Entertainment budget - too much?

[roberto]

Hi

I was looking at our budget for this financial year and started wondering if we are spending too much on Entertainment and Eating-out, almost $15,000 per year.

We are family of 4 (children are 4 and 2). I know all depends on earnings and life-style decisions, but Do you think we are spending too much in entertainment every year?

This list shows each item on the budget:

• Holidays: $3,000
• Gym / Sporting memberships: $780
• Movies / Music: $240
• Hobbies: $570
• Newspaper / Magazines: $240
• Celebrations: $1,500
• Weekends: $2,600
• Restaurants: $600
• Takeaway / Snacks: $2,400
• Bought lunches: $2,400
• Coffee / Tea: $480

Total:$14,810

 

[Edmond Dantes]

I think it depends on where you are at now, specially on your investment journey. If you are just starting out, I think the budget above is just ridiculous. Coffee $480, Gym $780 pffff... let's just say it can easily be reduced.

However, if you're enjoying the fruits of your hard work, it will definitely look different. If you're living off rents or just work because you want to (as opposed to needing to), it's a total different story. Although many retired people will still be money consious.

What stage of your investment journey are you?

 

[moyjos]

It entirely depends on your income...
Is that 15k less than 10% of your total combined income? Of so .. I say fine

If it is 30% well yes...probably too much

 

[roberto]

Thank you for the replies so far.

What stage of your investment journey are you?

Still in accumulation phase, 2 IPs around $750K and $100K on Cash and MF. Long way too go.

Is that 15k less than 10% of your total combined income?

Yes, it is less than 10% before tax, but it is a bit more than 10% after tax. We also have allocated 10% of our salaries for saving and investments.

I think it is a bit too much (lots of people in the world that don't have the luxury of an Entertainment budget), but when I identify items where we could cut, always find a reason for not too. I guess I am looking for encouraging, so I can commit.

Please keep the comments comming

Thanks,

 

[Richard Feynman]

I'm not here to tell you what's too much or not a problem, after all, I'm a drug addict who spends close to $1500 a year on coffee...but you are spending almost $100 a week on Takeaway / Snacks and Bought Lunches. I am sure you can trim some fat there without feeling deprived.

 

[coastymike]

having seen friends die at an early age from expected events in life i would if it isnt putting a strain on things then go for it. seen so many people accumulate masses of properties and never spend. then one day it is too late.

 

[china]

I think it is not too unreasonable for a family of four to spend 300 dollars per week on enjoyment of life. You only live once. You only get to see your children grow up once. 300 dollars per week to spend on happiness is a small price to pay. You don't know what is around the corner. What if you saved your 15000 per year and became diagnosed with a terminal illness or had a serious car accident that prevented you from eating out, going on holiday, etc. Some single people will spend more than that on weekly repayments on a good car alone. I see the 300 dollars as a lifestyle and family investment - as long as it gives maximal pleasure. Some people get enjoyment from eating, others from cars and others from the latest led/lcd tv.

 

[moyjos]

If YOU think it is a bit much then you can certainly trim it....
Here is my take

Holidays: $3,000........ This could be trimmed by having camping holidays..spend that 3000 setting yourselves up and have years of much cheaper yearly spends. Your kids are only babies and will have many years of great memories if you start camping now. (you can still have the odd "special" resort weekend away etc,

Gym / Sporting memberships: $780. Ditch the gym and walk the kids in the park and kick a ball

Movies / Music: $240. Less than $5 a week ...doable. Turn these into "date nights" . This figure is likely to rise as the kids get bigger and want to go to the movies

Hobbies: $570. ~$10/ week. Doable

Newspaper / Magazines: $240. I would be happy if I could my "reading. Udget down to that . Doable

Celebrations: $1,500. Is this gifts for family and friends? If so...this may rise as the kids get bigger

Weekends: $2,600. ... $50 a week ?? On what? Ditch this

Restaurants: $600.. 100 meal once every 2 months ? Doable

Takeaway / Snacks: $2,400. $45 (odd) a week ?? On what? Ditch this

Bought lunches: $2,400 .....take lunch from home (cook too much dinner not that hard ). Ditch at least half of this

Coffee / Tea: $480. $9 ish a week Equates to one or two coffees each a week .. Trimable but not a huge problem


The trick with any of these budget cuts is...if you choose to (eg) NOT have a coffee each...whack that $10 on the mortgage.

