Most people have started budgeting several times, only to give up in a matter of weeks – sometimes days. This is mostly because adhering to a budget involves way more than a few calculations and splitting your expenses into different categories. If your budget must achieve your goals of more savings and less spending, you must first consider your own money habits and then plan accordingly. Most people’s budgeting involves merely depositing their salaries in an account and spending it all with an ATM card. At the end of the day this “budgeting” method leaves you with no idea where your money went and no savings because almost nothing is left at the end of the day. When our budgets work against us it’s usually because we have the wrong idea about how they work to begin with. Below are 5 budgeting myths that stop people from saving as much as they should and act as a barrier to financial freedom.
- I don’t need to budget: Don’t let your financial status fool you, everyone needs to budget – even those with a large salary and very healthy bank accounts. This budgeting myth makes people forget that keeping track of your income and expenses every month allows you to make sure your hard-earned money is being put to the best use. If, for instance you knew exactly how much of your money went into meals at a restaurant, you could decide to prepare more of your meals yourself and put all that money into saving for something else.
- It’s complex math and i’m not good at math: This is probably the lamest excuse for not having a budget and you would be surprised how many people use it to chicken out of budgeting. If you can do basic elementary school mathematics, then budgeting shouldn’t be a problem. If you still feel confused by the arithmetic, there are a thousand different apps and budgeting software you can use. You don’t need to be good at the calculations, you just need to follow the instructions. If you know how to use spreadsheet software, you can even make your own budget. It’s as simple as creating one column for your income, another column for your expenses and keeping a running tab on the difference between the two. But don’t stay away from budgeting because “the math is too complex.” It’s not.
- I budget in my head: If you can accurately do a zero-based budget in your head every single month, then you must be the most brilliant person on the planet. Honestly, if you’re calculating all that in your head, then governments would be after you to make their budgets. The truth is that any budget that is completely in your head doesn’t qualify as a budget. It’s just a ague idea of how much you earn and how approximately how much you spend. If a budget will work, it must be on paper, or a spreadsheet or somewhere you can track on a monthly basis.
- I’m too broke to have a budget: Thinking that you should only budget if you have more than enough is just ridiculous, right? Well you’d be surprised at the number of people who think that budgeting is reserved for the rich. The truth is, if you don’t have much money to begin with, budgeting is crucial. It’s simply a way to maximize the efficiency of your money. Without a budget, you have no plan, and chances are, you’re not spending your money in the most resourceful way.
- Budgeting is a waste of time because unplanned expenses always come up: If you get several unplanned expenses every single month, then trust that you’re not considering all your transactions when you make your budgets. Review your spending from the past year in order to look beyond recurring monthly expenses. Keep an eye out for things like car insurance premiums, vet bills and other pet costs, tax payments, and home and car maintenance. If you find the same expenses popping up semi-regularly, you probably want to add a new category to your budget.