Written by Trent Hamm, The Simple Dollar is a popular personal finance blog that chronicle's one man's road back from overwhelming debt to financial security. Hamm declared the contents of the blog to be in the Public Domain in 2008 and available for sharing when attributed properly. We will share a couple of posts a week.
A few years ago, I was a big collector of DVDs. I amassed a collection of almost 1,000 DVDs of all kinds, and I was pretty proud of the collection. We had display cases in our living room showing all of them off.
Now, if you do a bit of “back of the envelope” math on those DVDs, you’ll quickly figure out the cost involved. If you assume an average of $10 per DVD, that’s $10,000 in discs sitting there. That’s expensive, no matter how you slice it.
You could make a similar case about my video game collection. Once upon a time, I had almost 100 games for my Playstation 2 and Gamecube. Again, if you assume they average out to $40 a pop, that’s $4,000 in video games.
That’s a lot of money tied up in hobby/entertainment spending.
Obviously, I was spending beyond my means here, but there is a happy balance to be found when it comes to hobby and entertainment spending. It just took some time to really figure it out.
Here’s the solution we worked out for our hobby and entertainment spending.
Each month, Sarah and I have a total dollar amount we can each spend on our hobbies and entertainment choices. Everything comes out of that money, from movie tickets to games, from books to painting supplies. If we’re doing something for entertainment’s sake, then it comes out of that budget.
What should that amount be? It really depends on your financial situation. However, I believe that everyone should have some small amount budgeted toward this kind of free spending, even if money is really tight. Having a bit of money to spend on whatever you wish really takes the pressure off of financial change. The simple idea that you have money in your pocket that you can spend without worry often makes the challenge of getting in good financial shape much easier.
The challenge that many people have is that they have their toes in a lot of different hobbies and types of entertainment. They watch movies. They read books. They play golf. They buy designer clothes. They buy lots of personal appearance products. They play video games or board games. They read magazines. They watch cable television.
All of these options cost money, and if you dabble in a lot of options at once, your costs arereally going to add up. How do you choose among them?
For me, my spending almost exactly matches how much time I spend engaging in and thinking about a particular hobby, at least to a certain extent.
I tend to think of this more in terms of the time I don’t spend rather than the time I dospend.
So, for example, let’s say I just watched one movie in the last month (which is actually true). Given that I don’t have a big interest in movies based on my own behavior, why would it make sense to spend much money on movies in the coming month? (In fact, I can only think of two films coming out in the near future that I have any interest in at all, and those are both adaptations of books that I loved.) So, for now, I won’t spend money on DVDs or going out to the movies.
Instead, I focus my time – and thus my money – on the small number of hobbies that really matter to me. I enjoy reading, so I’ll probably buy a book or two this month and maintain a magazine subscription, which, combined with the library’s resources, will give me plenty to read for the entire month (or more). I play a lot of games, both computer games and board games, so I might buy one new game this month since they take up such a significant portion of my time and attention. That leaves me with a bit more to spend on unexpected opportunities.
I feed the things I care about and cut back sharply on the things that I don’t. I determine what I care about based on the amount of time and attention I give it.
The one thing I ignore is the sense that I “should” pay more attention to a hobby. In the past, when I would feel like I hadn’t spent much time on a particular hobby lately, I’d “cure” it by spending more money on that hobby. The problem with that was that by having a lot of hobbies that I was trying to maintain, there were a lot of hobbies that needed “curing,” and that was expensive.
The better solution is to let those unattended hobbies wither on the vine for now. If you’re not passionate enough about it to give it quite a bit of your time and focus during your spare time, then you’re not passionate about it to funnel your money into it.
If you’re not passionate enough about a magazine to keep up with the issues, cancel the subscription. If you’re not passionate enough about films to watch quite a lot of them consistently, stop buying DVDs or paying for Netflix. If you’re not passionate enough about a premium movie channel to watch it several times a month, cancel that subscription. If you’re not passionate enough about video games to play all the way through the ones you have, then don’t buy new ones.
Another challenge is figuring out whether you’re going to get adequate enjoyment out of unknown purchases. How do you know whether a book you buy will be worth the cost?
I’ve found two solutions for this.
First, I try very hard to really understand what I like. I save my money for things I’m sure that I will like, such as board games with some strategic choices that play in 45 minutes or so, computer games that aren’t highly reliant on reaction speed but reward thought and have lots of replay potential, and books from authors I’m familiar with or come recommended to me from sources that I deeply trust (mostly friends).
Second, I use freebies and samples. If something is really outside of the bounds of what I like, I find a free or nearly-free way to try it. I download a sample chapter on my Kindle or start reading it at the bookstore. I download a game demo on Steam. I read lots and lots and lots of reviews. I check the item – a book, an audiobook, a DVD – out from the library.
When I put all of these tactics together, it actually becomes very easy to stay within my hobby and entertainment budget. There’s really no reason to overspend.