The word “budget” looks scary to a lot of people. It sounds like work, looks like restriction, and implies that you need to love math. I went 24 years without a budget for one huge reason…I didn’t want to take the time to do it. I was paying bills, making the minimum payments on my credit cards, and I had enough left over for food. What else could I ask for?
Having this idea that budgeting would take up most of my life left me restricted to just getting by. It’s true that you can manage your money without a budget, but you won’t be able to manage your money effectively. If you have a plan for your money (a.k.a budget), it’s absolutely amazing what you can accomplish with the income you currently have.
Budgeting completely changed my financial life. It can for you too! Just make sure to ignore these myths, stop living a life where you only get by and embrace the idea that you can learn how to effectively manage your money – all it takes is a budget!
I Don’t Need a Budget
The most common thing I hear from people who don’t budget is “I do it in my head” and “I budget by keeping track of everything I spend”. Doing it this way, you only kinda-sorta have an idea or have rough estimates of the real values for your budget. If you are budgeting in your brain, and you have a spouse, hang on to your pants, because they have no idea what magic budget you are creating in your head. This is where spending and money can cause conflicts. Most people only look at budgeting as one thing, looking at the past and using past figures to determine estimates for your budget now. It’s great you know what you are spending on, but you are only looking at what you have spent last month. Budgeting is looking at the past, but you must also look to the future. You have to budget for the money you haven’t spent yet. Your budget is a plan, a guide on how you should spend your future dollars.
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Budgeting Is Boring
Well, let me be the one to splash a cool glass of water on your face. Time to wake up! What is more boring than looking at your credit card statements or going through your bank account online? Talk about a snooze fest. If you are not budgeting, I guarantee a lot of you look at your bank account online, or go through your credit card statement, and say “Yep, looks good”. If budgeting isn’t fun – you are completely doing it wrong. I want you to think about what you really, really want. How cool is it to think and fantasize about all the nifty things you want to have and do? A trip to Asia – check! New sofa for the living room – check! In budgeting, we have a list of things we want and need. The things we need which are at the top of our list (food, bills and mortgage) and the things we want which are the bottom of our budgeting list (trip to Asia and the new sofa for the living room). At first, you might only have enough for “Need” items, but the fun part about budgeting are the “Wants” that are further down your budgeting list.
Budgeting is Too Much Math
Math is really the easiest part of budgeting. All you need to know is how to add, subtract, and occasionally use division. Not too painful right? The harder part of budgeting is figuring out your spending and knowing where to cut your expenses. If the math is keeping you from creating a budget, there are a million online resources that do the math for you. Even Excel has budgeting templates that have built-in formulas, you just type in the numbers. Here is my FREE simple budget worksheet for you to check out and use!
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Budgeting Is Too Restrictive
This is where budgeting gets its ugly reputation. A lot of people feel like creating a budget will restrict them from spending money on things they want. This myth will not only take away your opportunity to manage your money effectively, but it will prevent even the responsible spenders from reaching their true saving potential. You have to look at budgeting as something that allows you to spend the money you do have on the things that matter most and are the most important to you. It’s a positive approach, not a negative one.
It’s important for you to realize that budgets are actually meant to have flexibility. You are far more likely to succeed with budgeting if you can adapt to your life changes. You will set limits for certain spending categories, but you also have the ability to add or subtract from those categories. You are able to add to one category when you need to, and subtract from another to make up the difference.
Budgeting doesn’t have to feel like work or a chore. Make it fun, make it personal, and make sure you do what works for you. A budget illustrates your goals, your spending habits, keeps you on track, and allows you to find areas of extra money you didn’t even know where there. We make plans for the important things in our lives like weddings, vacations, holidays, and events. Your money is just as important, make sure you have a plan for it.