5 Things That are Killing Your Budget

Many people that create a budget have a difficult time sticking to it for one reason — incidental expenses. Although incidental expenses are only a small fraction of your expenses, they can have a really big effect on your budget. These tiny expenses often go unaccounted for and can destroy your carefully crafted plans. Here are a few small expenses that are killing your budget.

hair pulling stress

1. Entertainment Expenses

Too many people underestimate exactly how much money they spend on entertainment. These expenses can be so small that people fail to keep track of them. Small purchases like Redbox DVD rentals and on demand movie purchases are often overlooked. Spending $2 to $3 dollars here and there can really add up over the course of a month.

2. Impulse Purchases

Window shopping can be hazardous to your financial health. How many times do you go to the mall just to look and come home with a new shirt, pants or pair of shoes? Impulse purchases are budget busters because they are unplanned expenses. This means that you normally have to borrow money that was meant for another purpose to cover your impulse purchase.

Impulse purchases are great for retailers like Macy’s, Nordstrom, and Best Buy but they are terrible for consumers. You can easily spend $100 dollars or more each month buying items that you never planned on purchasing.

3. Too Strict a Budget

It may sound weird but having a budget that is too strict can make your budget impossible to adhere to. Too many people create a budget that applies every spare dollar to a bill or savings. If you feel like your budget is too constrictive eventually you will stop following it. Even while working to get out of debt allow yourself room to splurge from time to time. Splurging is not buying a new car or making a new debt for yourself. Splurging may be buying that new shirt you always wanted or a new video game. Just be sure not to charge them!

4. Labeling Wants As Needs

It’s important to place all of your expenses in their proper categories when budgeting.

  • Needs are expenses that are necessities such as food, clothing, and transportation.
  • Wants are luxuries that can be eliminated.

Individuals often budget around wants and not needs. A car can be classified as a definite need depending upon where you live and how far you travel to work. Buying a BMW 750Li however would be considered a luxury. This may be an extreme example but it demonstrates how easy it is to turn a need into a want.

5. Wrong Type of Friends

Having the right friends can make or break your budget. Are your friends spendthrifts who waste a lot of money with little to no thought about their financial future? Or do you have freeloading friends that consistently borrow money from you with only promises of being paid back? Both types of friends can be dangerous to your financial future. Most individuals pick up the habits of people that they hang around. The chances are good that if your friends are big spenders that you will eventually become one. Who wants to go out while everyone is having fun and not do the same? Freeloading friends can eat up your savings. You will find yourself busy financing their lifestyle that you may neglect to save for yours.

Photo from Wikimedia Commons.


By , on May 24, 2013
Mark Riddix Mark Riddix is the founder and president of New Horizons Financial Management, an independent investment advisory firm that provides personalized investing and asset management consulting. Mark is a regular contributor to Seeking Alpha and has written financial columns for Baltimore and Washington, D.C. area newspapers. Mark publishes his own financial blog, BuylikeBuffett.com and has written the ebook How To Make $2,000 A Month Online.


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  1. Impulse purchasing is the worst. That’s why we avoid going t the mall if we don’t have to buy something that we really need. And yes, we try to hang out with people who have the same financial ideas as ours.

  2. I am most guilty with the reason no. 2. I am an impulse buyer especially when I see great deals even if it is way out of the budget.

  3. I completely agree that all of these areas can completely kill a person’s bank account (and/or credit cards). I budget to the penny, but I also budget in entertainment, impulse, and emergency dollars to make sure I’m covered. I am sometimes happily surprised at the end of the month when I have a little money left over! My biggest hurdle is my husband…and his impulse spending. Over the years I’ve learned to budget to cover his spending as well.

  4. On number 3, the budget should still be zero – based. I try to add bigger to the categories I am prone to overspend in. I also have a “whoops” category that I am free to take from without guilt.

    • *buffer, not bigger

      It took a lot of tweaking and grace to get to the budget I have now. It’s so true that trying to use your budget to put boundaries on yourself doesn’t really work if you are constantly pulling from other categories. I had to separate out entertainment budgets so we can better prioritize our wants, and ended up combining groceries and dining into one food budget since we were frequently transferring between the two.

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