BUDGETINGLIFESTYLE & TRAVEL

Budgeting Myths That May Be Holding You Back Financially

Having a budget is essential to meeting your financial goals and having peace of mind when it comes to your finances. A lot of times budgets or spending plans get a bad reputation. Budgets have been said to be too restrictive, too difficult, or you have no need for a budget. Sound familiar? Let’s talk through some budgeting myths that could potentially be holding you back financially.

“I don’t have time to budget.”

This may be the perfect time to take a deep look at your finances and really understand where your money is going and if it's working for you. Often, many people believe as long as the bills are paid the budget is in order. But what if taking a closer look at your income and expenses revealed some unnecessary purchases, and instead of wasting money you were able to allocate those funds into savings or even investments?

“I’m not good at math.”

You don’t need to be good at math to create and follow a budget. Also, if you own a smart phone, you have a calculator at your fingertips. A budget or spending plan does include a small amount of addition and subtraction, but spending plans are much more than that. They allow you to understand your income, spending habits, expenses, debt, savings, and budgeting gives you a way to empower you to spend your money on the things that are important to you. There are also Excel spreadsheets and budgeting apps available that will do all the math for you.

“A budget is too restrictive.”

People often think setting a budget means you can’t spend money on things you enjoy, which is the furthest from the truth. Sure, you have to account for your needs in your budgets before the wants and the fun stuff. But if you enjoy grabbing a coffee and a bagel from your favorite bakery every Saturday morning, that’s OK — just account for it in your budget. That means when you’re creating your spending plan, add a category for things you enjoy. Budget for your weekend treat, a fun night out with friends, or a trip to the movies. Life is not made for us to just work and pay bills; it’s meant for us to enjoy as well.

“I make enough money and have no debt; I don’t need a budget.”

Budgets are not just for people who have trouble paying their bills month to month. Spending plans are for everyone — from a person on a fixed income all the way up to millionaires. Every single person should have a plan in place to tell their money where to go, whether it’s for a bill, groceries, vacation savings or investments. Even when you don’t have any debt, your money still needs to have a purpose and a place to go.

In general, budgets start with tracking expenses, creating plans to eliminate debt, and then building up savings. Budgets can help you make better decisions about your money and achieve your financial dreams.

Sources:

 https://www.investopedia.com/terms/b/budget.asp#toc-the-bottom-line