The cost of living crisis is sucking the joy out of life for so many. Inflation rates have just risen to their highest level in 40 years. Energy bills have skyrocketed, in part because of the knock-on effect of the Ukraine war. Since April, the average gas prices jumped by 53.5% and electricity prices by 95.5%.
Additionally, petrol prices are rising daily. The price of filling up an average family car with petrol is set to exceed £100 for the first time ever this week.
Many of us will find ourselves having to cut back on things we enjoy in order to pay for get by. This includes nights out. With so many household essentials increasing in price, it’s easy to think we can’t afford to go out and have fun.
But it’s not wrong to treat ourselves in hard times – in fact it’s to be encouraged. Bola Sol, author and finance coach, says that when life isn’t easy, it’s especially important to find a balance.
“Life shouldn’t just be about work or taking care of your duties,” she tells HuffPost UK. “It has to be about enjoying yourself and that includes your money. There’s no point working if you’re not going to enjoy your money.”
Tracking your spending
Dr Peter Brooks, head of behavioural finance at Barclays, echoes Sol’s view that we should be kind to ourselves, considering the past few years we’ve had.
“It’s all about getting the balance right – as long as you’re not going overboard with your spending, don’t fret over buying a one-off new outfit,” he says.
If you need help working out what you can afford to spend, try using a budget planner and split your spending into needs, wants, and savings, he says.
“Most bank apps will have a spend categorisation feature and spend alerts, so you can see where and when your money is going – and how much you’re paying out on everything from gifts and food, to clothes and transport.”
It’s important to keep track of your major outgoings and credit, however painful that feels. “When your pay cheque comes in, and after you’ve taken care of your other financial obligations, like bills and rent, look to pay off any credit cards, starting with those clocking up the highest interest,” he says.
Budgeting ahead for fun
If you’re on top of your outgoings, Bol recommends planning ahead by creating a fun fund and a miscellaneous fund. “These are two separate things,” she explains. “Your fun fund is for when you go out and your miscellaneous fund is for things like dining and self-care, but you can decide what that looks like.”
One person’s meal out is another person’s takeaway. And how much money goes into these funds obviously depends on how much you earn, but Bol recommends setting it as a percentage that can shift through the year.
“Depending on the time of year, I change my ‘fun fund’ amount,” she says. “In December, I add around 10%. For the start of the year in January to March, my fun fund goes straight down to around 3-5%.”
In summer, with holidays to budget for, the percentage might go up. “I always say look at the time of the year and make sure that you’re budgeting for that.
Budgeting on the night
It’s okay to want to have fun. And thinking through what you have to spend and how you want to spend it before you leave the house will help you do just that.
Assess what you really need, says Sol. “Ask yourself: ‘Do I really need to go to X event?’ and if I am going: “Do I need a new outfit? Can I budget for two drinks for the evening? Is there a cocktail hour?’ Do your research ahead of time.”
Are there ways to reduce costs? “If it’s a friend’s birthday, I’ll tell myself I’m not going to drink much that night and I’ll drink at home beforehand,” she says.
“If you’re going out and you have a spending problem in that area, put £50 in your ‘fun’ account and once it hit’s the limit, set a reminder you’ve gone too far. I’d also say bring out one card and put a limit on that card. When you’re close to reaching that limit, it will let you know.”
It’s also good to be open about those limits with your friends, says Ellie Austin-Williams, founder of This Girl Talks Money, who previously talked to HuffPost UK about the perils of “keeping up appearances” when socialising with friends.
“If you’re in a group and plans are being made, don’t be afraid to put forward an option and explain that you’d prefer not to spend a lot,” she said. “You’ll be surprised how often others are thinking the same too.”
Be mindful of other people’s finances, too, she added. “Make plans which don’t put a financial burden on anyone, and if other people suggest expensive ideas, put a cheaper alternative on the table.”
If you have overspent...
It rarely feels good looking at your bank account after a night out, but the more regularly you keep an eye on your outgoings, the more informed you’ll be.
Is your bank balance lower than you expected? “When you’ve got to this point, you need come back to your budget or budget from where you currently are,” says Sol. It’s never too late to tackle the issue, but try to recognise patterns.
“When you’ve got into the habit of treating yourself, it feels good and it can actually become somewhat addictive. To the point where you might be treating yourself more than you should be,” she says.
Here’s where talking it through may help, as Sol discussed at length on an episode of the HuffPost UK podcast, Am I Making You Uncomfortable? – you can listen to her sound advice around debt here.
Dr Brooks also advises speaking to someone if you are struggling with money management in an ongoing way. “Opening up and having an honest conversation with someone about your money stresses can really lighten the load and help you to come up with a plan of action,” he says.
That might be a friend, a family member or a professional advisor. Barclays has a network of money mentors, says Dr Brooks, and others banks have similar. “Don’t try and tackle the topic alone. Lean on your support network.”
There’s no doubt life is harder for many people right now, but that doesn’t mean you should ditch fun. Don’t neglect your wellbeing. Be sure to get out, meet your friends, and have fun on a budget that works for you.