As important as budgeting software is and as great some services are for managing your money, balancing a budget comes down to having the right mindset. You can follow the typical good money habits, but even then you still might fall prey to overspending. The most tempting area for us to overspend in is general entertainment. People, even the money-conscious, tend to purchase entertainment impulsively or at least without a lot of consideration for its overall value. To combat that, instead of buying the things you think will give you the most joy, you should try quantifying that joy in order to better manage your more frivolous spending. You can do that with a pretty simple equation in which you multiply how much you expect to enjoy that piece of entertainment by the amount of time you're going to spend on it, and then divide by the total cost. The equation is:
Entertainment Rating x Time Spent / Cost = Overall Value
To keep things simple, we'll calculate Time Spent in hours and the Entertainment Rating on a 0-10 scale.
How it Works
Now let's say you want to buy a new DVD. Try to measure how much you think you will enjoy that movie on a range of 0-10. That's your Entertainment Rating. Next, multiply that number by the time you'll spend on it, i.e. Time Spent. Finally, divide the cost to discover the movie's overall value. So let's say you're considering a movie that you expect that you would rate 9/10 and is two hours long. Divide that by the cost, which in this case we'll say is $20, to get your Overall Value.
9 x 2 = 18
18 / 20 = 0.90
You end up with an entertainment value of 0.90. Now compare that to something else you're interested in. Though they're more expensive upfront, video games are known for providing a lot of entertainment for your dollar, so let's use one as an example. Consider a video game that you'd rank a 7 in terms of entertainment which you'd expect to spend approximately 20 hours playing that costs $60.
7 x 20 = 140
140 / 60 = 2.33
The overall value is 2.33. That's over double the value of that $20 movie. You can make those comparisons with any kind of media you think you might want to buy.
What if the Piece of Entertainment is Available in a Different Form?
That $20 DVD is probably available for $5 On Demand, but you might be less happy with it if it's not yours to own. Let's change the rating to 8/10 and calculate again.
8 x 2 = 16
18 / 5 = 3.60
If the video game is only available to buy, then a movie On Demand has a higher Overall Value.
What if You Can't Predict How Much You Will Enjoy Something?
Sometimes you won't have a good idea of how much you'll enjoy something until you try it. If that's the case, do any research you can. You can watch trailers, read synopses and, perhaps most important, check out reviews. MetaCritic would be a good guide to what many critics and voters think of certain movies, video games, TV and music you're considering. If you're thinking about buying something else, then find a reliable source of reviews for that kind of entertainment.
What if They're Not Solely for Your Enjoyment?
Sometimes a piece of entertainment will also offer another kind of value. For example, a documentary about a social issue, while keeping you engaged, may also make you more culturally aware. Create a different set of metrics for how important that cultural awareness is to you, and add the level of cultural awareness to whatever items you're considering to figure out their entertainment values.
This isn't a perfect system, by any stretch. It starts to break down when you are considering large items like flat screen TVs or long vacations. It can, however, provide you a starting point for budgeting your spending on day-to-day entertainment. When typical money saving tips and tricks and good budgeting software aren't enough, calculations like this could end up making a big difference. That's for you to find out.