How Your Off-Budget Spending is Hurting You

What's your off-budget habit? Source: Wikimedia Commons

I have a stubborn smoothie habit. Don't ask me why, but if I have a few dollars in my pocket I am almost guaranteed to spend it on a smoothie. Not a big deal, except that those little mindless expenses can add up quickly.

A budget must be comprehensive and sustainable in order to work -- in other words, it needs to take account of your version of my little smoothie habit. Here's how to stay on track and get those off-budget items under control.

Off-budget: Not always prettyThe thing about off-budget spending is that a part of our brain intentionally "forgets" to track those items. It's like selective listening: you only pay attention to the things you want to pay attention to. It makes sense, of course. If you have a somewhat unhealthy or costly habit, you're probably not overly excited about finding out how much you spend on it.

However, ignoring that spending habit is even worse: Not only are you partaking in the habit anyway, you're undermining the budget you probably spent a lot of time setting up, making it harder to meet other costs and reach your savings goals.

Finding the leakThe first stage is to figure out how much your off-budget items are actually costing you.

If you charge everything, expense-tracking apps will do this for you. While I personally loathe the spending revelations these types of products bring to light, you can't argue with their efficiency. In a few minutes, you can get a crystalline picture of everything you've spent money on in the last week, month, or even year.

If you're sneaky and use cash to fuel your off-budget habits (my response to my tracking app), it will be a bit harder. But you can extrapolate. Be honest with yourself, how many times did you partake in your off-budget item of choice last week?

Deciding what to do about itKnowing how much you actually spend on off-budget items can help you address them. You essentially have three options: off-budget items need to either be incorporated, moderated, or eliminated.

For example, if you hate bringing lunch to work and know it's never going to happen, maybe it's time to stop fighting and just give yourself permission buy lunch. If you can muster a few homemade sandwiches a week, great -- in that case, build a moderate budget for buying and bring lunch the rest of the time.

However, be sure to consider your relationship to moderation. Some people function well when they can have a little bit of something, while others are more all-or-nothing. For example, you might find it easier to budget for three lunches a week, or it might be less stressful to either buy or bring all the time. Test out your new spending plan and see what happens -- you can always adjust it later.

That being said, maybe it is time to rethink a particular off-budget expense. If a habit is costing you both money and health, is it really worth hanging on to? Smoking is an obvious example, but many spending habits can undermine you over the long run. This is a good time to consider weaning yourself onto another, healthier habit, or just quitting altogether.

When replacing an off-budget item, keep in mind that our habitual spending often tells us something about what we need or want outside of the habit itself. I buy smoothies because I'm always hungry and like to get away from my desk. You might want a scotch after work because you're stressed and anxious after your long days. But if I replaced my smoothie habit with a proper lunch and you replaced your scotch with a run, maybe we'd both be better off -- financially and physically.

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