- There was limited access to local entertainment in 2020 due to COVID-19.
- The result could be thousands of dollars saved over the course of the year.
- As venues re-open and your entertainment spending increases, you must create a new budget to account for spending changes.
COVID-19 closed movie theatres, bowling alleys, amusement parks, and museums. The pandemic canceled concerts, Broadway shows, sporting events, and festivals. Even local parks, greenways, and outdoor venues closed for months in 2020. Personal entertainment turned inward. A walk around the neighborhood or streaming your favorite movie on Netflix or Hulu became the only outlets available.
Entertainment Costs During the Pandemic
Eliminating access to traditional forms of entertainment saved you money. Not only were you not buying tickets to events, but you also saved money on gas, parking, food, and souvenirs, which can easily double the price of attending an event.
Signing up for streaming services at $5 to $10 a month would never entirely absorb those expenses, even if you signed up for every streaming service available.
Where Did the Financial Savings Go?
Forced savings in entertainment may not have translated into higher balances in your savings account. In most cases, you spend any money left in your checking account. If you did not automatically increase savings or investments, the extra funds might have gone towards more take-out meals, lottery tickets, or debt reduction.
What Should You Include in Your Entertainment Budget?
Entertainment is a reasonably broad and elusive spending category. It can include anything from eating out to movies, concerts, and sporting events. If you go out with friends to enjoy live music and drinks after work, is that entertainment? Or part of the food budget?
Budgets give you the flexibility to create whatever subcategories you want to reflect actual spending habits. But when you establish a budget for entertainment, take the time to define what that means to you before earmarking a dollar amount to spend on fun.
Budgeting Strategies for Post Pandemic Local Entertainment Costs
Regardless of how you reallocated spending to accommodate for the lower entertainment costs, now is the time to relook at your budget and move money back into the entertainment category. In 2021, you may resume visits to the theatre, the ballpark, or festivals. These activities will require money you are now spending elsewhere.
Financial advisors recommend spending no more than 10% of your after-tax income on entertainment, vacations, and other non-essential expenses. Having high debt levels or low savings could lower the amount you should spend on extra-curricular activities to no more than 5% of your after-tax budget.
To help you make the appropriate adjustments to your budget, consider the following:
Prices are unlikely to fall: Businesses lost vast amounts of money in 2020. Although most companies are now re-opening, most still face reduced capacity, which means they are unlikely to offer discounts. Pent-up demand and lower capacity could make it more complicated and expensive to get tickets to concerts, sporting events, and other activities you enjoy.
Account for ancillary costs as well as ticket prices: Your budget should include the total cost of entertainment, including ticket prices, gas to the event, parking, food, and souvenirs.
Monthly costs may not be the same throughout the year: You may not spend the same each month on entertainment. Unlike local events like movies, concerts, sporting events, and festivals tend to be one-time events that you must attend on specific dates.
Cut back in other areas: To eliminate adding debt to your bottom line, you must reduce spending in other areas to account for an increase in entertainment spending.
After a year with limited options, allocating money for fun is an important part of your budget. To calculate an accurate figure, include the total cost of the entertainment and reduce costs in other areas to ensure you don’t increase your debt.
- How much should you spend each month on entertainment?
Experts recommend spending no more than 10% of your after-tax budget on entertainment, including vacation, holidays, celebrations, and other non-essential expenses.
- How much does the average family spend annually on entertainment?
The average family spends 4% of the budget or $2,564 on entertainment expenses. That breaks down to about $200 per month for entertainment spending.
- Are restaurant meals considered entertainment for budgeting purposes?
Eating out could be part of the food budget or the entertainment budget. When you eat out because you are too tired or too busy to cook, you might see that as part of the food budget. On the other hand, going out with friends for dinner feels more like entertainment. You must decide how to budget for meals out in a way that works for you.