When we talk about expenses, it's not just about budgeting and saving. Also, it's about spending on things that add to your life. So, this is where entertainment comes in.
How much to spend on entertainment can be difficult to determine within your budget. Another dilemma is its definition and priority. What is considered entertainment and what is not? How much should you really spend on fun each month anyway? Keep reading to find out how much you should spend – and if you're spending too much.
Prioritize your needs
To find out how much you can actually spend on it, you first need to look at your most essential needs. Set aside your recent payslips and calculate your take-home pay, or how much money you are actually bringing home during the month.
Then list your monthly and recurring expenses, for example:
● Rent / Mortgage
● Electric Bill
● Gas Bill
For the first part of the exercise, just focus on your basic expenses – that is, things you really need to survive on a day-to-day basis. After listing all expenses sorted by needs, subtract your salary from the sum of essential expenses.
Let's say you earn R$3,000 a month and your expenses are:
● Rent / Mortgage: R$1.000
● Insurance: R$300
● Electric Bill: R$200
● Gas Bill: R$100
● Food: R$250
● Transportation: R$150
If your salary is R$3,000 and your expenses are R$2,000, you have R$1,000 left. Now, that doesn't mean that this should be your entertainment budget, because the second thing you need to focus on after your needs is your financial security.
In other words, you can think about increasing your emergency fund, paying off debt, and saving for retirement as well. These categories can help you prepare for the future and strive to maintain your financial balance.
For starters, commit to saving ten percent of your take-home pay. If you have debt that needs to be paid off, you can start by saving less.
● 10% savings: R$300
● Monthly payment of debts: R$200
Based on the R$1,000 remaining after paying for basic expenses and the R$500 per month to save and pay off debt, you will have the remaining R$500. That's where your entertainment budget will come from. Will you need all R$500? It will depend on your hobbies and habits.
Of course, this will all vary depending on where you live, your family size, income, etc. It is important to have an overview and look at your situation and not compare yourself to others.
Please leave your comment or question below.
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