Trendy clothes. Daily Starbucks coffee. All the newest CDs. What is your weakness? Everyone has one, whether it's a common one, like the ones just listed, or something a little different, like needing every book and magazine by Rachael Ray, the oh-so-popular chef.
In budgeting, these common spending habits are identified as discretionary expenses. That means they're something we buy that we could either live without or find in a cheaper version that would work just as well. If they're allotted for in your budget, discretionary expenses can be a reward for cautious spending. But if you haven't set aside the money for them, or if you have problems doing without them, they can easily wreck your budget and put you in a financially tight spot.
So, what are your discretionary expenses? Do you buy new shoes every week, or pay for a gym membership you never use? It can be hard to cut some things out of the budget. But it really can be done, and without completely doing away with all the fun things in your life. After all, that is the purpose of budgeting -- to make room for what we want and need, by cutting out what doesn't affect the quality of our lives.
Throughout this article, we’ll we identify common unnecessary expenses that often cost us more money than we realize. We’ll explore ways to distinguish needs from wants and how to leave a little room for the wants in the budget.