10 Common Budgeting Myths Debunked
Budgets are the most important part of personal finance, because they are the foundation your financial goals are built upon, however there are a lot of negative connotations and myths associated with budgeting that can deter people from creating a budget.
Here are 10 common budgeting myths:
1. Budgeting is restrictive.
Myth: Budgeting is restrictive.
Truth: Budgeting is freeing.
Budgeting gives you the freedom to spend money without wondering how you’ll reach your financial goals, because they’re incorporated into your budget. Budgeting allows you to understand where your money is going and gives you control over your money, which reduces financial stress and anxiety.
2. Budgeting means I can’t have fun anymore.
Myth: Budgeting means I can’t have fun anymore.
Truth: Budgeting enables me to have guilt-free fun.
Budgeting and fun are not mutually exclusive, in fact guilt-free spending stems from living within your means. We recommended creating a category in your budget called “fun money” or “discretionary spend” which you can spend on whatever you want.
3. I don’t have time to budget.
Myth: I don’t have time to budget.
Truth: I don’t schedule in time to budget.
If you struggle to take time out and look over your finances, add a finance admin appointment to your calendar. This will help you get into the habit of reviewing your finances.
4. I’ll start budgeting when………………
Myth: I’ll start budgeting when ……………
Truth: I need to start budgeting now.
Now is the time to start that budget! The sooner you get into the habit of budgeting, the better. You’ll feel so much better once it’s done.
“Nothing is so fatiguing as the eternal hanging on of an uncompleted task.”
5. I can budget in my head.
Myth: I can budget in my head.
Truth: A mental budget cannot be tracked.
A budget is a plan for your finances which can be tracked and reviewed to see if you are on target. If you are ‘budgeting in your head’ it’s almost impossible to do this.
6. My budget must be perfect.
Myth: My budget must be perfect.
Truth: My budget is a work in progress.
Like most things in life, when it comes to budgeting you get better with practice. Your budget won’t be perfect the first time you make one. You may overestimate or underestimate some things, but don’t be discouraged if this happens. It’s a part of the process. Continue to persist and with time you’ll get better at setting an accurate budget.
“Budgeting is like riding a bike. Yes, you might feel wobbly and uncertain at first. Yes, you might ‘fall over’ and spend too much one month or not put enough in savings the next. Eventually though, you’ll find your balance and it’ll all kick into place. You just need to stick with it!”
7. I don’t have the math skills to budget.
Myth: I don’t have the math skills to budget.
Truth: If you can use a calculator you can budget.
You don’t need advanced maths skills to budget. There are a plethora of budgeting tools available for you to create a budget. You can use a calculator, google docs, spreadsheets, budgeting apps or budgeting software.
8. Budgets are static.
Myth: Budgets are static.
Truth: Budgets are dynamic.
Budgets are not a set-it and forget it one off activity, they are likely to vary from month to month or from time to time. For example, if you pay your council tax over 10 months instead of 12, you won’t pay council tax in February and March. Also, a change in your circumstances, such as getting married or a job loss will lead to a change in your budget.
9. Budgets are reactive
Myth: Budgets are reactive.
Truth: Budgets are proactive.
Some people think budgeting is tracking your spending, that's only part of budgeting. If you only track your spending and don't have a plan for your money, that's being reactive. A budget should be proactive, you should have a plan for you money before it reaches your bank account. That way you know how much you can afford to spend and save in order to reach your financial goals.
“A budget is telling your money where to go, instead of wondering where it went. ”
10. Budgets are for …………
Myth: Budgets are for………… (insert people group that comes to mind).
Truth: Budgets are for everyone.
Some people believe that budgets are for people who are strapped for cash. On the flip side, some people think they don’t have enough money to budget and that budgets are for well off people. Both of these ideas are false. Budgets are for everyone. No matter your age or income if you have money coming in, you should have a budget. Whether it’s your pocket money from your parents, a student loan or your salary, you need to budget. The earlier you get into the habit of budgeting the better.
Have you fallen prey to any of these budgeting myths? Let us know in the comments below.
References
Common excuses that stop you from budgeting By moneyaware.co.uk
https://moneyaware.co.uk/2019/10/common-excuses-that-stop-you-from-budgeting/