My DH has absconded completely from responsibility for the household accounting (and while it's not ideal, we've both recognized that he really doesn't have any ability with it) and we've done what others have done....separate savings accounts. I'd like to share how we've recently dealt with a situation like this (actually still going on today) and perhaps this might help your friend do what has to be done with a clear conscience....
DH is fully onboard with the concept of living within our means and spending the household money on what we need, as opposed to want. His savings acct grows when we make debit purchases for household expenses....automatically rounds it up to the nearest $5 and stashes it sideways into a savings account. Whatever's in that account is his to do with as he wants...that's what we've agreed, and while it causes me jaw pain to see some of the stuff he wants, I say nothing, because that's the agreement we made, and it's not affecting our household budget.
Recently he just about emptied his acct to buy a couple of game cameras to track the wildlife coming and going from his hunting areas. Yesterday, he asked me to budget in the possible purchase of two antique weapons for his collection.....and I said no. If he wants more guns for his collection he's going to have to figure out how to pay for it without using credit or dipping into household money. He wasn't surprised, really, because it would detract from the household budget, and I think it really drove home the point that he needs to think really hard about how to get what he wants.
Enforcement is a hard thing to do (and it's a really confrontational word) when there's no separate play money accounts. If buddy buys a $2000 bike or a purse (I just had a heart attack at the thought) and s/he doesn't get to eat or pay his/her bills or mortgage for a month.....they'd probably think twice (while their stomach's growling) about the wisdom of such an extravagent purchase. By setting up a separate savings account for blow money....once the money's gone, it's gone, and that's it...and they have to figure out how to build the account up again to buy what they want.
I don't think purchases for items that don't benefit the whole family should come out of a family budget, although there's always going to be exceptions. We want a new bed....that's going to be budgeted into the family budget. I want some supplies for a stained glass project I've got in mind; that's coming out of my savings account. I'd like a decent size food processor....DH agrees it'll be a benefit to all of us, so it'll be worked into the budget.
If someone isn't onboard, mentally, with recognizing that it's irresponsible to spend without care, it's going to be really hard to not get into a confrontational situation....I agree with everyone else here that there's got to be some division of accounts if the non-frugal person isn't interested in staying within a limit.