5 Budgeting Myths You Need to Unlearn
April 27, 2020
Let’s face it—the act of creating a budget does not have a reputation of being an exhilarating, picture perfect process. If you have attempted budgeting once or twice, you probably ended up closing an excel spreadsheet out of boredom or kicking yourself after some unforeseen card swipes ruined your plans for the month.
The fact of the matter is that budgeting is an incredible tool for karate-chopping your debt and setting up a roadmap for your personal or professional goals. To see budgeting in this light, you must let go of the myths you have taught yourself over the years. We have compiled a list of the most common misconceptions below:
“There is a lot of complex math involved in budgeting and I’m not good with numbers”
One of the most prominent myths we hear mistakes budgeting for honors abstract algebra. If you have a calculator and the skills to assist a 3rd grader with their math homework, you are more than capable of building out a budget! Boiling a budget down to its most basic elements, creating a monthly budget involves only a few elements of math:
- Adding together all the income you make within a month
- Adding together all expenses you have within a month
- Subtracting your expenses from your income
Once you have that math out of the way, it is time for some detective work—what unnecessary expenses can I get rid of? Where do I want my remainder for the month to be?
“Budgeting is time consuming, and I am super busy”
People have this idea in their head that budgeting will take over their calendars if they attempt it even once. The reality is this: setting up an effective budget takes some grunt work in the beginning (tracking your expenses, analyzing possible hidden costs), but once you have set-up the right structure you are good to go! From there, all you will be doing is double checking your math and seeing if you hit your goal or not.
“I have a pretty good idea of what my finances look like in my head”
Maybe some of you out there are advanced-humanoid-super-computers that mentally file every dime you have ever spent, but we would be willing to bet that most of you are not.
People may have a very general understanding of where they are spending their money, but the power of a budget is in uncovering the expenses you might be missing. When every expense in a month is laid out in front you, it is much easier analyze and say “Wow, I had no clue that is how much we spend on takeout” or, “I saved up some money for that golf trip, but forgot about gas and travel.”
“Unexpected expenses always ruin my budget, so it’s not worth it”
A lot of first timers find the process of budgeting very discouraging for this very reason. It is important to remember that a budget is a goal—a moving target to aim for to the best of your abilities. As we all already know, life can get in the way of our plans. Instead of letting this be a hinderance to your budget, build it into your monthly plan!
How does someone plan for the unexpected? It takes a keen eye to realize that some expenses are more predictable than others! For example, being invited to a December wedding should be a moment when alarms are going off for you—the cost of a suit, travel, and a gift may cut into the savings you planned on using for your mom’s Christmas gift!
“I enjoy my life and make good money, so counting every penny is not for me”
First off, a budget is only a restriction on your life if you build it to be that way. Can you save a lot of money by making coffee at home? Absolutely, but maybe a latte and breakfast sandwich from Starbucks is something that brings you joy—that’s fine too! A good budget doesn’t demand that you never step foot in another Starbucks, it sets a fixed Starbucks spending amount so you can enjoy what you love while also allowing your financial standing to improve in other places.
Second, doesn’t matter if you own a fortune 500 company or just a few hundred bucks—all walks of life need a budget. No matter what condition your finances are in, the journey ahead of you will benefit from tracking your income and analyzing your expenses.
Looking to get your finances in order? You don’t have to face it alone! Set up a free consultation with one of Skylight’s financial professionals today.