A parent’s guide to fun money: How to have fun on a budget

As a parent, you work hard to support your family. Your income helps ensure everyone has what they need — a warm bed, a safe home, and food on the table. Still, you work for more than just essentials. A budget should also include money to spend on entertainment, self-care, and special things your family enjoys.

That's where fun money comes in.💸 Fun money is just what it sounds like — cash for things that make you and your family happy. Your fun money can go toward all sorts of things: a vacation, a night on the town, or buying clothes you don't need but really want.

How to budget for fun money

Setting up a monthly budget is a great way to ensure every dollar you earn has a specific use. Some families follow the 50/30/20 rule for budgeting purposes. Under the 50/30/20 rule, you separate your income into budget categories. You'll use 50% of your income for essentials, 30% for wants, and 20% for savings. Fun money fits into the wants category.

For example, assume your household has $5,000 in monthly income after taxes. Of the $5,000, that would mean $2,500 for rent, utilities, insurance, and transportation. 🚗 You would save $1,000, and the remaining 30%, or $1,500, would go to wants.

Money for fun is a line item in your wants category. In other words, you may not use the entire 30% of your income toward fun money. Some of it may go toward other things, such as your kid's extracurricular activities or the household streaming services. 

How much fun money per month is it okay to spend? It depends on your family's circumstances. If you have unique goals you're working toward or other items in your wants category that you don't want to give up, there may be less available in your fun budget. That's okay — adjust your budget up or down as your situation changes.

Why budgeting for fun is important

If you've got major goals you're working toward, like paying off credit cards or saving for your teen's college education, you may be hesitant to include fun money in your budget. However, it's 100% healthy to use some of your income for things besides bills. 

For starters, knowing there's a little money in your budget just for splurges helps prevent spending guilt. No one wants to feel bad for buying a new video game or ordering a fancy latte ☕ — and you won't feel guilty if you know there's room for it in your budget.

Setting a fun budget can also help avoid overspending. If you know exactly how much you have every month to spend on things other than bills and savings, you're less likely to cross the line. You can avoid cash crunch issues that can derail your hard financial work.

5 ways to use fun money

So what are some fun things to spend money on? Here are a few ideas.

1. Family-friendly activities

Is there an amusement park 🎡 nearby that your kids love to visit? Or maybe you'd like to take your family skiing on a cold winter day. There are tons of family-friendly activities everyone will enjoy, and you can use some of your monthly fun money to pay for them.

2. Shopping for clothes

Kids frequently outgrow clothes (and you may want some new attire yourself). While you can try to save money on clothing costs by thrifting or shopping sales, there may be a few special items that you just can't find at bargain prices. Allocate some of your fun money for them.

3. Buying wish list items

A wish list item is something you or your kids want that's a little outside the monthly budget. Maybe there's a new gaming system your kids have an eye on, or the family TV could use an upgrade. Your fun money can go toward its purchase.

4. Celebrations or special events

Did your daughter recently ace her geometry class? Maybe your son made the varsity sports team 🏅, or you earned yourself a big promotion. Those are special occasions that deserve a celebration. Use your fun money to make it happen!

5. Loop your kids and teens in and let them choose

Getting your kids involved in monthly fun money discussions is a great idea. They'll learn important lessons about budgeting while bouncing around a few spending ideas you might not have considered.

Make the most of your fun money

If you're on a tight budget, using part of your income for fun may sound a little silly. However, spending a little on things that bring you and your family joy is important. When you include fun money in your monthly budget, there's less risk of overspending. You know exactly how much you can use on the things that make you happy. 

Are you looking for other ways to level up the family finances? Explore the Greenlight blog for more tips and tricks to make your money work for you. And if you want to empower your kids with financial independence, sign them up for a Greenlight debit card with up to 5% cash back to savings, a money app for chores & allowance, and so much more.*

*Greenlight Core and Greenlight + Invest families can earn monthly rewards of 1% per annum, Greenlight Max families can earn 2% per annum, and Greenlight Infinity families can earn 5% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max and Infinity families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.