Whether you collect coins, love exercise, or are involved in extreme sports, hobbies are a great way to relax and unwind.
However, they can be expensive – according to the US Bureau of Labor Statistics, the average American household spent more than $3,000 on entertainment in 2019. How can you enjoy your hobbies without breaking the bank? We break down the basics of budgeting for your hobbies below.
The Importance of a Budget
Why should you budget for your hobby? According to MoneyCrashers, the results could be absolutely catastrophic if you don’t. They recommend remembering the following when you’re setting your budget:
- It’s easy to go overboard: you love your hobby – it’s exciting, and it fills you with joy. However, it’s easy to overspend on something you love, so make sure you set up a plan to avoid those extra expenses.
- Budgets make purchases feel extra special: saving for the things you really want and taking the time to identify those things in the first place will make things feel more special.
- Budgets can be adjusted: get a promotion or lose your job? The great thing about a budget is that it adjusts with you. Hobbies are often the first things to go when you have a financial issue, but don’t take it to heart – you can always scale back up after a few months.
- Save the difference: make sure to save what you don’t spend. Say your hobbies budget is $100, but you only spend $25. Add that $75 to your budget for the next month, meaning next month’s hobbies budget is now $175. This method helps you save for bigger purchases.
Budgeting is essential. Now that we’ve broken down why you need to budget, we’ve included our best tips for figuring out what you need and how to plan for it.
Set Your Limits
When you create a budget, you set a limit on your spending. However, you should also be setting sub-limits within your budget. Poker players do this every day. It’s called bankroll management – and it’s about deciding how much you’re comfortable to spend in your enjoyment of the hobby.
According to Global Poker, “start by deciding how much risk is comfortable for you…it doesn’t matter what the amount is, it is the starting point for building up your poker bankroll…it’s important not to make the mistake of thinking that your bankroll is just the [money] in your poker account, this is not true. You might, for example, decided that you have a [$1000] limit on your bankroll, then decide to limit yourself to playing with [$500], leaving the remaining [$500] in reserve in case you need it later…it’s knowing what your limits are, setting them, sticking to them, and keeping track of them.”
Now that we’ve made a budget and set limits within the budget, it’s time to start thinking about ways to cut costs within your hobby to maximize your budget.
- Take An Inventory: according to the experts at Money Wisdom, the first thing to do when cutting costs is to take an inventory. How much equipment have you actually got, and how much are you spending per week and per month on the hobby? They recommend making a list and writing out the approximate cost of each item. After you’ve taken an inventory, write down all the things that you still feel like you need (equipment, subscription fees, etc.) as well as those anticipated costs.
- Sell What You Don’t Need: after you’ve written down your inventory, take a hard look at the equipment you’ve amassed. If you’ve been at your hobby for a while, chances are that you’ve outgrown some of that equipment or ‘leveled up’ with newer, more sophisticated tools. Are there any items that you don’t need anymore that you could sell to make room for new equipment? Are there any opportunities to rent or share items that you don’t use regularly? Could you instigate a trade for an item that you’d use more? There are plenty of opportunities to cut costs when you’re honest about what you need. It’s also a good lesson for yourself. When you first started the hobby, did you go all-in and buy a bunch of tools that you no longer use? If you start another hobby in the future, this is something to know about yourself and avoid.
- Join a Club or Organization: a club or organization is a very low-cost way to experience your hobby, according to the experts at DBS Bank. Groups allow you to discuss your hobby with other interested people (a very low-cost way to extend your hobby and improve your skills), and the community they offer is a massive bonus. Many people within the community will be open to trading, buying and selling equipment, and the club or group might have even negotiated a discount with some equipment providers. It’s a great way to get more from your hobby without actually having to pay more.
Monetize Your Hobby: it’s the dream for many of us – to make money doing what we love. Many of the world’s most famous startups have grown out of passion projects, and it makes sense – passion is the thing that gets us out of bed each morning and drives motivation. How can you turn that passion you have into hard-earned cash? A recent Forbes article breaks down the basics:
- Combine passion with experience: this, simply put, is ‘telling your truth.’ What do you have experience in, what do you love to do, and how does it help people? You don’t need to be saving the world or solving huge problems – many people just want to be entertained.
- Be patient and consistent: patience is the key to success – you’ve got to be willing to work hard for a long time, even if you’re not making very much money at first. It’s one of those secrets to success that’s boring but effective.
- Leverage mentors and partnerships: remember those organizations we told you to join? The relationships you make there are critical to your long-term success at monetizing your hobby. Don’t be afraid to use your friends as a sounding-board, and ask them about the things they need – odds are, they’re the people who will be most likely to buy your service or product.
Hobbies are a fantastic way to spend your time, and by planning for them financially, you can enjoy them guilt-free. Have fun!