Let’s squash this myth right now: Having a financial plan does not mean you can’t have any fun. In fact, you may be able to have more fun, if you plan correctly. (Yes, even on a middle-class income in San Antonio, Texas.)
We all deserve to have a certain amount of fun in our lives. And quite frankly, if you’re working with a financial plan that never lets you have any fun – if it’s all about paying bills and increasing your savings – you’re less likely to stick to it, eventually splurging and overspending. Just like a lot of diets out there, if you end up feeling deprived and frustrated, you’ll likely be tempted to fall off the wagon and abandon your carefully laid-out plans.
The key here is to establish the right amount of fun. Working with a trusted financial advisor can help with this.
One of the great things about having a budget – a record of your expenditures and your income every week and month – is that budgets clearly indicate how much discretionary income you have after required expenses are paid, like mortgage or rent, utilities and other bills.
If you don’t have enough discretionary income to do the things you like, a budget also allows you to see spending categories in which you might economize in order to have more fun – yes, even in retirement! Or, you can decide upon strategies to earn more to increase your fun budget, like a side-hustle.
Below are 6 ways to incorporate fun into your financially responsible habits!
1. Save for Something Fun, Like Travel
Once you know how much discretionary income you have in your budget, you can start saving up for something fun. If you want to travel, for example, whether locally, nationally or internationally, estimate how much it will cost. Then, estimate how much you’d have to set side every month to get there.
(This blog post may help: 8 Steps to Planning a Trip Without Breaking the Bank.)
Remember, even simple steps like skipping your morning macchiato can put an extra $25 or so a week in your accounts for a larger purchase that can bring you more fun. Small purchases add up, and recognizing where this is happening can help you boost your fun budget.
2. Establish a Fun Money Account, If Possible
To save money for fun activities, both for bigger-ticket items, like an expensive mountain bike, and smaller purchases, like buying a round of drinks on Friday night, consider setting up a fun money account. If you want to avoid going into debt, link a debit card to this account, which can help prevent you from overspending.
(This blog post may help: 8 Budgeting Tips to Help You Stay on Track.)
3. Use Credit Cards that Offer Rewards or Kickbacks
We are living in a golden age of credit card rewards and kickbacks. Card after card offers savings on purchases, generally from 1 percent to 5 percent. Many other cards offer points or rewards, such as frequent traveler miles, that convert into savings or perks.
Credit cards can pose a danger to the financially responsible person on a budget. Going into credit card debt can siphon disposable income into ever-increasing payments and costly balances.
The key is to use your credit cards to your advantage. First, don’t overspend on them. Pay the balance off in full every month. If you don’t, the ensuing monthly payments can cancel your fun – and that’s not your goal! Instead of investing a percentage of your money into your fun activities, you’ll be paying the credit card company, usually at a very high interest rate.
Second, make a concrete plan to use your points and kickbacks. Visualizing what you’ll do with your cash back or other rewards can help you stay focused and driven.
(Read our recent blog post: How to Build Your Dream Life Without Going into Massive Credit Card Debt.)
4. Find Cheap Alternatives to Expensive Activities
Does fun seem expensive? Another strategy to increase your life’s fun quotient is to find less expensive alternatives.
If you like to hit new and rather expensive eateries, for example, start scouting around for their less costly siblings. Or consider a meal plan alternative that allows you and your friends to create new recipes at home or for a dinner party. If shopping for clothes is your go-to fun, look at thrift stores, outlets or online sales.
5. Only Spend on Things that Really Do Give You Happiness
Consider your fun purchases before you make them. Your goal? Making sure that your hard-earned fun savings are going toward things that really give you happiness. You don’t want to blow your fun savings on an activity or purchase that leaves you feeling … nothing, or worse, actually wishing you’d never spent the money.
One strategy is to pretend that you’ve made the purchase. Daydream and visualize about what you do afterward and how you feel.
If this evokes feelings of happiness, go ahead. But if you feel like you just did it to keep up with the Joneses or you wish you still had the money, hold off for the thing you really want.
6. Remember Your Long-Term Goals
Your financial planning and budget should track with your long-term goals. In fact, establishing and working toward important long-term goals is an integral part of a financial plan.
Long-term goals vary with each person. You could be interested in more extensive travel, getting a graduate degree, saving for a down payment on a house, starting a family, paying off student loan debt, saving for retirement and more. The list of potential long-term goals is endless.
The important take-away is this: Remember your long-term goals as you plan for fun. Fun and these goals should work in tandem. Don’t sacrifice either one for the other. Don’t put off the steps toward long-term goal achievement, but don’t put off fun, either.
That said, however, there are times when thinking about your long-term goals can keep you from overspending on fun. Visualize the day you put the down payment on the house, for example, or reach a retirement fund goal on your 401(k). Believe me, those moments can be very fun too.
Talk to a trusted financial advisor about setting up a financially responsible plan that includes fun. (Yes, even if have a middle class income in San Antonio, Texas!)
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.