Budgeting Myths Debunked
There's a number of reasons that people don't budget. Partly this is because of an array of myths surrounding budgeting. Behind the myths there lie a number of significant benefits for both your finances and your stress levels.
- The more you earn the more likely you are to be able to save
Your ability to successfully manage money has nothing to do with how much you earn, and even those on high incomes can have difficulty budgeting. Sometimes having a higher income takes your focus off of budgeting and money management, having a higher income can also lead to a more expensive lifestyle.
- I'm no good with money
Being good with money is not something that you are born with, nor is being bad with money, it’s something that you learn and can overcome!
And the first and most important step to learning to successfully manage your money is to harness the power of budgeting and being Clever with Cash!
- I just need to find the right savings product
Maybe you do, but the right savings product is not going to be of much use if you don’t plan what you’re going to put in to it. Because you might either not put as much as you could into it, or you might have to start taking money out because you are not planning your money correctly.
Until you find the right savings product you should still be saving, so that you have something to put into that savings product when you get it to get the most out of it.
- You have to suffer to use a budget
You do not have to suffer to use a budget because a budget is simply a method of planning what you want or need to do with your money. Your budget should be flexible and reflect your current situation and needs, this will allow you to get the most out of it. Depending on your financial situation or your goals, if say you need to get out of debt fast or want to save as much money as possible, you may have to get a little stricter with your budget.
- You have to be in debt to budget
No, you don’t… but if you are in debt budgeting is something that you should definitely consider taking up. The earlier you plan to eliminate your debt the easier it shall be. Not only shall it be easier, but it will save you money, worry and allow you to plan to avoid getting in unnecessary debt in the future.
- We live on a variable income and, therefore, can't budget
Budgeting is a useful process for anyone, regardless of how large or regulated their incomes are. Having a variable income is more reason to budget, because there is more uncertainty that you should be planning for, some weeks you may get more and others you may get less… what are you going to do on those weeks with less?
Merely having a budget allows you to plan for the times when you have less, so that you don’t find yourself in the difficult position of being without enough money to pay necessary bills and other such expenses. It is a means of prioritising your spending based on your current position, providing you with a financial to-do list which you can take advantage of when your variable income is providing you with more in anticipation of times when you may have less.
- It's impossible to budget for unknown and unplanned expenses
It might not be possible to budget for those unfortunate periods where everything seems to go wrong, but it certainly will make the financial strain of those times a lot less. Plus, having some money to fall back on in an emergency might help you to sleep better at night. Budgeting can help you plan for expenses that you know will happen, such as going to the doctor or car or house maintenance. It can also help you to afford insurance that you may not have been able to afford before. Insurance is important because it dramatically reduces the risk and financial impact of the ‘unknown’.
Budgeting can also help you to better manage infrequent expenses such as registration and insurance, so that you’re prepared for them instead of surprised.
- I'm not mathematically inclined
Well that would have been a problem if you were doing the budget manually… but we’d like to introduce you to a secret weapon (we call it Budgets Get Real), which will do all of the maths for you so that there’s no error and minimal effort!
- We don't have a large enough income to budget
There’s no such thing as having too little income to budget, because if you are on a low income budgeting can provide you with the security of knowing you have enough to pay the bills and have some money to fall back on in the case of an emergency. Budgeting can help you decide how you want to shape your quality of life.
- We have too large an income to worry about budgeting
You might think that, but the real questions are ‘Do you earn too much income to worry about managing your money?’ and ‘Are you managing your money as effectively as possible?’ there’s a chance that you aren’t, plus, there’s almost always room for improvement.
Budgeting can allow you to see where you can make improvement and help you to better manage your money.
- I don't have time to work on a budget
You might not have time to work on a traditional budget, which is why we have cut out most of the time and effort with Budgets Get Real. Budgeting can afford you more time to not worry about money and more time to spend enjoying your free time and money, however you choose!
- Budgeting doesn't work!
No, budgeting does work. Budgeting is a very useful real world process, used by many people and companies who are not in debt. The reason that they budget is because it works, can you imagine a construction company beginning to build a house without a plan or a budget. They wouldn’t do that. They know that budgeting works and that it is more reliable to work from a plan that to attempt to build anything without one. The same goes for your finances.
Having a budget is an excellent way to better understanding and managing your money, it can allow you to truly know where your money is going and where you are making good decisions and where you can improve.
- Budgeting means being boring and miserly
A budget is what you make of it, and if your mindset is that it will make you feel boring and miserly then it might end up doing that. The truth is that whilst the act of budgeting might not be the most exciting thing, it can allow you the opportunities to take advantage of lots of exciting things that you may not have been able to do without a budget.
Don’t believe us? Take a look at how budgeting can make such a difference. See our article 'How Budgeting Can Benefit You'
- Budgeting means not spending
No it doesn’t, budgeting is organising what you want to do with your money, including how to spend it. There’s no reason why you can’t spend it, unless you need to get yourself out of atrocious debt, or unless you don’t want to. Budgeting can allow you to make sure you have enough money to pay all of your bills and necessities, as well as have enough left over for anything else you might like to do.
People often budget for pleasurable things, or things that are important to them, such as:
- Travel
- Retirement
- Starting a Family
- Building an Investment Portfolio
- A new car
Submitted by Budgets Get Real
April 24, 2006
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