Having a hobby and saving money is often polar opposites. In fact, in a lot of circles, the difference between a hobby and a side business is whether it makes money or costs money.
But life is meant to be enjoyed, and if you have your debt under control, you may be tempted to pull some minor funds towards a favorite interest.
A Hobby Comes After The Emergency Fund
Of course, it is paramount that a hobby (or any other form of superfluous spending) should be considered only after a solid emergency fund is in place in a readily accessible but safe location. If that is not the case, then stop reading this article and come back after it is.
Now that we have our debt managed AND a separate emergency fund in place, a question must be answered. That is, how long will the money spent on the desired activity delay the financial goal you have set.
If the honest answer is acceptable, then you may be okay. If you do not have a financial goal, then again stop reading. You are not ready for a hobby. Instead, spend the time developing a financial plan. After all, the old saying is true – those who fail to plan actually plan to fail.
Consider Fund Matching
Okay, so far so good. You have everything situated to where you can reasonably afford it. You also understand how everything will impact your goals. Now, how do you manage the hobby itself, as it obviously impacts your savings? One effective approach is to match funds.
That is, as you spend a dollar on leisure activities, put a dollar into savings. This does two things, it obviously builds your savings, and it slows down hobby spending as it is tracked twice (once on the hobby itself, again as the funds are put into savings). So you really need to get those new ski boots or hobby radio? It is going to cost you twice.
This arrangement is easy to manage, but it is also easy to custom tailor to your needs. For example, you can make it a two to one ratio ($20 hobby, $40 savings).
You can fine tune this as needed (1.5, etc.), but you should probably not let it drop less than a one to one match for any spent leisure funds.
By having a plan, you can have a hobby (even family hobbies) AND put money into savings. But making sure that the plan is easy to implement can make the difference between success and failure. After the plan is laid, the only quality that will make it work is the discipline to follow it through. There are no shortcuts.