What is Fun Money and How Much Do We Need?

They say money can’t buy happiness, but I disagree. When we spend money on things we love, we feel joyful. In the budgeting world, we call this fun money. 

Many of our expenses are mundane and boring. We don’t typically shout, “Yay, I paid the electric bill!” or “Hooray, I just wrote a check for trash pickup.” These obligations may be necessary, but they don’t lift our spirits or fill us with joy.

We may feel grateful and appreciative for paying our bills, but it’s not fun to pay them. That doesn’t mean we shouldn’t leave room for a little fun in our budgets and lives.

What is Fun Money?

What is fun money? Fun money is a fixed amount of money saved for events, activities, and things we consider pleasurable or entertaining. When we spend fun money, we elicit joy and spark happiness.

Like all the other money in our budget, we assign fun money to a job. The job of fun money is just what its name implies. To help us have fun and feel happy.

Like every other financial goal, we must prepare for this one. To begin, we’ll add a fun money category to our budget. This budget line gives us the green light to spend money on experiences, people, and places we love.

After we set aside money for necessities and savings, fun money should become our next priority. We’ll use it to pay for non-essentials, including stuff we don’t “need“ in a traditional sense.

I put need in quotes because, in some sense, we need fun money. Fun money is an investment in ourselves. It could be an investment in our skills, mental health, or overall well-being. 

Once we’ve met our savings goals and financial obligations, we can spend money on activities and objects that make us happy. These investments may not rank alongside food, shelter, and water, but they are almost as important.

Fun money is not an excuse to rack up debt on your credit card, and it’s not raiding your emergency fund to buy a pair of shoes or take a trip either.

Fun money can make us happy. We can spend it expanding our minds, following our dreams, strengthening our relationships, and supporting those we love. With a focus on joy, we make saving money fun.

Money is Fun: Bringing Joy to Budgeting

In financial circles, we focus a lot on negative emotions and beliefs. We save for rainy days and create emergency funds to help us when our worlds fall apart. Mainstream financial advice urges us to save for retirement and financial independence that loom decades away.

While these are all necessary money management tools, they can also suck the joy of saving. All of these worst-case scenarios are dim and depressing.

Saving every penny is exhausting. It’s downright draining to make sure our money is waiting for us on a rainy day. 

Most of us work hard for our money. Some of us reflect on that misery and decide to hoard our wealth. We don’t want to accidentally waste the money we spent hours, days, months, and years earning. 

Saving every dollar sucks. We make money to spend money, not just to stow it away. Fun money keeps our budget on track and prevents us from getting burned out.

Many people strive for early retirement then realize they don’t want to save gobs of money before enjoying life. Fun money focuses on saving for long-term goals but forces us to think about the short-term, good stuff too. We don’t want to waste our hard work on useless discretionary spending, but we don’t want to be stingy with money either.

Fun money allows us to brighten our budgets with joyful thoughts. We can save for necessities while simultaneously focusing on fun. 

With fun money, we can focus on the positive aspects of earning, saving, and spending. We can relish positive emotions, enjoy the money we earn and make saving money fun.

Losing Sight of Fun

If you are saving to build an emergency fund, pay off debt, retire early, or striving for financial independence, you know the value of saving. But do you recognize the importance of spending a small portion of the money you earn in fun ways? 

Most supersavers say saving is fun. They feel a rush when they see their retirement accounts climb or their investments soar to new heights. As a compulsive saver, I understand this. When I save, I feel a deep sense of satisfaction, but would I classify that feeling as joy?

Saving is an important goal, but it should not be the only one we pursue. Fun money reminds us that a well-lived life reflects other joyful pursuits. After all, what will we do with the money we save after we retire?

For most of my life, I ignored the concept of fun money. I assigned each dollar a job, which included paying the bills and piling the rest in the bank. 

Building a nest egg for the future is a great idea, but not if it means ignoring the dreams and aspirations of today.

Seeing money in the bank might make us happy, but happiness also stems from experiences. When we spend time enjoying our lives, we find fun and joy.

Spending money might sound scary to those who love to save, but fun money won’t send us on a spending free-for-all. With a budget in hand, we won’t go financially overboard or find ourselves lured by the promise of instant gratification. By giving every dollar a job, we are less likely to overspend. Instead, we will enjoy life while living within our means.

If putting fun money into your job sounds scary, find one small way to treat yourself every month. There is absolutely nothing wrong with starting small.

Fun Money Prevents Spending Guilt

Many savers struggle to create spending goals. They delight in saving but cringe at the thought of pulling out their credit cards.

Supersavers rethink every purchase, place items in their cart, contemplate the value, and then wait to buy them. After a while, their joy fades. It’s more painful to spend money than keep it tucked away safely in the bank.

Compulsive savers may find it challenging to spend money. “Is this discretionary, unnecessary purchase worth a week’s worth of work?” they ask. “Shouldn’t I save this money for another purpose?”

The act of spending can elicit feelings of fear and negativity. Shouldn’t all of our money go towards saving goals? Yes, we want to buy a new hot tub, but what happens to our other plans when we place that spa in our backyard?

Why Is It Important to Budget Some Money for Entertainment?

Remember, the purpose of fun money is fun, and joy is just as important as every other goal in your life. In fact, in some ways, I would say it’s one of the most important money goals of all.

There is nothing better or more important than enjoying your life from time to time. To ease your guilt, recognize that you planned for this fun. Remember, you didn’t haphazardly decide to spend money reserved for your mortgage or use up this week’s gas money.  

You deserve to save money for financial stability or to ease anxiety. You also deserve to spend money on happiness. Give your money permission to bring you joy.

The Importance of Self Care

Some people refer to fun money as a treat, but I think it serves a need just like any other. Fun money allows us to spend money on ourselves, and self-care is just as important as all of the other goals we set.

