Yahoo Finance The Average American Spends This Much on Entertainment — See How You Stack Up
Last year, at GOBankingRates, we researched data from the U.S. Bureau of Labor Statistics to find out “What Is the Average American’s Budget?” While the most significant budget expense was by far housing, costing approximately $1,886 per month, other categories also consumed a large portion of the budget. For instance, the average American spends over $900 each month on transportation and more than $5,450 per year on healthcare.
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While these expenses are all considered necessities, other things people spend money on generally fall into the “discretionary” category. The data showed that the average American spends over $1,700 a year on apparel and services and more than $770 on personal care products and services.
The final area we looked at was entertainment. Americans aren’t afraid to shell out money for movies, concerts and more. Here is how much the average American spends on entertainment and what you can do to cut back if you are spending too much.
Also see how one consumer was able to cut down their entertainment costs significantly.
How Much Does the Average American Spend on Entertainment?
According to our research, the average American spends $3,568 on entertainment each year, which is just over $297 per month. Entertainment may include any number of things, such as going to the movies or seeing a concert. It can also include less costly items, such as the money you spend on your favorite game on your phone or that lottery ticket that was sure to win you millions.
Many people overlook this vital part of their budget. It isn’t until they go through every expense over the course of a year that they begin to really see how much they are spending on non-necessities. However, depriving yourself entirely of these things can result in a backlash. Creating a realistic budget that includes an entertainment line item can help you stay on track and meet your financial goals more quickly.
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How Much Should You Spend on Entertainment?
While there is no set-in-stone amount you should spend on entertainment, most money experts agree that it falls into the category of a need instead of a want. One of the most popular methods for determining how much you should spend on wants versus needs is the 50/30/20 rule.
The 50/30/20 rule says that you should allocate 50% of your budget to essential expenses, 30% to wants and 20% to savings. In general, housing, utilities, transportation and food costs fall under essential expenses or necessities. These are things that you cannot live without.
Wants, on the other hand, are things that you can live without but maybe you would rather not. Entertainment expenses would fall under this category. The final 20% is for savings, whether it is towards your emergency fund, retirement or paying down debt.
How Do You Cut Back on Entertainment Expenses?
For many people, cutting back on entertainment expenses can feel like punishment. After all, entertainment is there to well, entertain. It is an integral part of life and arguably one that should be prioritized. So, how do you find a healthy balance between enjoying the fruits of your labor and not spending beyond your means?
It starts by building a realistic budget. Start by going line by line with everything that you make and spend each month. This will be your starting point. If your wants far exceed 30% of your budget, you will need to make some adjustments. You can also save up for certain entertainment costs. As you meet specific goals, you can reward yourself by going to the must-see concert of the year or finally taking that girls’ trip that you have been promising yourself.
How To Prioritize Your Entertainment Spending
Another thing to consider is prioritizing the type of entertainment that matters most to you. As you look through your monthly expenses, see if there are any subscriptions that you no longer use or cheaper alternatives.
For example, if you love working out, consider taking up jogging or cycling in lieu of a pricey gym membership. If you have an expensive hobby, check your local library to see if they offer a makerspace or other freebies. With a little creativity, you can significantly reduce your entertainment expenses without sacrificing your happiness. You may also be able to find discounts on your favorite activities through deal sites like Groupon or promotions offered through social media.
Just remember eliminating entertainment costs from your budget may not be practical. At least a small portion should be set aside to allow you to have fun and enjoy life.
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This article originally appeared on GOBankingRates.com: The Average American Spends This Much on Entertainment — See How You Stack Up
