If you’re like many people, you may have shied away from budgeting because you have felt like it hasn’t worked in the past. When you scheduled your expected expenses against your anticipated income, there was no guarantee that your expectations would come to reality. Sometimes your expenses were higher than expected while your income was a lot lower, resulting in a budgetary mess.
When budgeting leaves you frustrated, it is usually because you started with the wrong idea of how a budget works. Below are some common budgeting myths debunked
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Budgeting means giving up things that I love.
There is a common belief that budgeting means depriving yourself of life’s joys, such as eating in fine restaurants. If you have this mindset, expect to bust your budget. Budgeting is not sacrificing things you enjoy; instead, it’s developing a purposeful plan to empower you to do what you want with your money.
Why do you need to budget? There could be various answers such as wanting to get out of debt or saving money to start a business. If you change your mindset to see that there is a greater purpose for your money than constantly being self-indulgent, you won’t feel like you’re depriving yourself of things you love but planning something better for yourself.
My time is already stretched thin—budgeting will only add to the stress.
You might reason that you don’t have time to develop a budget, but the real reason is that you do not want to make time to create one. If you really look at your schedule and check your priorities, you’ll probably be surprised at how much time you are wasting on things that are not essential. Such time could be spent on a useful activity such as preparing a budget. In the long run, careful financial planning almost always ends up putting time back in your life.
Budgeting is the same as tracking my expenses, and I already do that.
Keeping track of your expenses is not budgeting – that is just bookkeeping or recording your expenses, and that only makes up one aspect of budgeting. Your budget is your plan for the future that allows you to make the best purchases.
While you keep track of your spending, budgeting requires that you look forward to the money you expect to earn to give you an idea of how to spend your money. Budgeting will prevent you from spending more than what you will earn.
I can’t plan for everything so why try?
Yes, demands on your money may crop up spontaneously, but this is even more reason for you to budget. Budgeting takes into consideration what may happen in the future. If you expect that something could come up, set aside money for that something. This will keep you out of difficult situations where you will be forced to borrow money. Most budgets include an item classified as “miscellaneous” that is intended for these surprises.
I don’t need to budget because I make enough to meet my needs.
This could be the worst myth about budgeting because a budget is not only for people who live paycheck to paycheck. It does not matter if you are a millionaire; you still have to plan where your money goes.
People are supposed to enjoy their money. The best way to do so is to decide in advance how it will be spent. Take control of your money before it takes control of you, and you’ll find that your life will be a lot smoother and more fulfilling.