How to Create an Entertainment Budget

So, you're ready to make a budget for yourself or your family. Creating a budget for household expenses and all of life's other necessities is a wise financial move, but you don't want to forget about all of those things that aren't "necessities" per se. Having a budget for your entertainment expenses will help you incorporate these expenditures into your overall budget plans.

Difficulty:

Moderate

Instructions

1. Determine how much of your overall budget you want to devote to entertainment purposes.

2. Gather together your check book, related bills, receipts and bank statements for the past three months. Look through and circle any entertainment-type expenses to get an idea of what you spend money on and how much.

3. Write all entertainment expenses down for the past three months. List the item along with how much you spent on it. Include things such as eating out, going to the movies, internet and cable television. Then total up the dollar amounts and divide by three to get a monthly average.

4. Pare down expenditures wherever possible if the monthly average you calculated is more than the original amount you set aside for your entertainment budget. Cut back on cable television or commit to eating out less often. Because entertainment is not a necessity, you should have no problem finding some areas you can cut back on.

5. Decide how much money you want to commit to each category of expenses, such as eating out, after evaluating the amount you actually spend in a month compared to your overall monthly entertainment budget.

6. List each category with the allotted dollar amount next to it for your final budget. Include a "miscellaneous" category for unforeseen or one-time expenses, such as a birthday party for your spouse or child. Stick to your budget. Resist any temptation to exceed it.

Tips & Warnings

• Apply any leftover money from your entertainment budget to your savings account or towards any debt you may have, rather than rolling it over to the next month's entertainment budget.

• Take money from your "miscellaneous" category if you go over your monthly allotment for one of the other categories. Do not borrow against the next month's allotment, since it is unlikely that you will actually debit that amount from the next month's budget.