Budgeting is not only for people who make too much money or are in debt. On the contrary, it’s a habit everyone should have, instead of always worrying about money and living from paycheck to paycheck. There are many types of budgeting methods, and you should test to find the one that works best for you. Many people, however, give up or never even start it, because of the many misconceptions that they have. Here are five budgeting myths you need to stop believing:
1) Budgeting is too restrictive
Most people think that budgeting means depriving oneself. However, this couldn’t be further away from the truth. Budgeting is a habit to help you to manage your finances better, while still doing and having nice things. You should always plan for the things you like in advance. For example, if you can’t live without going out on weekends, you should assign the amount of money needed for such in your budget, without going over it.
2) Budgets are too time-consuming
If you get overwhelmed with even the thought of having to deal with lots of numbers and Excel spreadsheets to manage your money, not to worry. Budgeting does not have to be complicated. You can find many free apps online, like Mint or Personal Capital, which facilitate this process by linking your accounts and having your budget made automatically and effortlessly. These apps also offer cool features like free credit score checks, an all-in-one financial dashboard, investments, and goals.
3) You think you can work it out in your head
Even if you have a great memory or are a numbers person and know all your expenses by heart, you should never entirely rely on it alone to budget. You might forget something. Moreover, having it on paper or in an app will make it so much easier to keep track of. For example, you might see you’re spending money on something you’re not using, or be able to substitute expensive things for more affordable ones.
4) You can never go over your budget
Sometimes we create a set budget for something, and then you come across an unexpected expense. Contrary to popular belief, budgets should always be flexible. For example, if you need to spend more money in one category, you can always take from another category.
5) You can’t budget because your income changes continuously
If your income is rarely the same each month, it shouldn’t be an excuse for you not to plan your expenses. In order to have a budget, you’ll need to set yourself a “base” income, which can be done by calculating your average earnings, at a level you hardly ever go under.
