Yes, You Need "Fun Money" in Your Budget

Saving money and living frugally can be hard work. While there's something romantic about living the ascetic life, most of us need to let loose once in a while. But how can you inject fun into your life when you're trying to save every penny? That's easy! Just budget for it.

It's perfectly OK to allow for a modest amount of fun in your life. The key is to plan for it each month, so that you don't let your spending exceed your income. Here are some key reasons why budgeting for fun activities is something even the most frugal people should do.

Every dollar needs a bucket

If you are tracking your spending, every expenditure you make belongs as part of a budget. By maintaining these budgets, you'll have better control over ensuring that your spending falls under a certain overall level for the month.

Fun money should be kept separate from things like your restaurant budget or your cable bill. This is money that you use for anything you want, with no guilt or questions. It can be used for a night out at the movies, or on that new sweater you saw at Banana Republic. Anything goes, as long as it falls within your (modest) predetermined budget.

Being frugal can be exhausting

Saving money and living on a shoestring budget is really, really hard. Watching every penny and spending money only on essentials can get old, tiresome, and flat-out depressing. In fact, it can be so soul-sucking that after a while, you may just abandon the whole effort altogether.

But if you give yourself a small fun budget, it can take the pressure off. You can reward yourself for a job well done and enjoy yourself without feeling guilty about it, as long as you don't blow through your modest budget.

A small fun budget can prevent a big expenditure

If you go too long without fun, eventually you may break down and do something over the top and expensive. You might buy a motorcycle you don't need, or book a trip to Bali that you can't afford. You may overpay for tickets to the Super Bowl. You'll go overboard, because you can't take it anymore. Think of it like a dam that needs to let some water through occasionally so that it doesn't burst entirely. Your fun budget is saving yourself from an explosion of spending.

You don't want to resent your partner

It's a real drag being the person who has to clamp down on fun. It's also unfair if you're the one having fun while your partner is depriving themselves of it. It's best to give each other a small fun budget, so neither person can get on the other's case for enjoying themselves a bit. Your relationship will be enhanced if you allow yourself to have some fun together or apart, as long as you don't spend too much.

It's impossible to avoid fun

There are times when you will get roped into having a good time. Your buddy calls and begs you to come and see the new Star Wars movie with him. One of your girlfriends has a bachelorette party. There's a happy hour to thank a coworker who's moving on. These are things you can't say no to, but they might not necessarily fall into any other budget. Start each month assuming you'll get roped into something fun, and you won't feel bad for taking part.

Fun doesn't have to be expensive

You may ask, "Why budget for fun when the entire idea is to save as much as possible?" Well, because fun doesn't necessarily have to make a big dent in your overall spending. Grabbing $5 bleacher seats at the ballgame isn't going to make or break you financially. A round of golf every other month won't hurt too bad, especially if you play at the local municipal course on a Tuesday.

No one says you have to budget hundreds of dollars to allow for front row seats at the Foo Fighters concert. Just a few bucks of fun can help lighten the tension of saving money and boost your morale.

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Yes, You Need "Fun Money" in Your Budget

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