Don’t Take the Fun Out of Budgeting

Margie Wiley of Freedom Street Partners

Here’s what’s easy to overlook when you’re new to thinking strategically about your money.

You set aside funds for the daily bills, including the mortgage, utilities, gas and food. You plan for college and other educational expenses. You decide how much you can contribute to a 401(k).

Don’t forget about fun, reminds financial advisor Margie Wiley.

“You have to budget in fun for any sort of lifestyle,” she says. “Fun will blow up your savings plan, your retirement plan, your life strategy if you do not plan for it because nobody plans for fun.”

You define what’s fun. What do you value doing the most? Maybe it’s splurging on a venti Mocha Frappuccino two shots of expresso. Could be that alligator wallet with matching shoes. Many of us relate fun to experience: an afternoon at the rock gym or a cruise to Alaska with your hubby. Fun can also mean entertainment — a Netflix subscription or buying the hard copy to read before book club. These days, fun coincides with wellness, whether it’s a pedicure, massage or a peaceful night at home with a favorite bottle of wine. 

Margie Wiley of Freedom Street Partners

You define your idea of fun and decide how much to budget for it — typically no more than 30% of your monthly income but often significantly less, all dependent on your financial situation. Wiley can help you decide the amount that fits your budget. But it can’t be zero no matter how much you prioritize saving.

If you don’t take the time to build in some money for fun, you’ve set up an unrealistic budget and a lifestyle you can’t sustain.

Once you decide how much per month will go fun, the only rule-of-thumb is to stick to that amount or adjust annually based on your goals. What you don’t want to do is borrow from your retirement plan or hand off your credit card to make up the difference. Just as you set aside a designated amount for the mortgage, you do so for fun.

Sometimes that means taking a holistic view of the small stuff to save up for something larger. You might have to limit eating lunch out every day if you can’t afford the vacation you want.

Planning for fun might sound boring, Wiley admits, but it’s a critical part of keeping your budget on track so you and your investment advisor can achieve all of your investing goals.

Any opinions are those of Margie Wiley, AAMS, Financial Advisor and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. You should discuss any tax or legal matters with the appropriate professional.