Americans may be feeling the financial pain at the pump and supermarket as inflation escalates costs, but many are committed to opening their wallets for recreation.
A 2023 McKinsey & Company Consumer Pulse Survey revealed a surge in out-of-home entertainment, a 7% year-over-year growth in real dollars. In addition, the survey determined that people of all income levels are increasing their dining and entertainment expenditures.
It may not make sense to splurge on nonessentials when times are tough, but there are good reasons to consider fun an essential line item.
Post-Pandemic Pleasures Take Precedence
Everyone’s version of valuable extracurriculars is different. It may be concerts, festivals, trivia nights, personal travel, amusement parks, movies, video games, comedy shows, theater, the ballet or sporting events.
“Entertainment means different things to different people,” Joe Camberato, CEO of the fintech lending platform National Business Capital.
“It could be that moment when you finally get to unwind after a grueling work week. For some, it’s a chance to reconnect with family, friends and their own culture. And it can be a temporary escape from a less-than-ideal situation that keeps someone moving forward,” he says.
During the Covid-19 pandemic, group-focused activities were restricted or not recommended, but as health concerns settled down, a new appreciation for these activities trended up.
Long delayed vacations, including luxurious trips, were booked. Major League Baseball reported that fans returned to stadiums for the 2023 season in record numbers, with a 9.6% rise in attendance over the previous year.
Planning for the future by saving as much as possible may be the financially prudent thing to do, but enjoying life as it happens has become essential to many.
“It’s a way to savor the rewards of that hard-earned paycheck,” Camberato says.
“Those spare moments on the weekend? They become an opportunity to dive into something fun you’ve been daydreaming about. Even in a world with rising prices and inflation, those dreams stay pretty consistent,” he adds.
Even With High Inflation, People Still Pay for Things They Enjoy
People have been responding by buying enjoyable things they’ve put off, even when prices are high. For example, the Taylor Swift concert tour exemplified Americans’ willingness to drop serious money. Tickets for her Eras Tour ranged from $49 to $499, and were quickly snapped up, then were sold on the black market at nosebleed prices.
“Initially, everyone was calling it the ‘Covid bump,'” says Adam Jaffe, managing director at the financial advisory firm Solomon Partners, “People hadn’t spent money in a year. They had all their student loan payments made. They had payments from the government. So they were spending, spending, spending.”
Jaffe notes that nearly every company in the experiential entertainment sector has been seeing better results.
“Based on talking to dozens and dozens of operators, everyone in the industry is up over 2019 — and that’s both from an attendance standpoint and a per cap standpoint,” he says.
“So when people are going out, they’re spending more as well. It is an ‘intentional visit.’ They want to make sure that they have a really good time. They’re spending more when they go out to experiential entertainment places,” he adds.
Social media has also fueled the drive to be out in the world, taking part in large and small events, says Brett Goldberg, co-CEO and co-founder of TickPick, an online live events ticketing platform.
“Entertainment is something the consumer is making a priority,” Goldberg says. “Live entertainment, getting together in groups, people are posting about going. It’s social currency.”
The Savvy New Entertainment Consumer Emerges, and the White House Responds
Despite peoples’ willingness to spend on entertainment, they’ve balked at extra charges and vague pricing. Consumers have become so irritated by them and the lack of transparency that in August 2023 the White House got involved, criticizing high hidden junk fees.
Related:Where to Look for Junk Fees]
Demand for entertainment is resilient but consumers are frustrated with the purchasing process, Goldberg says. Understanding the total price is important. But to find that out, the buyer often has to enter their credit card number first.
Goldberg was part of the roundtable discussion about hidden fees at the White House with President Biden.
“We met with him behind closed doors,” Goldberg says. “He’s nervous that consumer sentiment has become so sensitive about being taken advantage of, that he wants to require ‘all in’ pricing. I’m in support of that. The price you see should be the price you get.”
Incorporate Entertainment Into Your Budget
Amy Colton, wealth advisor and president of the online divorce website Divorce Made Simple, encourages building entertainment into a spending plan, whether you budget on your own or with a partner.
“It offers a much-needed break from daily routines, reducing stress and improving mental health,” says Colton, who has found that it also fosters connections with others and nurtures social ties. A memorable concert or trip can provide lifelong memories.
“Choose what truly matters to you,” Colton says. “If music is your passion, allocate more toward concerts and perhaps cut back on dining out. After that, start dedicating funds to your fun. Create a separate ‘entertainment’ savings account and make regular deposits. ”
“Even a small monthly amount can accumulate over time, ensuring you can enjoy it without financial stress,” she adds.
That’s exactly what Gabrielle Gambrell, founder of the New York City marketing and communications company Gift of Gab, does.
She takes fun seriously, setting cash aside for activities like quarterly trips to Disneyland. Gambrell set up direct deposit with her bank, and deposits $1,000 a month into a designated “play” account. “I often forget about it but when something comes up, like Usher in concert, I have the money ready to go,” she says.
“We have two children, so it’s really expensive,” Gambrell says.
“I am the budgeting queen, so we can have the luxuries. It’s really important to enjoy life. I work really hard and my husband does too. Enjoying the fruits of our labor is very important to me. We’re here for a limited time. Make the most of it,” she adds.
When entertainment costs are particularly expensive, she makes sacrifices to afford them. Gone are the bimonthly salon sessions, and she cuts back on extraneous grocery store purchases.
[READ: How Much Should I Spend on Groceries?]
“Budgeting is the name of the game,” Camberato says. “Try to score some extra perks from your spending, like cash back or rewards from a credit card.”
But be realistic, too.
“You know yourself and your limits, so tweak your budget where you can realistically make it work,” Camberato says.
“If your budget gets even tighter, it might mean temporarily putting entertainment on hold. Don’t sweat it, though. With some savvy financial planning, this phase won’t last forever, and you’ll be back at your favorite movie theater or concert venue before you know it,” he adds.
Entertainment Needn’t Be Expensive
Don’t assume that ticket prices to everything from concerts to games will set you back ridiculous sums, Goldberg says. “Baseball games can be as little as $10,” he says. “There are lots of A-talent, like Pink, tickets going for reasonable prices. The average consumer is able to find a way.”
Daily deal sites like Groupon offer deep discounts on a wide span of entertainment activities, too. When money is tight, think outside the box for ideas, urges Nina Meehan, founder of GoCreate, a creativity consultant for professionals and corporations. There are ways around high costs.
“For instance, Taylor Swift is showing her entire concert at local movie theaters at a much lower price point,” Meehan says. “Or, if you can’t afford Cirque Du Soleil, which many of us cannot, try finding a local traveling circus — the price point will be much lower but the acts will be just as fun and daring.”
Entertainment Can Actually Be Free
And then there are fun activities that cost nothing.
[READ: Fun Things to Do in Your Free Time That Cost Nothing]
“Many communities sponsor free outdoor music events,” Meehan says.
“Figure out which museums do free evenings, often it’s once per month. Create your own entertainment by inviting a friend who plays the guitar, finding a nice outdoor spot at a park or a beach and invite a bunch of friends to come for a sing-a-long of a bunch of songs that everyone knows,” she adds.
When consumers are ready to spend money, they’re focusing on unique experiences, Jaffe says.
Often, it will be a special event they’ll remember instead of something they can do on about any night. “You can’t put off experiences that won’t come around again,” Jaffe says. “I can always go out to meet friends for a meal again another time.”
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This Is the One Thing Americans Refuse to Stop Spending On originally appeared on usnews.com
