Myths Surrounding Budgeting

Some people think that budgets aren’t for them. We have listed below some of the myths surrounding budgets as we feel these are some of the reasons that stop people from budgeting. By not budgeting you risk being held back from being successful with your money and achieving your personal goals.

If you can overcome these myths, you will really understand the significant benefits that can be achieved from having a plan around your money. Budgets really do work. The most successful and wealthy people all manage their finances using a budget.

Myth: I can’t handle money so I can’t budget

Truth: If you acknowledge that you are no good with money, then this is the perfect reason to give a budget a go. Just like most things in life, you need to learn and become familiar with how things work.

Setting up a budget will help you get in control of your money and before you know it you will have a good handle on your situation.

Myth: Budgets mean that I have to account for every dollar I spend

Truth: Budgets are there to help you be careful with your money so that you have money spare for the special things you want to achieve such as your goals. Initially you might want to keep a detailed record to see where your money is going and you might track your expenses, but over time your budget will be quite set. You don’t need to record where every last dollar is being spent. Remember though, the little bits here and there can add up and could make a big difference long term!

Myth: Budgets mean that I have to spend valuable time away from my family, friends or leisure, as I will always be crunching numbers

Truth: For you to manage your money well you will need to put in some time and effort. The only place where success comes before work is in the dictionary. However, if you set time aside regularly to work on your budget, the easier it will all become. Over time you will become much quicker at updating and reviewing your income and expenses.

If you succeed with your budget, you will actually have more quality time with your family and friends as you won’t be stressing about money. You will also be able to enjoy the freedom of having extra money to spend on them.

Myth: Budgets will control my life

Truth: Budgets do not need to control your life. The opposite actually happens when you have your budget working well. Having control over your money and spending habits, actually gives you greater freedom which is quite liberating. You will be able to make rational decisions and choose what you want to do rather than your money / debts / personal situation dictating what you can and can’t do.

Myth: I need to earn more money before I start to budget

Truth: It isn’t how much you earn that will make a difference. It is what you do with what you earn that will make the difference. If you earn $100,000 a year and spend $90,000 a year you have $10,000 to save. If you earn $50,000 a year and spend $30,000 a year you have $20,000 to save. The person on the lower income is actually further ahead than the person on the higher income because they are disciplined and able to save more.

No matter how much you earn, you will be able to start to budget and manage your money today. A budget will ensure you have sufficient monies set aside to pay your bills as they come in removing some pressures and stresses that might otherwise be felt.

Myth: I can’t start a budget yet as I have too many debts

Truth: There is no better time to start than today, especially if you have too many debts and don’t know how to manage them. Having a budget and some control over your money will be much easier for you. You will be able to clearly identify your position and will easily be able to look for solutions to help you out of your situation. This might be a combination of bringing in more income or reducing expenses in other areas.

By ignoring the situation you are in and by not taking steps to address and correct the position, you are doing more damage and causing yourself much more stress and worry. The solution isn’t to go out and get another credit card!

Myth: If I go on a budget I will have to miss out on the nice things in life

Truth: As strange as it seems, budgets actually allow you to still have all the nice things in life. With a budget you will have more control over your money and will be able to decide what you want to buy. It is your choice!

With a well working budget, you will find that you have more money than before, as you will be aware of where your money is going and you won’t be losing funds into a big black hole.

Budgeting stops the leakage and you will find that you have spare money that you haven’t seen before, allowing you to actually have more fun and enjoyment.

Myth: If I am on a budget, I will never be able to have a holiday or new car

Truth: Of course you will. Saving for larger items is one of the main benefits of starting off a budget. You will just need to work out how much your goals will cost you and when you require those goals. Then you will need to set aside the money to save for these accordingly.

If you haven’t thought about your goals before our Money Detective Goal Planner can assist you. You can list down all the goals that you want to achieve and when you want to achieve them.

You can then work out how much you want to spend on these items and how you are going to save for them using our Money Detective Goal Tracker.

You can start to provide funds and save for these goals now by setting this money aside in your new budget. If you start working on your goals today, you will be one step closer to turning your dreams into reality.

Myth: I don’t have any debts so I don’t need to budget

Truth: Congratulations on being debt free. A lot of people would dream of being in your position. You still however need to manage your money effectively and look toward the future. There will be things that you need to buy and you always need to have sufficient for a rainy day.

A solid budget will enable you to keep debt free and save you running the risk of having to hit the credit cards down the track. If the time comes and you need to get a loan to buy a larger item, then you will be able to do so with the peace of mind that you can manage it well and clear the debt as soon as you possibly can.

Myth: Budgeting is for scrooges, misers and penny pinchers

Truth: You don’t need to feel that you are one of these persons, just because you are on a budget. A budget is what you make it. If you cut back to the bare bones and don’t allow yourself to have money for certain things then you might feel like you are a scrooge, miser or penny pincher.

If you set yourself a well balanced budget you will feel more like a king or queen.

Myth: My income changes so often a budget wouldn’t work

Truth: A budget needs to be flexible and it is certainly a working document that can be altered or amended at any time. If your income / situation changes so often, that is even more reason to have a budget and have control of your money.

If you have irregular income, a plan and structure is paramount to ensure you get through the drier times without missing out during these periods.

Myth: If I am on a budget I won’t be able to spend any money

Truth: A budget allows you to control what you do and don’t spend your money on. You will need to prioritise your expenses based upon your level of income. If you don’t earn sufficient income to allow you to purchase something, you will need to either cut back in another area or look at increasing your income.

A budget is a great friend and will actually save you from going into financial ruin. It is so tempting to just grab the credit card and buy something without any thought of how you are going to pay it back. Once on the debt treadmill of churning debts and accumulating credit cards, it can be very hard to get off.

Myth: My budget won’t work as I won’t be able to plan for unexpected events or emergencies

Truth: When you set up a budget you should include provision for these items. You need to allocate money for buffers for unknown events and future purchase of whitegoods and other household items that are often forgotten.

Why not have a bit of fun. Take our Quizz the Budgeting and Cashflow Wheel. This quiz allows you to answer certain questions that will delve deep into your personal situation regarding your thoughts and feelings on budgeting and your current cashflow position.