How To Avoid These 7 Budget Disruptors In 2023?

Budget Disruptors

Budget busters are quite different from your regular monthly expenses. These are extra, unexpected indulgences that get added on top of the essential things you need to get by. Whether you’re new to adopting a cost-conscious lifestyle or hoping to brush up on the latest budgeting strategies, here are some of the notable budget disruptors you should be mindful of and how you can deal with them.

App Purchases

App purchases are easy to make without thinking about how much they cost. And once you’ve spent money on apps, they’re even easier to justify because it’s just a couple of bucks. Of course, who can resist when an app feels like it’s just a dollar? You’ve probably downloaded apps that you thought were free, only to be greeted by the dreaded “Buy Now” or “Upgrade to Premium” button.

Sift through your mobile apps to ensure that your purchases aren’t subject to in-app purchases. If you are on a budget, be mindful of how many apps you upgrade in a month.

Buying Coffee Every Day

While it’s true that coffee can be a delicious, life-giving force, it can also have an insidious way of taking over your life if you’re not careful. For one thing, it’s expensive—at $5 per cup at a typical coffee chain, you might spend $30 or more per week on coffee alone. That’s a hefty amount to be forking over for the privilege of staying awake.

Instead of going down this slippery slope, take advantage of free coffee from your office. You can also invest $20 in an insulated travel mug that keeps your coffee hot for hours. Not only will this save you money by limiting how much you spend on coffee each day, but it can also have positive effects on your health.

Credit Card Interest Charges and Fees

It’s easy to fall prey to an exorbitant credit card bill when you don’t know how to avoid the extra fees. Interest charges are often the most common and least-understood culprit of high credit card bills. Besides, many people don’t know they’re paying thousands of dollars in hidden expenses because credit cards levy extra fees for late payments, returned checks, foreign transactions, and so on. Even if the economy is roaring like it was in 2017 and 2018, for instance, this is not something to write home about.

The easiest way to avoid these charges is to pay off your balances in full each month. If this isn’t possible, try to manage your balance to stay as close as possible to zero. And no matter your situation, be sure to track your credit card activity regularly so that you know exactly what’s going on with your accounts.

Movie Rentals and Streaming Subscriptions

As the cost of cable continues to rise and the availability of content on streaming services increases, more and more people are choosing to watch movies or shows with a digital subscription. The convenience of watching whatever you want from the comfort of your home is hard to beat. Based on this, this change in viewing habits can be costly.

Always return all movie rentals (Redbox) on time. If necessary, set a reminder on your phone to notify you when the due date is approaching. You can also switch to cheaper streaming services for entertainment.

Flash Sales

When you’re on a budget, taking advantage of a flash sale can be tempting. For example, a website offers a product you want at a meager price—such as $40 off an item that normally retails for $200. You might even justify it by saying, “It’s a one-time thing, and I need the product, so I’ll just buy it now.” But then you get home and realize that the budget you set for yourself was actually $100—and now you have to make up the difference.

The best way to combat this is to set your budget before shopping. Don’t let extraneous items squeeze your budget to the breaking point. Think of flash sales as something fun to browse—but always set your budget first. This is even more important in times of high gas prices and runaway inflation.

Eating Out Too Often

Eating out and ordering in can be a way of life for many people, but staying mindful about your spending is essential. Every time you eat out, you’re paying for the labor involved in preparing and serving your food and any costs associated with utilities & maintenance. So even if you’re not eating out every day, it can easily slink into your budget, whether grabbing lunch during your break or treating yourself to a night out with friends.

Reevaluate your habits. Instead of going out for lunch daily, pack a healthy sandwich or salad at home and bring it in a lunchbox. Order a less expensive item from the menu, such as soup or salad—instead of ordering an entrée or appetizer to save money on dinner.

Charitable Donations

The appeal of charitable donation buckets at stores and shopping centers is undeniable, but often you don’t know where that money is going or how much of it will actually get there. While donating a few dollars here and there might feel good, it can add up to a significant amount over a year.

Don’t feel pressured into giving money to charity just because the cashier in the mall wants you to. If you have already budgeted for charitable donations, then that could be enough. You should look at legitimate charities such as The Knights of Columbus or the American Legion, for example.

