A critical element of smart money management is effective budgeting. You must create a detailed and accurate budget, and you must live within the means that you have established in that budget. One common way that people plan ahead for entertainment, dining out and other fun things is by allocating funds to a special account that is used specifically for these purposes. However, many people are unfortunately dismayed by how quickly this money is spent. If you are wondering where all of your fun money is going, take a closer look at these common culprits.
Many people pay for numerous recurring expenses through their fun budget or account. For example, you may have a recurring gym membership payment that you have allocated to this line item in your budget. Perhaps video game payments for a membership or single purchases are taken out of a special fun money account. Keep in mind that some of these recurring expenses may be withdrawn from your account annually or quarterly rather than monthly. All expenses should be accounted for in your budget rather than only monthly expenses.
Quick Snacks and Drinks
When you are commuting to and from work, running around on the weekends or otherwise out and about, you understandably may stop by a restaurant, a coffee shop or even a corner store to pick up a quick snack or a drink. Some people do this several times each day on a regular basis. While spending a few dollars here and there may not seem like a big deal, these small expenses can add up to a huge amount of money over the course of a month.
If you are in the habit of treating others when you are dining out, at a local bar or in other environments, you may be doubling, tripling or more your expenses. It is nice to treat someone every now and then. However, if you are in the habit of offering to pick up the time for no significant reason, this may be a habit to get out of. If you simply prefer the convenience of not dividing a tab, consider alternating who picks up the tab rather than regularly being the person who carries the financial burden.
It is not enough to have a fun budget or a special spending account for fun expenses. You also need to manage your spending in this area so that you can conserve funds and avoid overspending. Now that you have identified common financial drains in this area, you can take steps to adjust your activities as needed.