Where do you spend your money? According to the United States Department of Labor, Americans spend approximately 12.5% of their yearly income on food, with almost half of that spent on eating out, and another 5% on entertainment.

Despite this figure, we still all spend differently. There are obviously the required expenses like housing, healthcare, and education, but what about the added expenses for the things that make you happy? One person could spend money on going to the movies, while another person may love going out with their friends. The key to happiness is to create a budget that not only fits the required expenses, but making it fit the way you live your life. Here are some tips on how to save and spend, while ensuring happiness.

Saving

Saving is like making a big meal on Thanksgiving; it takes a while to see the results of all the work you’re putting in, but the end result makes it all worth it. When you set up your budget, try separating your savings into four different categories: 401k, home, education, and emergency fund.

If you’re renting, it’s important to save for when you want to buy a home. If you have a home already, investing in it will not only lead to a better place to live, but limit problems and possibly lead to a return on investment.  For your 401k, take a look at your policy and if your employer offers contribution matching, try to max out the benefit each year.

As far as education, it’s important to continue to invest in it, even if you still have student loans to pay off. Continuing your education could be anything that helps you in your job or even learning more about photography to pick up a side gig and earn some extra cash. There’s also an option to refinance those student loans to better fit your lifestyle. Companies like Earnest can give you a better rate, let you skip a payment if you need to, or customize how much you can pay each month.

Finally, an emergency fund is crucial to have in case something serious occurs. There are so many little surprises in life that we don’t see coming. Therefore, it’s crucial to have money set aside that can turn a major financial setback into a minor headache.

Fitness

Gym memberships can range from $10 to over $300 a month. The key is to find a program that works for you. Lay out your options and weigh the pros and cons. If you go with a cheaper option, but end up never using your membership, is it really worth it? If you go with a more expensive option, it may provide you with more incentive to get to the gym as much as you can.

Food

An average cup of coffee is $2.70, multiply that to account for getting coffee every morning before work, and you’re spending over $700 a year. Of course, many people need coffee, but there are simple ways to manage your food expenses to save and still gett what you want. Try reducing your budget for special occasions, like buying coffee or eating out, and you’ll be surprised how quickly saving money on food will add up!

DIY

The term “do-it-yourself” may sound intimidating, and only an option for people who have an endless amount of time, but it’s very simple to make or do things you currently pay for. Similar to a company that moves from outsourcing work, to bringing it in house, you can save a ton by putting work into doing things yourself. For example, try starting your own garden. Not only would you save on groceries, but it could even become a hobby!

Balance Experiences with Investment

If you love to travel and experience new things, it’s important to invest in that. However, you need to do it in a smart way. Using your emergency fund to book a last minute trip through a Groupon you see online could be a huge let down, and could negatively affect you financially. You never want to end up thinking it wasn’t worth it. It’s important to set aside the same amount of time you spend researching ways to save, and use it toward weighing the cost vs. experience of a big trip or event.

Conclusion:

Obviously, budgeting for happiness will differentiate from person to person, but the key is being smart with your money. If you haven’t yet, set a budget and use these tips to make sure you’re still living your life!

The above is a contribution to Leisure Freak by Jamie Wharton

Jamie is a freelance writer dedicated to all things finance, most commonly covering education costs and post-college budgeting.