The Single Biggest Budget Buster & How to Avoid it This Year

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Posted January 6, 2014 by Kelley Long in Life After Five
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As you did your review of your money in 2013 as suggested in step one of my Year-End Checklist, what did you notice about where your money went? Most likely as you reviewed each month’s spending, there was always something that negated your efforts to save – a wedding, travel for the holidays, a music festival, even just a party you threw. These things cost money, and not an insignificant amount. It’s not the daily latte or ordering take-out or a splurge at the mall that kills most of our budgets. It’s the happy fun things. The things that, I think, make life worth living. It’s these things that we end up spending our “extra” money on instead of putting those funds toward our financial goals.

It’s not the daily latte or ordering take-out or a splurge at the mall that kills most of our budgets.

But I’m not saying you shouldn’t spend that money. What I’m saying is you can actually plan for these expenditures. You knew that most of these expenditures were going to happen way before the money left your wallet. In fact, I bet you can probably predict most of them for the year right now.

This year, instead of trying to work these things into your everyday spending, make them part of your yearly financial plan by mapping them out in advance. It’s easy to do: make a list of the twelve months, then get out your calendar and start writing in the commitments you’ve already made outside your normal routine. When I did this, I realized that almost every month I had some type of travel planned already. And this is just stuff that’s already been planned as of the beginning of the year.

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This month it’s a trip to Michigan for a friend’s wedding – not a huge expense, but it will cost probably $500 after I factor in gas money, hotel, a gift and the fact that I won’t be earning my typical fee for teaching a Saturday morning fitness class. This is money that I might otherwise allocate toward my goal of buying a new car. Another month it’s a trip to my hometown for a friend’s birthday celebration – that’s at least $100 in gas money.  And my brother is getting married in Colorado this fall, which means at least two trips for the bridal shower and actual event. It’s these things, these happy life things, that are your biggest budget busters.

It’s these things, these happy life things, that are your biggest budget busters.

Pay attention to these seemingly financially insignificant events on your calendar and put them into your spending plan now. Did one of your friends get engaged over the holidays? Better start planning now for at least a wedding gift, if not a shower and bachelorette party. Lucky you if you’ve also been asked to join the wedding party!

By doing this advance planning, you should still be able to achieve whatever financial goals you are working toward such as paying off debt or building up your savings – those less “fun” but still essential goals. Knowing in advance that this money will be spent anyway actually does motivate me to cut back on my wine or clothing budget in a way that just trying to “make it all work” doesn’t. Try it and let me know how it works for you.


About the Author

Kelley Long

Kelley Long is a CPA/PFS and CFP® who believes that the true meaning of financial security means having choices in life. Formerly the head of her own practice, KCL Financial Coaching, Kelley parlayed the knowledge and experience gained from starting her own business into her dream job as the Director of Communications and Marketing for the Chicago-based CPA firm Shepard Schwartz & Harris. She’s also a volunteer and media ambassador for Feed the Pig and 360 Degrees of Financial Literacy. In Kelley’s perfect world, everyone would feel great talking about their money concerns, fears, questions and problems, because then everyone would see that we ALL have those concerns, fears, questions and problems. Kelley lives in Chicago where she also teaches BODYPUMP group fitness classes at the Chicago Athletic Clubs.

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