The 2 Little Words That Can Blow Your Budget

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  • The words, "It's only…" can be used to justify all manner of spending.
  • If you can't avoid impulse buying, try building a little extra spending cash into your budget.
  • Reframing how you think about costs can also go a long way towards avoiding purchases you'll later regret.

A budget only works if you stick to it.

Pretty much every personal finance expert will tell you that the key to keeping your finances under control is budgeting. Knowing how much money you have coming in and how much is going out can help you ensure you're not spending more than you're making.

But there's a world of difference between making a budget -- and sticking to your budget.

For one thing, there's always some type of unexpected cost that inevitably crops up. A pricey car repair, a last-minute trip to the ER, or even a friend's whirlwind wedding (and the associated gifts).

More often than not, however, it's not the big things that will blow your budget. It's the little things. And it all starts with two little words.

"It's only…"

Perhaps the two most dangerous words for any budget are, "It's only..." This phrase can justify a huge variety of unnecessary purchases and splurges.

"It's only $5."

"It's only one thing."

"It's only this once."

For most people, a single $5 purchase isn't going to ruin hours of careful budgeting. But those little exceptions can add up remarkably fast. Before you know it, you're $50 over budget and wondering how you got there.

A good example of this phenomenon is the dollar store. Have you ever walked into the dollar store looking for an item or two -- and walked out somehow $30 poorer with a bag full of junk? Every time you pick something up, a little voice in your mind thinks, "It's only a dollar!" Pretty soon, you've it's only-ed your way into spending way more than you planned.

And this problem scales with your budget. Folks who make $100,000 are just as guilty of using "It's only…" justifications as those making half that. It's just how much they justify that changes. This is commonly called lifestyle creep, which is when your income grows -- so your spending grows, too.

Build impulse spending into the budget

One way to deal with the effects of impulse spending is to simply build it into your budget. Once your bills and savings are situated, set aside some funds to be used for those little things you can't seem to stop buying.

As an extra precaution, keep your impulse budget in cash. That way, you can only spend what you physically have on hand.

Of course, this method relies on having the discipline to not bust out your handy dandy credit card once the cash runs out. That's where the sneaky "it's only…" can rear its ugly head once again.

Retain your brain

Perhaps a better way to deal with budget-busting impulse buys is to change the way you think about the cost of things. Instead of saying something is only $X, use a different currency, like hours worked or portions of bills.

For example, if you make $10 an hour, that $5 item will cost you at least half an hour of work (before taxes -- the real cost is actually higher!). Is a random item worth half an hour of your life? If the answer is no, put it back.

You could also consider the cost in terms of other expenses. That same $5 item may be 10% of your cellphone bill, for instance. Do you want to sacrifice 10% of a vital expense just to buy that thing-a-majig or what's-it?

Don't forget about your savings goals. Are you saving up for a $500 vacation? A $5 piece of junk is 1% of your vacation budget. Would you rather be sitting on a beach sipping margaritas -- or sitting on your sofa surrounded by a pile of nonsense you didn't need?

Stores, and their advertising, are specifically designed to encourage you to spend money. (The little displays of items at the register are literally called "impulse items.") Advertising companies spend billions every year trying to figure out how to sell you stuff, and an "it's only" mentality plays right into their hands. Reframing how you think about purchases may be your best defense against the psychological warfare waged by the retail industry.

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