Even the most diligent budgeters can get off track, especially when faced with these notorious budget busters. The best way to stay on target is to be aware of where your spending may go wrong and do your best to avoid it.
1. Impulse purchases
It’s all too easy to grab a few extra items at the checkout or to buy expensive junk food when you go grocery shopping hungry. You can’t escape the temptation for impulse purchases online either with targeted ads, online stores that save your credit card information and email blasts announcing limited-time savings. Make a budget and a shopping list and do your best to avoid unplanned-for purchases.
2. Small extras
Most people don’t plan to buy a magazine here or a pack of gum there, and we’ve all heard about the dangers of a latte habit. The problem with “extras” is that they trick you into thinking you’re not overspending since they’re inexpensive purchases. In the long run, these purchases can add up, so don’t give in to the siren song of the clearance nail polish.
3. Television and movies
Cable television is a pricey indulgence these days, and many consumers purchase streaming subscriptions on top of cable. Renting a movie via an on demand service is often expensive, not to mention paying to go to the theater. Unless you’re a true television and movie aficionado, you can probably find somewhere to trim the fat.
4. Fees and fines
These budget busters run the gamut from small (ATM fees) to large (parking tickets), but they’re all unnecessary. The worst part about these expenses is that you don’t even get to enjoy spending the money. Watch out for credit card interest and fees, overdraft charges and other places that can leak money if you’re not careful.
5. Restaurants and fast food
It’s always cheaper to make your own food at home because restaurants and fast food places charge for convenience. It’s okay to treat yourself once in a while— make an “eating out” budget, so you don’t overspend—but going out to eat regularly is one of the surest ways to blow your budget.
6. Aspirational spending
It’s normal to want to look and feel your best, but it shouldn’t be at the expense of your budget. Don’t buy a gym membership that you never use or clothes that are too small or trendy, and if you decide to take up a new hobby, try it out for a while before splurging on supplies.
7. Emergencies
Medical emergencies, car repairs, and other surprise expenses can eat away at your savings if you don’t plan ahead. Emergencies shouldn’t be considered surprise expenses—you know you’ll eventually have to pay for some emergency; you just don’t know when or what. Buy insurance, build up an emergency fund, and practice preventative maintenance on yourself, your home and your car.
8. Gifts and donations
If you always donate to your friend’s cancer walk or buy your mom a gift for her birthday, these expenses shouldn’t be surprises. Save up for special occasions and charitable donations, so they’re no longer an unpleasant yearly surprise.
9. Retail therapy
If you feel like splurging because “I deserve this!” then back away from the credit card. You may feel like you need a manicure, a vacation or a shopping spree after, a hard day at work, but you don’t deserve to ruin your budget.
10. Irregular bills
A lot of bills—tuition, home maintenance, etc.—don’t come every month, but you still need to budget for them. If it helps, set up a separate checking account for these bills and pay for it monthly, so you have enough when the bills come due.
This article was written by Advicent Solutions, an entity unrelated to AFS 401(k) Retirement Services, LLC. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. AFS 401(k) Retirement Services, LLC does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2013, 2015 Advicent Solutions. All rights reserved.
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