It’s always a good idea to keep your expenses to a minimum and save as much money as possible. This allows you to build up an emergency fund and prepare for the future. But you don’t want to focus so much on saving money that you cut all the fun out of your life. Here’s how you can prioritize your hobbies to keep spending down and cut down on your debt.
Evaluate Your Current Financial Situation
The first step in taking better care of your finances is creating a budget, as this shows you exactly how much you make and spend every month. Start by listing the money you make from any income streams you have. For most people, this will be their salary at their current jobs, but if you have a side hustle or any other sources of income, list them, as well.
Next, write down all your expenses in a typical month. You can look over banking statements from months past to figure out approximately how much you spend on food, gas, utilities, and recreation.
The goal is to make more than you spend every month. Ideally you want to have a cushion of $1,000 or more, but even having a few hundred dollars extra every month is a good start. Make sure that you’re contributing to a savings account consistently, as well.
Consider Cutting Down on Recreational Spending
If you’re spending a large amount of your monthly income on hobbies, see if there is a way you can spend less while still enjoying yourself. Can you lower your bill for a certain hobby, or swap it out entirely? For example, instead of paying for a premium gym membership so you can take all the classes, maybe you can choose the basic membership and add in the occasional class. Or, you could invest in home workout equipment and cut out the gym entirely.
When you evaluate your spending on hobbies, compare the cost with the amount of enjoyment you get from them. You don’t want to cut out something you really enjoy, but it also doesn’t make sense to spend money on a hobby that you’re not actually that passionate about.
Paying Down Debts
Some types of debt are difficult to avoid. If you want to buy a house or a new car, you’ll probably need a loan, and that’s fine. But if you have debt with a high interest rate, it’s imperative that you get that paid off as quickly as possible. Title loans and personal loans are two examples of short-term loans that carry very high interest, so if you have any loans like this, make paying those off your priority.
Cut out any unnecessary spending, especially recreational spending, until those loans are paid in full. In situations where you’re incurring large interest charges, you need to make sacrifices in the short term to avoid long-term debt that keeps getting worse.
Just because you’re saving money doesn’t mean that you need to live a boring life without any hobbies or pursuits. It’s all about managing your spending. As long as you’re being financially responsible, recreational spending is fine and can help you get the most enjoyment out of your life.