percent to the next pay period until you get to where you can afford the fun you want. But my opinion, forget saving for big things when you’re in debt. Take the fun money and spend it on something. If you have only enough for a candy bar – get it. You haven’t deprived yourself of your debts, or your savings, and you managed to have something as a reward. What good is saving for anything without reward along the way?
So, that’s why I advocate the 3:3:4 budget and using some of it for instant fun. You earned it, and you should be allowed to use it.
So what are you going to use your fun money on?