For many people, budget is a four letter word (those people need to improve their counting skills). Having to manage our money is just too stressful. It’s easier to just leave our hard earned money up to the fates and hope that everything will work out okay. Part of this irrational fear comes from the myths that surround budgeting. Let’s debunk a few of the biggest ones:
Budgeting is too difficult
Budgeting is as simple or hard as you make it. Somehow, people think budgeting involves some sort of complex trigonometry and formulas only available to the mathematical elite. That’s simple not true. To budget you need to know how to add, subtract and/or use a calculator. There are even a number of software programs specifically targeted at budgeting which do all the math for you. Mint, You Need a Budget, and Mvelopes are a few.
Budgeting is for poor people
Everyone needs a plan and a way of tracking and managing your expenses regardless of how much you make. Even major corporations that are highly profitable like Apple, Microsoft, GE, etc have budgets. Budgeting allows you to see where your money is going and make better choices about what you can do with that money. It’s about optimizing how you spend it. Regardless of how much or how little you make, making smart choices about each dollar you earn and spend is smart. A budget allows you to do this regardless of your income or current assets.
Budgeting is too time consuming
Before you start, gather all your pertinent financial info together and you can make a budget in less than 15 minutes. Remember that the first few months aren’t going to work out perfectly. Don’t get discouraged. Until you start budgeting, it’s difficult to know exactly how much you spend each month. Keeping a spending diary for one month before starting is a helpful way to see exactly what categories you’ll need and how much to budget for.
Once you budget for a few months, you’ll be able to tend to your budget by spending 5-10 minutes every other day. One trick is to do your budget concurrently with another activity – any semi-daily ritual that will remind you that it’s time to do a little budgeting.
Budgeting will be too constricting
Having a budget is actually the opposite of controlling. It gives you freedom. As long as you stick to it, you’ll no longer need to worry whether the money is there or not. When you know how much you have in a particular category, it removes all guilt from the purchase.
Before we had a budget, my wife would fret over every clothing purchase, often regretting it later and that guilt took all the joy out of getting a new outfit. Now she knows buying new shorts aren’t going to break the bank and I can’t tell you how much stress that relieves for the both of us.
Budgeting is for people with fixed incomes
People that live on variable incomes are the ones that need to budget the most. Budgeting on a variable income is different though. Check out this great article for tips on how to do it: How to budget on a variable income