Treat Your Entertainment Like Food and Save Money

You've probably read everywhere that the key to saving money is to cut back on unnecessary expenses; this is true! Oftentimes people will get the advice to rework the way they spend money on food: instead of going out to eat once or twice a week, you could spend the same amount of money preparing food at home which will last longer. This advice is great and can apply to everybody, but it doesn't account for all the discretionary spending a person can make. Today we're going to apply some of these strategies to your entertainment budget with some practical examples. 

There are two core concepts behind what we're talking about today: opportunity cost and fulfillment.

In economics, the concept of opportunity cost represents the next best alternative use of the resources being utilized (in this case, money spent on entertainment). When you were spending money on your monthly subscriptions, the latest game, or upgrading your technology, you should think about where else you could use that money. 

Instead of spending $15 on a movie ticket, I can spend that same amount of money on a Netflix subscription for the whole month. It's important to understand that by seeing the movie in a theater, I'm giving up the resources that could be used to see movies from my laptop for a month.

The other concept that's important here is fulfillment. How many hours of entertainment can you get out of this money and how much does it satisfy you? This is the key concept that applies when talking about spending money on going out to eat. The food you cook at home may not be as nice, but you can cook 3-5 meals at home for the price of one meal at a restaurant. Ultimately the tradeoff will be different for everyone, but in general, stretching the dollar further and covering multiple meals is a good tradeoff for most people.

Let’s apply this concept to entertainment: I know plenty of people who have Netflix subscriptions and still want to go out to the movies because even though they like their Netflix they still want to see the newest film, which is totally reasonable for some. This is usually because people don't get the entire value out of a Netflix subscription because they only care to see certain TV shows or certain movies. In terms of cutting your budget, you should think about these things in the context of: how much value can I get out of this before I want to spend money on something else? For those on a budget, the answer to this question revolves around time. 

How much time can I sink into this without getting too bored? (For the same amount of money)

Time is a limiting factor that everyone shares, and if you can occupy most of your time with relatively inexpensive hobbies and entertainment, then you'll end up spending less and saving more over time. because there are only so many hours of free time that you could have in a month, the activity that fills most of that time for the least amount of money spent is going to be your best option.

With that context, look at these examples:

Like watching movies? Try spending $15 on a subscription service instead of a movie ticket. The movies may be older, but you'll get a lot more for your dollar by watching 20 movies over the course of a month instead of one movie over the course of an evening. Already have multiple subscription services? Plan out your entertainment for the next month on a single platform and cancel the others.

Like playing video games? Instead of spending $60 on the latest AAA title, buy a World of Warcraft subscription for $15 a month. You could be done with the AAA title in a week, but you can spend the entire month playing world of Warcraft. Too cheap to spend $15 a month? Find some free to play games (League of Legends, Apex Legends, etc.) that you like and play those exclusively.

The key takeaway is simple: if you're on a budget, look at your entertainment spending and see if you can get more time entertained for your money. This may not be 100% applicable in all situations (sometimes it's important to be a part of the latest movie or video game), but over time you can see a massive difference in the amount of money you save by treating your entertainment like a diet, and stretching your resources a bit further. If you made it this far thanks for reading. I challenge you to look at your budget and see how many hours you can occupy with only a small amount of money spent. Good luck!