Sounds like a load of BS but it is true that every penny counts .

You do have to have a balance and MOST IMPORTANTLY enjoy your family, while building your future.

 

[Ace in the Hole]

It doesn't seem excessive, when you break it down to weekly figures.
With 2 kids and the expenses which come with them, it's so easy to lose track of spending.

If that's 10% of your income, imagine what your income could be if you simply double your entertainment budget....?
Well, it works that way, for some.
Earning more is often an overlooked alternative to spending less.

 

[Corey Batt]

Less than 10% of your gross? Meh, enjoy life. Especially with little ones, in the end, that's what it is all about.

 

[Ideo]

having seen friends die at an early age from expected events in life i would if it isnt putting a strain on things then go for it. seen so many people accumulate masses of properties and never spend. then one day it is too late.

Exactly.

I try to strike a balance between investing and enjoying life.

As long as you are meeting your investment goals enjoy life a little.

 

[roberto]

Thank you for the comments. It is good to know what we are not crazily over expending.

I’ll definitively cut some of those $8 lunches at work by taking food from home. Apart of making sense financially, it will also contribute to better health.

Cheers,

 

[Andrew_A]

It doesn't seem excessive, when you break it down to weekly figures.
With 2 kids and the expenses which come with them, it's so easy to lose track of spending.

If that's 10% of your income, imagine what your income could be if you simply double your entertainment budget....?
Well, it works that way, for some.
Earning more is often an overlooked alternative to spending less.

Or perhaps increase the number of kids if the correlation works that way

Earning more and keeping the expenses similar is the key, earning more and increasing spending is just the hedonic treadmill in action.

 

[cimbom]

I agree with the others that it depends on many factors. We're not on a huge income (~85k before tax) but we still aim to put aside enough for an overseas holiday every year. We make up for it by bringing packed lunches to work every day and not buying coffees. We get cheep takeaway every 1-2 weeks and only go out to dinner on special occasions. We save a third of our after-tax income so spending a part of that on travelling while we're young doesn't seem like a bad idea to me.

I would advise you to maybe increase the savings rate though - try to bump it up to 15 to 20% if you can.

 

[china]

I agree with the others that it depends on many factors. We're not on a huge income (~85k before tax) but we still aim to put aside enough for an overseas holiday every year. We make up for it by bringing packed lunches to work every day and not buying coffees. We get cheep takeaway every 1-2 weeks and only go out to dinner on special occasions. We save a third of our after-tax income so spending a part of that on travelling while we're young doesn't seem like a bad idea to me.

I would advise you to maybe increase the savings rate though - try to bump it up to 15 to 20% if you can.

I am glad that you are doing some travelling as a reward for living frugally the rest of the time. I think everyone needs something to reward themselves in the present when sacrifices are being made for the future.

 

[devank]

Hello Roberto,
I think we are in a similar boat. Similar incomes number of kids (3.5,2 & -2 moths) and similar habits

I keep an expense spread sheet to see
a. if we can afford to do any investment
b. risk level with interest rate movements
c. min part-time hours my wife needs to work to maintain current life style

Whole summary is in the first sheet 'budget'. Other sheets are used to support the first sheet.

Hopefully this can be useful to you. Happy to answer any questions.

 

[devank]

Here is the file.

 

[Indifference]

As others have said, if all that is about 10% of income, you are already tightly budgeted. Life is about living.... Enjoy family time while your children are young. Go on vacation, travel, take them to a theme park.....live!

I spend more than your annual entertainmnet allowance on vacations alone.... With everything else in your entertainment basket, I couldn't get by without feeling like I was depriving my family of the lifestyle and enjoyment we can otherwise afford.... But it is all relative.

10% is bugger all & any further cutbacks here will probably do more harm than good! Enjoy the "journey"!

 

[china]

As others have said, if all that is about 10% of income, you are already tightly budgeted. Life is about living.... Enjoy family time while your children are young. Go on vacation, travel, take them to a theme park.....live!

I spend more than your annual entertainmnet allowance on vacations alone.... With everything else in your entertainment basket, I couldn't get by without feeling like I was depriving my family of the lifestyle and enjoyment we can otherwise afford.... But it is all relative.

10% is bugger all & any further cutbacks here will probably do more harm than good! Enjoy the "journey"!

We all have own own indulgences. I spend that amount 15k each year - eating out and surfing the internet.

 

[Shaneelastic]

Looks fine to me with your incomes.