The following is a guest post by Jacob from My Personal Finance Journey. The post was written as part of a blog “swap,” a monthly event where participants of the group pair off and exchange posts on a common topic. The topic for this month is “balancing frugality with fun.” You can check out my post over at Jacob’s blogtoday.
So, let’s see. Frugal fun. At first glance, this phrase might seem like an oxymoron. After all, is the purpose of having money not to spend it doing things that we enjoy? Why does one even need to be frugal?
In my opinion, balancing frugality with fun is important because all of us (unless we are super-wealthy) need to save a certain amount of money in order to live comfortably and indeed have fun (there’s that word again!) during our retirement years.
Know Your Budget
As a general rule, I don’t feel that budgets (at least in a general sense) work all that well.
However, I do feel that it is important to track your spending for approximately 1-2 months each time you move to a new place in order to get a feel for what your fixed and variable expenses are each month and in which categories they belong. Doing this will give you a gauge of 1) how much you currently are spending for entertainment/fun purposes and 2) how much you can afford to spend on entertainment.
Automate Your Savings
As I mentioned in the previous section, I don’t feel that budgets, in the general sense, work for most people. What I mean by this is that let’s say you make $5000 per month in your job. Your budget can tell you that your target is to save $2000 of this for your emergency fund. However, if you merely leave the money in your account with the intention of deducting it at the end of the month, you will likely find that you have spent this money earmarked for your savings.
Because of this, the method I promote is the idea of automating your savings each month. This can be done by setting up recurring, scheduled money transfers from your checking to savings account 1-2 days after you get paid. By doing this, you trick your brain in to thinking that you don’t have access to those funds anymore.
And, with the money you have left in your account after your required automatic transfer, you can spend as you need to on entertainment or regular monthly expenses.
Balancing Frugality With Awesome Vacations
At times, it may seem impossible to live frugally and still somehow have enough money saved up to go on the type of vacation that will leave you with lasting memories for many years.
However, the way that I balance frugality with vacations is to 1) decide how much I can afford to save each month for a future vacation, 2) use this monthly savings target to calculate realistically, when I will be able to take the vacation, and 3) set up an automatic monthly transfer (at the beginning of the month) to a savings account set up specifically for the purpose of vacation savings.
In this way, I ensure that I go on the vacations I want and be frugal at the same time.
Live and Save According To Your Purpose-Focused Financial Plan
At the risk of sounding like a broken record by the amount of times I’ve promoted the value and use of creating what author David Bach calls a Purpose Focused Financial Plan, I will once again mention that having this system set up in my life enables me to balance frugality with fun.
At a high level, the aim of this plan is to ensure that you use money to accomplish the things that provide you with satisfaction at a deep, moral/soul level. I’ve briefly summarized the steps to creating this plan in your life below:
- Determine the importance and purpose of money in your life
- Determine your life values
- Determine your life dreams
- Automate your finances so that you can accomplish your life dreams and values.
Basically, by implementing my Purpose Focused Financial Plan (and most importantly, automating it), I ensure that I accomplish things each month that are fun and provide value to me at a deep level. And, having fun with these things that really matter helps me to resist the need to spend money on frivolous, often more costly, “fun” activities.
For example, my automated Purpose Focused Financial Plan dictates that I save/spend money each month for doing at least one cycling or running race (which I really enjoy and fulfills my life value of healthy living) and for a future vacation the Grand Canyon (one of my life dreams).
Make Saving Money a Fun Hobby
For anyone that has read my blog previously, I think it probably is plainly obvious that finances and saving money is a fun hobby of mine. By thinking of saving as something I enjoy, instead of a hindrance in the way of having fun, it enables me to accomplish my financial goals whilst being happy at the same time!
How about you all? How do you balance frugal living with fun? Share your experiences by commenting below!