After paying our bills and saving for important goals, we can spend without guilt. We aren’t wasting money. We are consciously spending it to achieve a sense of delight and happiness.

Don’t feel guilty for enjoying life. Remember, going out to dinner, buying new art supplies, and taking a trip to a nearby amusement park won’t bust your budget. It won’t delay your long-term goals for years, either.

What if we took the time to understand what makes us happy? What if we began to spend money on activities and objects that helped us create the best version of ourselves?

How Should I Spend My Fun Money?

So what should you buy with your fun money? The list of ways to spend it is endless.

If you aren’t sure what constitutes fun, ask yourself, what brings joy to your life? Here are a few ideas to get you started.

• Travel
• Education
• High-quality food
• Concerts
• Lessons (dance, painting, writing, photography)
• Shared experiences (skydiving, ballroom dancing, boat tours)
• Subscriptions (newspapers, magazines, books, monthly boxes)
• Home decor (mattresses, furniture)
• Clothing
• Fitness-based hobbies (bike riding, snowboarding, kayaking, kickboxing)
• Skill-based supplies (painting, drawing, writing, photography)
• Hot tubs
• CSA shares
• Couples events (massages, hotel rooms, dining out)
• Personal chefs
• House cleaning services
• Personal trainers
• Video games

Many people spend their fun money on activities with others. Do you want to attend events with your children, travel with your parents, or spend money to visit your loved ones?

Use fun money for anything that brings you joy. If you feel happy when your house smells good, save up your hard-earned cash for candles and potpourri. If your heart sings when you spend time with others, use your money to pick up cheese and wine and visit with those you love.

You can use fun money to explore new hobbies or learn new skills. If painting brings you joy, use your funds to pay for classes or purchase more expensive brushes and paints.

If you feel the need to decompress and relax, spend that money on a meditation retreat, apps that help you unwind, or yoga classes.

Happiness and joy aren’t the only goals. You can also use this money to heal your inner wounds or feel reenergized.

Some people want to blow their discretionary spending on anything their hearts desire, while others need to plan. They might agonize over the wastefulness of what they bought and kick themselves for spending on something when they could’ve saved the money instead. 

If you can’t let loose with the money you save, that’s perfectly okay. Instead, you can save with a particular objective in mind. There is no limitation to what you can buy. If you struggle to spend on yourself, start with a list of little things that would bring you joy. 

Create a Fun Money Wish List

If you aren’t sure what sounds fun, create a long list. Tape it to a wall and rank the items you wrote down. Figure out how much each item costs and write down the amount next to the activity, event, or object you want to buy.

Taking the time to generate a list forces you to think carefully about your options. Supersavers hate to waste money, so this is a way to prevent you from buying something that doesn’t provide joy.

How would you like to spend your money? Do you want to take a snowboarding adventure, buy an espresso machine, or impulse shop in a thrift store?

If you dream of learning to play guitar, add that too, along with your goal of flying to Greece. Add weekly events like dinner with friends, drinks after work, and a new kickboxing class. What purchase will add a new perspective to your world?

You can add scratch-off lotto tickets if you want. The goal is to spend this money in ways that excite you. If you can’t wait to rub off the silver parts of that lotto ticket, then buy yourself one with the money you saved.

Don’t limit yourself at this moment in time. Instead, write down even the wildest ideas. You can prioritize and prune later.

How Much Should You Spend on Fun Money?

How much should you spend on fun money? Should it be a percentage of your overall income? A set dollar amount? Well, that depends on your money-saving timeline.

Before deciding how much to save, you must ask yourself the following.

• Do you have debt?
• Have you funded a six-month emergency fund?
• Do you contribute to your 401k or IRA?
• Have you saved for long-term goals like buying a house or going back to college?

How Much Fun Money to Budget?

If you can check all the boxes above, you can create a decent-sized fun money account. Exactly how much is up for debate. I’ve seen numbers between 5% and 30% of your income, and that’s a huge range!

I suggest starting small and increasing the amount as you see fit. While money can evoke joy, we can also live a good happy life without spending a lot of money in the first place.

If you need to pay off debts, keep close tabs on your fun money and make sure you don’t go overboard. If you are digging out of debt, haven’t funded your emergency fund, and haven’t saved for retirement, you’ll need to aim a bit lower. But don’t let that discourage you. Everyone deserves at least a little money to experience the joys in life.

Run the numbers and decide how much you can spend.

Fun Money is a Plan for Spontaneous Events

Fun often involves spontaneity, which means the fun stuff in life is typically stuff you weren’t expecting.

Who knows when your favorite band might come to town? Who knows when your friends might call you up for a night of dinner and dancing? Fun events are unpredictable.

On Monday, you went out with a friend for lunch and hit happy hour after work, but next week you’ll live like a hermit and stay home. 

Fun money allows you to plan for the unexpected. You don’t know which events will pop up this month, but you’ll know you’ve saved enough to cover them. 

To create a fun money fund, you must factor in the unpredictability. The amount of money you spend this month won’t be the same amount you spend next time. For example, summer months might cost more than winter ones in your area.

Pay attention to the ebb and flow of money and cut back on other non-essential expenses that don’t provide as much joy. Also, remember that when you run out of cash, you’ll have to call it quits until you replenish it.

How to Save Your Fun Money

You can save your fun money in a jar or move it over to a specially marked savings account. It doesn’t matter where you store the money (with today’s piddly interest rates). It matters more that you save for the fun stuff. 

Should you save for long-term visions and goals or short-term fun? Plan for both. You can prepare for an expensive trip to Europe and still set aside money for little pick-me-ups.

Money is Fun

In the quest to save, don’t forget that money is fun and meant to be enjoyed.

How do you spend your fun money? What’s on your list?