New Spending Strategy

I've started thinking about our budget in a new way: necessary expenses and entertainment expenses.   My goal is to make sure necessary expenses are always covered.  To me, the necessary expenses are the core expenses that are needed to live.  Entertainment expenses are everything else.

Here are some examples of each expense category:

Necessary expenses.  Rent/mortgage, electric/gas/water utilities, basic food, basic transportation, basic clothing, health care, and  federal/state/property taxes are what I include.  If I were not retired, I would include retirement savings and an emergency fund.  To note, I have not included  phones (cell or land line), Internet, TV, or computers.  The toughest one to exclude was the Internet, but to me, the other three are definitely not necessities.

Entertainment expenses.  This would be everything else.   Computers, cell and landline phones, cable/satellite, Internet, TV, eating out, movies, electronics, and upgrades to basic items listed in necessary expense.     In the entertainment category, I can live without any of the items.  No ________ (fill in the blank with an entertainment expenses)?  I can do just fine.  

I like the reframing because entertainment expenses, by definition, are not necessary.  Therefore, I shouldn't spend money on entertainment items until I have sufficiently covered the necessary expenses.   And after covering my necessary expenses, I need to make choices about with entertainment item to get since I don't have enough money to get them all :-)

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This is not financial or budgeting advice. Please consult a professional advisor.

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