Yesterday, we were talking about how one can go about transcending their financial beliefs. This is one of the reasons people don’t achieve their financial goals, for example, having a ‘locked’ mentality about things that were taught by our parents sometimes are taken as the absolute truth no matter what. If you really want to change your mindset, you better ‘open’ up your mind to new ideas. A good example of a financial belief that is proving difficult for people to overcome is their view on budgeting, JG Anderson cracks five myths about budgeting in the following article that prevents a lot of people from coming up with a financial plan.
Budgeting has a bad reputation with many people. They envision a budget means calculating hundreds of difficult sums and spending hours each week tracking every single cent they spend, all the while being forced to stay at home and never have any fun. The truth is nothing like this at all. Below are five common budgeting myths, and the reality of the situation.
1) Setting a budget is hard.
Many people feel that the process of setting a budget is hard, requiring hours of complex maths or large periods of time slaving away over large piles of paper or an Excel spreadsheet. The truth is there are many ways to go about setting a budget. If you are someone who likes a lot of detail or working with numbers, there are budgeting methods that can involve lots of figures and time working them out. But there are equally other budgeting methods that are very simple and straight forward to set up. It’s all a matter of finding a budgeting method that’s right for you. If you’re not comfortable with the budgeting method you’ve chosen, you’re unlikely to stick at it.
2) It takes a lot of time and paperwork to maintain a budget.
Maintaining a budget does mean you have to keep an eye on how your spending, and budget match up over time (making tweaks to your budget if necessary), but very few budgeting methods require a lot of work and time to maintain them. Usually you will have a quick look at your budget when you get paid to ensure you’re on track, then get back to enjoying your money.
3) You have to be in financial trouble to use a budget.
A budget can certainly help someone who is having financial difficulties find their way out of trouble, but budgets aren’t limited to such situations. Anyone can use a budget. In fact, a budget is the best way to ensure you never get into financial trouble! Better yet, a budget is the perfect way to save up for an expensive item (like a holiday or the latest electronic gadget) that you know you will want in the future.
4) Having a budget means you have to suffer.
Budgets have a bad reputation because many people envision eating cheap noodles at home in a dark room lit only by a single candle, with absolutely no luxuries or fun allowed. But just because you have a budget doesn’t mean you have to suffer. Coming up with a budget is all about working out how to do the fun things you enjoy doing, while at the same time ensuring you have enough money left to pay the bills as they come in. Sure, in some cases you may find you have to cut back in some areas. But the only reason you would ever suffer after putting a budget in place is if you purposely set the budget up to make yourself suffer.
5) Budgeting means not spending any money.
Ironically, budgeting is really the exact opposite of not spending money – it’s working out the best way to spend your money! Sure, if possible there should be an amount in your budget set aside for savings. But even savings are simply putting aside money to spend in the future. All budgeting does is help you save money on little things you don’t really need now so you can spend the money on big items that you really want in the future.
Now that you know the truth behind these five budgeting myths, what are you waiting for? Get started today in setting up your own budget, and reap the rewards they bring!