What Is a Normal Entertainment Expense in Budgeting?

Examine expenses for entertainment and necessity in your budget.

Examine expenses for entertainment and necessity in your budget.

What’s normal for entertainment expenses in the average household might not seem normal to you when it comes to budgeting. It depends on how you separate your wants from your needs. When figuring out your monthly budget, consider the difference between entertainment and necessary expenses. Fun money plays a role in your life, but not at the expense of your financial needs for the family, home or health care necessities.

Average Entertainment Expenses

The average American household spends a little more than $2,500 a year for entertainment expenses, based on an annual income before taxes at about $63,500, according to the Bureau of Labor Statistics. That comes to just more than $200 a month, or 5.5 percent of earned income, for entertainment. The bureau’s report also includes some $2,600 for food away from home and about $1,700 for apparel and services among the average annual expenditures.

When to Have Fun

Eating food away from home could account for necessary spending in your budget during work and commuting. Dining out in an expensive restaurant, however, could fall into the entertainment category. Clothing plays an essential part of your budget along with food and home spending, but you might consider the expense for certain fashionable items when planning a monthly budget. You work hard for your income and deserve to splurge now and then. Know where to divide the line between fun stuff and necessity when figuring out your monthly budget.

Budget Practices

Young adults could benefit significantly in their financial life by establishing good practices and habits. That could mean spending less than 5 percent of your earned income on the fun things in life. Forbes recommends putting entertainment expenses at 1 to 5 percent of your income, especially if you have loans to repay. Even though entertainment might seem important at this time of your young life, goals should include building up your savings and investments to help pay any debts or have money available for an emergency fund.

Needs and Wants

One method of establishing a monthly budget includes spending 50 percent on must-haves, 30 percent on wants, and 20 percent for savings and debt payments. The “wants” category might expand beyond entertainment, including gifts, vacations, eating out and clothes. You make the decision on which ones are actually for entertainment. Expenses for entertainment can overlap in your monthly bills. For instance, providing gifts could be necessary for family and close friends on special occasions. Other necessities, such as communications, might expand into the entertainment area. You need your phone, but adding features for fun could be considered entertainment.


About the Author

Jerry Shaw writes for Spice Marketing and LinkBlaze Marketing. His articles have appeared in Gannett and American Media Inc. publications. He is the author of "The Complete Guide to Trust and Estate Management" from Atlantic Publishing.

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