5 Steps To Create A Personal Budget

Personal Budget

Every dollar you earn and every minute you spend is an investment. Your budget tells you where your money goes each month and can help you gain more control over your finances. Follow these steps to make personal budgeting quick and easy.

Step 1: Determine Your Net Income

Your net income is the foundation of a well-planned budget. In other words, it is your take-home salary after deductions for taxes and employer-provided benefits like retirement plans and health insurance. 

Remember, relying on your total salary instead of your net income may make you splurge. You’ll mistakenly believe you have more money than you have. Maintaining detailed records of your agreements and payments can help you manage unpredictable earnings if you are a freelancer or a self-employed person.

Step 2: Find Your Savings Rate

You get your savings rate from the difference between your earnings and expenses. It defines your financial stability and wealth. The savings rate shows you how much of your earnings you can allocate each month toward accumulating wealth.

Keep a savings rate target of 10% or more of your net income post-tax. Depending on your financial goals or if you wish to retire early, you should increase your savings rate and build a passive income from it which can help you in times of high inflation and runaway food costs.

Also, you can use your monthly savings to pay off unsecured debts, such as credit card debts or personal loans. Next, enroll for a secured credit card. How you achieve your savings goal is the rest of the budgeting process.

Step 3: Make a Spreadsheet for Your Budget

Creating a basic monthly budget doesn’t need you to be an Excel expert. It’s not even necessary for you to build your template; you can use the worksheets on Google drive.

The spreadsheet should have four categories: savings, income, expenses, and a financial summary. But first, write in your savings goal that you’ve already determined. Next, you can start mapping out a course to get to that savings rate.

Pro Tip: You can sign up with Tiller or check out Microsoft 365 for customized templates and easy budgeting on Google Sheets or Excel.

Step 4: Identify Month-to-Month Expenses

The two main expenses you incur each month are essential (unavoidable) and optional (avoidable) expenses. You can cut back even on the essential expenses to some extent. Based on this, the distinction between necessary and optional spending is a helpful reminder of where you have the most flexibility to save in your monthly budget.

Essential Expenses

Although there are inventive ways to cut or evade these necessary costs, most financial experts call them unavoidable monthly living expenses. 

  1. Accommodation: Think about how much you can afford while still being satisfied rather than how much you can spend.
  2. Transportation: If you want to amass a fortune, buy the least expensive car. 
  3. Groceries: To survive, you must eat. Moreover, you do not need a gourmet feast every day – not even every week. Once a month is more like it when gas prices are what they are.
  4. Utilities: You will require internet, water, power, and possibly gas. Still, you can reduce utility costs through sustainable living. 
  5. Medical care: You can use benefits, choose a preferred provider option (PPO) based on your insurance plan, pay in cash, or even request discounts.
  6. Child care: For under-school-age kids, you can hire babysitters instead of nannies, swap responsibilities with family or friends, or have play dates.
  7. Debts: Pay off unsecured debts like credit card bills and student loans as soon as possible. 

Optional Expenses

Remember that you have total control over these costs. Anything you spend on the below items should be the bare minimum and only if you can’t live without them. The list includes:

  • Food: restaurants and takeout
  • Shopping for clothes or accessories
  • Cosmetics and personal care
  • Electronics
  • Alcohol and tobacco
  • Gifts
  • Travels
  • Entertainment

Step 5: Review Your Budget Regularly

It’s essential to regularly review your spending to make sure you are staying on track. No budget is set in stone; it can change. For instance, your spending might alter, you might get a bonus, or you might achieve a target and decide to create new goals. Whatever the reason, establish the practice of periodically reviewing your budget using the methods above. Here is a practice you can follow: 

  • Keep a track of monthly expenses
  • Understand your spending pattern
  • Adjust expenditures to must-haves and eliminate luxuries

Closing Thoughts

It’s simple to create a budget, but changing your spending habits is the tricky part. There are several ways you might hold yourself accountable for deviations from your budget. To begin with, you can activate notifications for your bank and credit card accounts to remind you when you hit a set spending limit. Learn to live frugally, which means not buying things you cannot afford. It constitutes the foundation of successful personal budgeting.