What Percentage of Entertainment Budget is Ideal?

Financial planning is important for every individual. Income needs to be managed in such a way as to meet current and future needs. To achieve a prosperous life, one must recognize their financial condition in order to determine an appropriate budget.

A healthy budget can be created by ideally allocating funds between “needs” and “wants”. Otherwise, individuals may end up spending more of their income on trivial things.

Don't Go Broke!

According to the "Family Financial Planning" book by Indonesia Financial Services Authority (OJK), the ideal percentage for entertainment is 5 percent of total income. The amount may be adjusted if the individual does not have a mortgage burden or their emergency fund is sufficient.

So, how to optimize the use of entertainment funds so as not to interfere with other expenditure items?

5 Tips for Entertainment Fund Allocation

Watching movie online — Image Source: Freepik

1. Variety in Entertainment

It doesn't always have to be expensive, one can also look for cost-effective entertainment. Options such as a picnic in the park or watching a movie via an online platform will help keep expenses down without compromising on fun.

2. Discounts and Special Offers

Everyone loves a discount. Discounts or other special offers are usually obtained through customer loyalty programs or payment methods at certain moments. Take advantage of these to reduce your entertainment costs.

3. Long-term Entertainment Plan

This strategy can prevent consumptive and impulsive behavior. Individuals can make a wish list, whether it's a dream travel destination or a long-dreamed-of item.

4. Budget Review or Evaluation

Every certain period, the allocation of entertainment funds needs to be evaluated to find out whether the utilization is appropriate or something can be corrected. Make sure the budget stays in line with your current financial condition and prioritization.

5. Primary Needs Remain Number One

Don't sacrifice your main expenses for entertainment. Instead, if you have entertainment funds left over, allocate some of that money to savings or investments.

Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).