Personal Finance

Is Your Hobby Driving You Into Debt?

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We all know that person who has a new passion every week. It’s great to explore hobbies, but it can be expensive if every new endeavor requires a large outlay of cash. Your outlet for fun shouldn’t eat up your whole budget. Here’s how to avoid spending too much on your hobby.

Trial Period

Ease into any new hobbies. If you are thinking of taking up yoga, don’t immediately sign up for a two-year membership at the expensive yoga studio nearby. Ask if they have any introductory specials – sometimes studios offer free classes or even a free week of classes so you can try it out.

You may be interested in photography, but don’t run out and buy all the expensive equipment just yet. Look into borrowing or renting equipment. You may find you don’t need anything too fancy or you may find you really like a certain brand of camera and that it’s worth saving up for it.

The same is true for any outfits or special gear. Give yourself a trial period. If you stick with the hobby for a month or six months, you can invest in some gear.

Create a Mini-Budget

Within your regular budget, make a category for hobbies. Look at the expenditure compared to the big picture. Decide how much you are comfortable spending on a hobby and break it down. How many yoga classes a month does your budget allow? Make sure to include yoga clothes and equipment in the hobby budget. Then, at least twice a year, check that you are staying within the guidelines you set out for yourself.

Is It Worth It?

Only you can answer this question. Determine what you are trying to get out of your hobby. Are you looking for relaxation or excitement? Trying to improve your health or stimulate your brain?  If your hobby is meeting your goals and staying within your budget, it’s worth it. If you find yourself overspending, try looking for an alternative hobby that fulfills the same need.

Overspending on hobbies can put a major strain on your finances, especially if you use credit cards or other loan products to finance your fun. Not only can interest charges on unpaid credit card debt pile up quickly, but maxing out your credit cards can impact your credit scores, which then could lead to higher interest rates when you apply for loans in the future. If you want to see where your credit currently stands, you can get two credit scores for free using the Credit Report Card, which will also breakdown the factors that are impacting your credit scores.

Potential Moneymaker

Some hobbies might also work as side jobs. Even if you don’t make a lot of money, you could aim to pay for the hobby with your earnings. Of course, now your hobby is a job — and you might find yourself looking for a new hobby.

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Image: iStock

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