How much should we spend on recreation and leisure?

Think about dividing your expenses in this manner:

1) Necessities. Housing, food, gas, clothes, etc.

2) Personal and financial betterment. Taking a class, reading a book, remodeling a bathroom to increase home value, etc.

3) Recreation/leisure/personal pleasure. Everything else, pretty much. Movies, vacations, concerts, whatever.

Note that there is some overlap for some items. for example-- food and clothes are a necessity but when you go out to eat, buy fancy shoes, etc. you are not making that purchase purely out of necessity. It is also for personal pleasure. Beer is probably my biggest overlapping expense.

Now that we have our definitions down, how much is it okay to spend as a percentage of your income? I haven't ever taken the time to break down how much I spend in this area, and if I did I can guarantee that I wouldn't like the result-- and I am a pretty frugal spender for the most part. But why should I get upset about it? Spending in this area is okay to a certain degree. I'm convinced of this. But where is the threshold?

We are probably not taking a vacation this year, for two reasons.

1) I don't have much disposable income since I am paying off a car and a surgery by December.
2) We'd rather save up some money and take a better vacation next year. If we could spend $1500 this year and $1500 next year and take two small driving trips to relatively uninteresting places . . . or we could spend $3000 next year and fly somewhere we can't get to on the road, we'd prefer the latter.

At least those are the two reasons we agree on. I have a third reason . . . I don't want to spend the money! More and more lately, I have gotten obsessed with my bottom line, and my better half doesn't think I spend enough money/energy on fun in the present. We had a bit of a spat last night on this issue after a conversation about my vehicle downsizing effort. She's fine with a vehicle swap but she doesn't want me to go too cheap or too old because she thinks it's just unnecessary and I'll enjoy the car less. She's probably right, and I'd probably get the urge to change cars again sooner than I need to because of it.

We have different opinions on spending, clearly, and we both tug each other toward the middle. I think this is ultimately a good thing-- she'll be better off in 5 years for saving more, and I'll be better off in the present for not being quite as much of a tightass!

But I digress. How much should we be spending in this 3rd category? In the coming days I may subject this question to some detailed analysis and estimate what fraction of my income goes toward this. I'd like some opinions from readers and other bloggers, though, as I know my opinion is skewed in the "less is better" direction.