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3 Warning Signs You’re Overspending on Hobbies…and How to Afford Fun!

What brings you joy does not have to break the bank. 

We all know–financial planners included–that leisure activities are essential to physical, mental, and emotional health. 

But if your passion comes with a significant price tag, it can set up a tug of war between sound finances and feeding your soul. That doesn’t have to be the case. A clear look at your priorities, including what makes your life worth living, is the key to a financial plan that works for you. 

If you suspect you haven’t incorporated your hobby into a well-rounded strategy, consider: 

 

Red flags that your leisure spending is out of balance 

  1. You avoid tracking your expenses.  

How much are those deep sea fishing trips or private Pilates lessons really costing you? If you’re afraid to add it up, you already suspect the number is too high. Denial can temporarily spare you the shock, but it won’t save you when you come up short on bills, build up debt, or drain your long-term savings. 

  1. You hide the costs of your hobby from family members. 

This tactic may help you avoid conflict for the time being. But imagine what will happen when your significant other discovers your deception? If you keep loved ones in the dark about something that affects their well-being and financial future, it’s time to reevaluate your money management. 

  1. You routinely spend beyond your means on your hobby. 

Do your piloting lessons take precedence over paying the rent on time? Did you charge that mountain biking trip and bump up your balance instead of paying it down…again? If you spend money you don’t have, a reality check is in order. 

 

Make a plan to pay for your passion 

The goal of financial planning is to ensure you have money available for your most important priorities. If that includes snowboarding down a beautiful mountain slope, make sure it’s part of your plan. 

Treat leisure spending like any other item in your budget. Set your priorities, then earmark an appropriate amount to spend on your hobby. 

What should that number be? It can vary widely depending on how much you earn, your age, what’s left in your budget after paying for necessities, and your other financial goals, including debt reduction, education, and retirement. Here are some ideas to consider: 

  • The Bureau of Labor Statistics reports that on average, consumers allocated 5.3% of expenditures for entertainment in 2017. That’s about the same amount they spent on health insurance (5.7%). As with most averages, the numbers fluctuate once broken down according to income and the demographic characteristics of the consumer. 
  • The currently popular 50-30-20 rule divides spending into three categories: 50% for necessities, 30% for flexible expenditures (your wants not your needs), and 20% for financial goals (savings, investments, debt reduction). 
  • Financial planners often recommend capping your leisure spending at 10% of your net monthly take-home pay. 

In the end, your personal situation drives the numbers. The most important takeaway is to take a realistic look at your leisure spending, so it can take its rightful place in your budget. 

Once you see the numbers in writing, you can make thoughtful, informed decisions about where you want your resources to go. People often find that this process opens their minds to new possibilities. 

You may decide that reducing debt will bring you peace of mind and eventually free up more money for the studio recording equipment you really want. Can your photography skill be turned into your retirement side gig and fund your dream trip–a photographic safari? What if you bought that high-end digital camera on eBay and put the savings towards maxing out your 401(k)? 

 

Once you’ve incorporated your hobby into your financial plan, you can free your mind to enjoy the pleasures of your passion without the guilt and stress. FJY Financial can help you create a plan guided by your personal priorities. 

Contact us for more information. We’re happy to hear from you.