Entertainment falls into the budgeting category of "wants," which are 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. Use a few guidelines to decide on the right amount to budget on entertainment.
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. 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
According to the U.S. Department of Labor's consumer survey on expenditures during 2009, 5.5 percent of the average consumer unit's expenditures went toward entertainment. For the average consumer unit of 2.5 people with average annual expenditures of $49,067, this worked out to $2,693 per consumer unit, or $1,077 per person. To apply this average guideline to your budget, calculate the annual amount of your expenditures, which is your income minus taxes, deductions and savings, and multiply it by 0.055.
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.
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. 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.