Low Bank Account Balance? Maybe ‘Funflation’ Is The Problem.

From “loud budgeting” to “money dysmorphia,” the personal finance world is filled with quippy new terms to describe recent spending trends.

One of the sneakier financial realities of late is “funflation.” To help consumers understand this phenomenon and keep its negative effects at bay, HuffPost asked personal finance experts to break down what it means and share their advice for dealing with it.

“Funflation” is a term economists have used to describe a recent pattern in consumer spending. Even amid rising prices for fun experiences like concerts, fancy meals and vacations, people are still splurging on these kinds of events and activities.

“Even if it might not seem like a $400 concert tickets fits into your budget, for example, you might decide to buy it anyway because you know it will bring you a lot of joy and a great memory,” said Kimberly Palmer, a personal finance expert at NerdWallet.

Although the term first took hold last summer, the trend has clearly persisted (and perhaps even grown) into this year.

“The cost of having a good time seems to be rising higher than other expenses,” said Bola Sokunbi, the founder of Clever Girl Finance. “With everyone eager to make up for lost time after the pandemic, we’ve seen a surge in travel, concerts, festivals and dining out. People are craving experiences. Funflation is definitely alive and well this summer, as people are willing to spend more to enjoy their favourite activities.”

And it’s certainly not just a summertime phenomenon.

“I don’t think we will see it die down anytime soon,” said consumer finance and budgeting expert Andrea Woroch. “Fall and winter welcome plenty of special events, shows, concerts and outdoor exhibits like holiday light shows that will be drawing crowds who are willing to spend more to have fun.”

“Spending money on experiences, even pricey ones, can be a smart move as long as that spending is aligned with your values,” Palmer said. “If you know that live music and travel is really important to you, then it can be a good move to prioritise spending money on those items instead of things you might value less, such as clothing or other material items.”

But while putting your hard-earned dollars toward fun experiences can boost your mental health, this approach can backfire if you don’t manage your budget.

“Overspending could lead to debt, and this can have a very negative impact on your well-being while also derailing your budget and financial goals,” Woroch said. “The term ‘funflation’ suggests the increased cost of having fun, and it’s becoming apparent that people are having to choose between enjoying their life versus paying the bills. However, there are some consumers are just not willing to give it up, even if it means taking on debt or delaying life goals such as buying a house.”

Sokunbi noted that funflation might reflect an economy that is doing well, in which people have more disposable income, but there can be negative implications in the short and long term.

“Funflation can make fun activities feel out of reach for some people, especially those on tighter budgets,” she said. “It can also lead to a sense of financial strain when your favourite things to do start taking a bigger bite out of your budget, and over time cause people to spend less as they become more mindful of their budgets.”

Amid rising funflation, it’s important to assess how much more money you’re actually spending compared to what you paid before for the same experiences.

“The downside is that you’re going to end up paying more for the same thing ― in many cases, you even pay more for less,” said Dasha Kennedy, creator of The Broke Black Girl blog and a financial activist at Chime. “The upside is that this will encourage many people to find free and low-cost resources to enjoy themselves, ultimately helping them save a little more.”

In this funflation era, consumers must aim to find a healthy balance between splurging on fun activities and putting their money toward other important areas of their lives.

“Someone who completely cuts out activities that bring them joy will feel burnt out and may give up on any financial progress, diminishing their motivation to keep working towards their goal,” Woroch said. “Plus, having fun is necessary to maintain a healthy mental state, something we all need more than ever when the economy is stressing us out!”

The good news is there are many budget-friendly ways to have a good time, especially if you’re willing to get creative.

“Look for deals and offers,” Sokunbi advised. “Take advantage of discounts, coupons and off-peak pricing. Websites and apps often offer deals on activities and dining. Big-ticket items like concerts and vacations can often be cheaper if you book in advance or during sales.”

Woroch noted that movie theatres often offer reduced rates on tickets and concession on less popular days, and pointed to discount programs like Regal’s Summer Movie Express. Similarly, you can travel to certain destinations for a much better price if you go in the off-season.

“Museums and other cultural centres offer deals on admission and sometimes even free entry on certain days of the week or times of a select day, so check websites to go when it costs less,” she added.

Take a close look at your budget and determine what you want to prioritise.

“Decide how much you’re willing to spend on fun activities each month and stick to it,” Sokunbi said. “It’s easier to enjoy yourself when you know you’re not overspending. Choose the activities that bring you the most joy and focus your spending there. It’s better to have a few amazing experiences than to spread yourself thin over many subpar ones.”

Palmer recommended trying the 50/30/20 budget rule ― spending 50% of your take-home pay on needs, 30% on wants (like travel and concerts), and 20% on any debt payments and savings.

“Using that ballpark can help you decide whether or not a purchase makes sense for you and your values,” she said. “If you feel you’ve made mistakes or purchased experiences that you regretted later, then it can be helpful to slow down and take your time before you make your next purchase. Waiting 24 or 48 hours before completing your purchase can help you decide if you want to go through with it or not.”

Consider tapping into your credit card and membership rewards, as well. If you’re a member of AARP or AAA, you can take advantage of ticket discounts. And there are a variety of cards on the market that can give you cash back on certain purchase or points that you can use toward travel or other fun experiences.

“Some credit cards will also give you exclusive savings on event ticket purchases through their online portals, so make sure you compare different credit card programs at sites like CardRates.com to find the best one for your summer fun needs,” Woroch advised.

She also recommended searching for deals, rewards and cash back offerings with Coupon Cabin, Fetch, LivingSocial and even warehouse stores like Costco. And you can always keep up with local news and social media sources to find free activities, concerts, movies festivals and other experiences in your area.

“Not all fun has to be expensive or cost money,” Sokunbi said. “Host a game night or potluck, go for a hike, or have a picnic. Get creative with how you entertain yourself, and don’t feel pressured to keep up with other people’s spending habits. Sometimes the best memories are made with little to no cost.”