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As soon as the word ‘budget’ gets mentioned, a whole heap of people start to feel uncomfortable. Somewhere along the line ‘budget’ became a dirty word and people started avoiding it like bread rolls at a keto conference. The problem is, all of these tales about budgeting started emerging and people stopped learning what budgeting is really about. Now there are big budgeting lies that you keep telling yourself because you don’t want to face the financial truth.
These budgeting lies do one thing and one thing only – they stop you from succeeding. They keep you from achieving your financial dreams and they keep you in this place of unease around money. It’s not good.
Here are the crazy lies about budgeting you need to kick to the curb and let go of so you can smash out all of your financial goals.
1 – Budgets Are Only For Those Who Earn Low Income Or Can’t Manage Their Money
I have to admit, this is something I believed for a long, long time. I avoided using a budget because if I did, and if I admitted to using one, then that would be admitting I couldn’t manage my money and that I didn’t earn enough to not worry about money.
But here’s the thing, even the people who do earn enough to ‘not worry’ about money, know exactly how much money they have and how much they spend.
It wasn’t until I made the correlation between managing money in a business and managing money in my life that it all started to make sense. After all, no successful business would EVER survive if they didn’t keep track of their money. Imagine a business not knowing what income they have, or how much their expenses are. So why should we treat our money management in our lives any differently? It’s like having a profit and loss statement for your personal income.
Budgeting isn’t about not being able to manage your money, budgeting IS being able to manage your money.
2 – You Can’t Have Budget Because Your Income Changes All The Time
My income has changed continuously over the last 10 years. I don’t even remember the last time I had to pay periods with the same income. Even working full time, my husband’s income changes each pay period because of shift work, allowances, overtime… there are so many variables.
Which, can make budgeting more challenging, but definitely not impossible. It just means you have to spend an extra 5 minutes each week looking at your budget and working things out. It takes longer to stand in line and wait for your coffee order.
Set yourself a ‘base’ income – work out what the average income you get is, preferably at a level you rarely go under as that can cause more stress. This is your base for working out your budget.
Work out all your ‘must’ expenses and list them out. Each pay cycle add in any new expenses or money commitments. Then when your pay comes in, work out your budget from there. Anything that is left over can go into your savings account.
We also have what we call an ‘overflow’ account. This is where we add a little extra money when we have higher pay periods to help even out our income when we have lower pay periods.
3 – Budgeting Means You’re Going to Have To Start Going Without Things You Want
Again, this was one of the myths I believed for so long. I always thought that having a budget meant that any additional income outside of my basic expenses had to go to savings. I have no idea why I thought this or why I felt like this needed to be the case. I guess it was to do with the whole ‘budgeting is for low income’ type belief and therefore everything had to to go savings.
Regardless, it’s totally not true. In fact, it’s quite the opposite. Budgeting means I can clearly afford the things I want. And if they are higher ticket items, I can budget and save for them.
Our budget includes money for going out for dinners, clothes shopping, buying items we want to buy. If there’s something we want, we simply add it to the budget. If we can afford it that pay cycle, we buy it. If we can’t, we put some money away towards it each pay until we can buy it.
This has allowed us to go on holidays when we would have otherwise thought we couldn’t afford them and save up for big ticket items we would have avoided purchasing before. If anything, we get to buy more things we want with a budget and we are able to do so without fear that we can’t really afford them.
4 – Budgeting Takes Too Much Time and Is Too Complicated
Setting up our budget took about 10 minutes. Updating it each pay cycle takes about 5 minutes. That’s not much time at all. I was using just a traditional pen and paper budget for a long time, but then I started insisting my husband have more to do with the budget. So I switched it over to a Google Spreadsheet so both of us can access it at any time from whatever device we are on. I’ve also managed to set it up so it calculates everything for me saving a few minutes each time.
I have to admit, I love numbers, I love budgets and I love being able to see what money we have coming in and where it goes to. If I’m really honest, I love money (totally not ashamed to admit it). BUT, prior to having a budget I was completely fearful of them and often made them far more complicated in my mind than they had to be.
Your budget can be as simple or as detailed as you need, but it’s still only going to take 10 minutes max to update each pay.
5 – I Have a Budget, I Know How Much I Earn and How Much My Bills Are, I Can Work It Out In My Head
This literally never works. Trust me. As I mentioned I’m a numbers person, I love it. And I’m pretty savvy and intelligent when it comes to how numbers work together, especially money. But there is nothing like seeing everything in front of you, and having it all laid out in black and white (or bright pink if that’s your thing).
There will always be expenses you forget to account for (like your mum’s birthday… whoops) or part savings for things you want to budget for (like a weekend away to the coast). These are difficult to keep track of in your head.
Just take the time, take 5 – 10 minutes each pay and get it all written down.
Plus, you may have a budget, but you probably wrote it 6 months ago and it’s no longer an accurate representation of your situation. Who has the exact same expenses 6 months ago as what they have today? Not me!
6 – You Can Just Use The Same Budget Template As Everyone Else
Wrong, wrong, wrong. This is a surefire way to set yourself up for failure.
Everyone is different, and as such, everyone has different priorities for what they want to spend their money on. Think about it, if you’re a big foodie and love cooking meals, you’re naturally going to spend more money on food than someone who eats basic meals. If you’re a socialite you might spend more money on lunches out than someone who prefers to stay home.
There is no ‘one budget fits all’ model. And this is why I disagree with budgeting models that tell you to spend certain percentages of your budget on certain aspects of your life.
When you get real with your finances, lay everything on the table, and really start to understand what’s important to you and where you spend money, you can have the confidence to create a budget that is specific to you and makes you happy. Which means you’re far more likely to stick with it.
7 – You Only Need To Budget Until You’re Out Of Debt
My husband and I paid off over $120k in debt in around 3 years, but do you think we stopped budgeting once we were debt free? Nope! Absolutely not.
Budgeting should be a natural part of managing your money. Think of it as a ‘profit and loss statement’ for your personal finance as opposed to a budget.
Knowing where your money is coming in and where it’s going is an essential part of managing your money. You can’t grow your wealth if you don’t know what money you have or where it goes.
Plus, keeping track of your finances is a fast way to moving towards your next financial goal, no matter what it is?
If you’re still sceptical and not sure, give budgeting a go. And I mean a real go, just for two months. That’s not too long to commit to but long enough that you’ll be able to see just how much of a difference budgeting and knowing your financial situation can make. I promise it’s worth the few minutes it takes, and you can always do it when waiting in line for your coffee.