How to budget for the fun things when your money is stretched and costs keep rising

Many of us have had our wallets and bank accounts squeezed by increased grocery bills, petrol, rent or mortgage repayments this year.

Inflation has gone up since the last results in June and with wage growth easing, and other cost-of-living pressures, some of us are feeling the pinch with our finances.

For many people, finding ways to tighten household budgets is a challenge.

With the holiday season approaching and our social calendars filling up, finding the money to pay for eating out with friends, presents, and generally going out for fun can be stressful.

We caught up with Aleks Nikolic, a financial blogger who runs the website Broke Girl Wealth, and money educator Nicole Pedersen-McKinnon, to get their tips on balancing your budget between essential household and wellbeing costs, and the "fun stuff".

1. Be honest about your money situation

Aleks is a lawyer by day. In her spare time, she helps other women improve their relationship with money by sharing financial tips via her podcast and website.

Through this project and her own journey, she noticed the shame people felt when they were speaking about money.

"People don't want to feel cheap, or don't want to feel judged," Aleks says.

Many people deal with their money challenges in private but once you chat about it openly, you start to realise you're not alone.

"A lot of my friends were like, 'Oh, thank God you said something because I was also feeling really uncomfortable about how much [that] was'," Aleks says. 

"I also found it was a beautiful way of figuring out who my true friends were."

2. Set aside a 'fun' budget (and don't go over it)

Aleks suggests putting away a "fun" budget once the bills are paid and using it towards things that "fill up your cup". That might be going out to eat with friends, or it might be budgeting for a warm barista-made coffee a couple of mornings a week.

Having a specific amount (and sticking to it) will help you have fun, guilt-free.

"We don't want to villainise spending altogether because that can lead to unhealthy habits as well. If you have the money set aside, just be mindful of what you're buying," she says.

Find ways to stretch your "fun" budget by planning ahead.

"Don't feel embarrassed [for not] buying a $10 milkshake when you're going for a walk with your friends. It's totally fine to bring a keep cup and make your coffee at home," Aleks says.

Some other ideas:

• Eat before you leave home so you don't buy food when you're out.
• Eat out on nights when your favourite restaurant has special deals, or use websites to get a discount for last-minute reservations.
• If you're going to the movies, pack some snacks to take with you instead of buying them from the candy bar.

3. Curb impulse buying

Aleks made significant changes to her spending after realising she was a "shopaholic".

"My relationship with money changed when I realised what my emotional triggers were for spending," she says.

Promotions and big flashy sales are designed for one sole purpose: To make you think you need to buy things. Especially during sale periods like Black Friday and Boxing Day.

If you're suffering from FOMO (fear of missing out), consider sleeping on your shopping wishlist before swiping your card.

"Create a list of items you might want to purchase and wait at least 24 to 48 hours before actually biting the bullet," she says.

"If you really feel like self-control is hard, it gives distance between the purchase and the emotion.

"[You won't] be left with the remorse or guilt of having bought something when you don't have the money set aside."

Unsubscribing from promotional e-newsletters and unfollowing retail stores on social media can also help.

4. You don't need to attend every social event

If you're starting to feel overwhelmed with the number of Christmas parties and end-of-year catch-ups, consider thinking about what you can afford versus what you want to attend.

"I remember when I was strapped for cash, I would say to my friends: 'I can't meet you for dinner, but I'll come for a drink afterwards'," Aleks says.

"That way you're spending far less than you ordinarily would, but you don't miss out on the whole night."

5. Can I re-wear that?

Rather than buy a new outfit for a few one-off events, why not try and reinvent what you have in your wardrobe?

Queensland-based finance author Nicole Pedersen-McKinnon says recycling old outfits is good for the wallet. It's also better for the environment.

"Go all 'Kate Middleton' and reprise previous year's festive outfits to bring that cost per wear and that Christmas cost way down," Nicole says.

Shopping at op shops or buying accessories (rather than a whole outfit) can spice things up while keeping costs down too.

6. Buy experiences

Buying presents really adds up, especially if you're buying for a lot of people.

One tip Aleks suggests is to shout an experience over buying an expensive gift.

"Brunch is a cost-effective way of giving a gift … it's a great way to meet up with your friends and they'll feel really loved," she says.

For family or a group of friends, Nicole suggests organising a secret Santa and setting an agreed budget.

To stretch the budget over multiple presents, consider making preserves or chutneys to add that extra personal touch. 

7. Look for discounts

A hack Nicole uses when she's buying presents is looking for perks through memberships or clubs she's joined – like her private health insurance.

"Lots of companies are doing reward deals with their partners and offering discounts on vouchers for retailers and hospitality outlets. For cinema gift cards, you can usually get more than 15 per cent off," she says.

Shopping around for coupons on discounted experiences like theme parks is a great family-friendly option too.

8. Recreate a DIY experience at home

Whether it's date night, hanging with the girls or lunch out with the kids – Nicole is a fan of getting creative and recreating the experience at home by doing "funds swaps".

"That doesn't mean having less fun, it means swapping out things that are more expensive for something [that's] inexpensive but still gives you that amazing experience with the family or a friend," Nicole explains.

That might be recreating a gold-class movie experience at home by making your own choc tops, popping the mattresses on the floor and enjoying some warm, buttery popcorn.

It could also be hosting your own Christmas party at home, making your own cocktails and inviting everyone to bring a dish.

"Those expensive $20 designer cocktails are going to possibly break the budget right now, so think of substitutes that still give you a special experience without pain to your hip pocket."

9. Look for free events

Spring is in full swing and summer is just around the corner, so ditch the restaurant for a picnic in the park or by the beach.

"You can't underestimate how wonderful a picnic is, especially in summer. Gather some family and friends and organise a potluck," Aleks says.

Explore your local city like you're a tourist visiting for the first time and make a list of places you haven't tried.

There are lots of great places to bushwalk and you might like to try keeping an eye out on your local council's website or social media pages for upcoming free events.

"For parents, there's so many free activities [organised] by local councils during summer, so do a little research about what's going on in your city," Aleks says.

This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.