How Much Should Someone Budget for Entertainment?

Entertain is a discretionary expense in a budget.
Image Credit: Klaus Vedfelt/DigitalVision/GettyImages

Entertainment falls into the budgeting category of "wants," which are discretionary expenses that are not necessary for basic survival, but are good to budget for. Leaving room in your budget for entertainment ensures that you have some money available for relaxation, whether on your own or with friends.

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The average cost of entertainment per month for one person will depend on your income, expenses and personal savings goals. Use a few guidelines to decide on the right amount to budget on entertainment.

Defining "Entertainment" Expenses

Before digging into budgeting for entertainment, consider what falls into that category. There are a few obvious answers, like going to see a movie, going to sporting events and attending a play or other cultural event. Premium cable television service and electronic equipment are usually considered entertainment expenses as well. Recreational activities, such as fishing, skiing and golfing, are also entertainment categories.

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Usually, cell phones and basic Internet service fall into the category of utilities, even if you use them for entertainment as well as for basic household use. Decide for yourself whether you will budget eating out as a food expense or an entertainment expense.

Average Consumer Spending

Consumer spending statistics during the pandemic years aren't a good indicator of common spending habits due to the combination of unemployment, stimulus checks, fear and other short-term factors. Looking at consumer spending in 2019, Americans spent approximately ​$3,050​ per person on entertainment, according to the U.S. Bureau of Labor Statistics.

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This number changes every year, and only shows a broad national average. For example, lower-income households will spend much less on entertainment than affluent households. Using guidelines from financial guidelines, you'll only spend on entertainment after you are able to pay all of your necessary expenses (rent, utilities, food, clothing) and have saved money for an emergency fund, retirement and health insurance.

Read More:The Average Budget for Food for One Person

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Most financial advisers recommend that you spend anywhere from 5 to 10 percent of your after-tax income on miscellaneous expenses that include entertainment and recreation. Some advisers take a broader approach that gives you a set percentage of your income, such as 20 percent or 30 percent, to spend on nonessential expenses, which include gifts, vacations, clothing, eating out and entertainment. These guidelines give you more flexibility in how to spend your disposable income on what you want to purchase.

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Read More:Objective of Family Budgeting

Setting Your Budget

The right amount to budget for entertainment really depends on how much money you make, what your other expenses are and what your priorities are with regard to your disposable income. If you have a high salary but modest living expenses, you may be able to spend ​$500​ per month on entertainment. On the other hand, if you have more debt than the average household, you may have to put your money toward that and won't have much left for entertainment.

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To set your budget, list your living expenses, including debts, and calculate how much is left. Allocate this money among areas where you want to spend it, which may include vacations, gifts, eating out, buying clothes and entertainment.

You can download Excel spreadsheets to create budgets for a single person or a family of four at My F.I.R.E. Facts.com. The spreadsheets have a variety of suggested necessary and discretionary expenses filled in.

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