9 Myths About Budgeting
For most, the word budgeting sends a shiver down the spine from past or maybe even current trauma. I get it.
Budgeting, or the planning of your income and expenses, tends to be the stage that involves the culmination of your history with money (including financial trauma), values and beliefs, your shortfalls, financial goals and more.
However, there seems to be many misconceptions around budgeting.
Whether you’ve tried a traditional/zero-based budget, reverse budget (paying yourself first), or no budget at all in the past I want to debunk some popular myths around budgeting to hopefully give you a new and fresh perspective.
It's too time consuming
This is perhaps one of the biggest arguments used to justify not budgeting. I won't lie, if budgeting is a fairly new concept or process for you then there will be a learning curve which will result in a larger time commitment up front.
The good news is that the more you do it, as with anything else, you'll become better and faster at it. To master anything it takes consistent work and concentration. Once you begin to master budgeting you'll actually find that it's time well spent and that you have a huge return on time invested.
On the other hand, not budgeting actually costs you money in the form of time that was spent to earn that money. Although budgeting will require an investment of time up front, and the gradually, the process will save you time, and consequently money, over the long haul.
Invest the time now so that you don’t have to invest significantly more time later!
At the very least, you should be doing a reverse budget since it’s the most time friendly option.
It's too restricting/depriving
Another core myth that deters many from budgeting is the thought of not being able to live your life. Those on the outside looking in at budgeting see that they would have to give up everything. This couldn't be further from the truth.
The core friction here is that those same individuals don't want to plan and live with self-appointed boundaries so they can reach their goals and priorities. Long-term goals and short-term pleasures will always be at odds with one another.
The truth is that you actually have MORE freedom living under a budget because you're fully cognizant and are exercising full control over your money.
I’ll leave you with a piece from Ramit Sethi’s book I Will Teach You To Be Rich on Conscious Spending, “It is, quite simply, about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don’t love.”
It has to be super detailed
When many think of a budget they envision a super detailed sheet with a hundred lines of various categories with everything down to the penny. This doesn't have to be the case.
What's nice about budgeting is that you can be as detailed as you want. I will say the more detailed you are at budgeting and tracking then the better data you'll have when it comes to reviewing or analyzing expenses and trends. But if you want to lump all your utilities together, do it. If you want to lump all your food costs together, do it.
When you're just starting out, it will take a few months to hone in on your expenses and what's realistic.
And truthfully, if you’re doing a reverse budget (paying yourself first) it doesn’t have to be super detailed because you’re only spending what’s left after saving and your needs are taken care of.
It's difficult and I hate math
This is partially true. Budgeting IS difficult....starting off. It's challenging because it forces us to be clear about what we value, a type of clarity that we might not be familiar with.
You know what's consistently difficult? Living paycheck-to-paycheck with no end in sight because you can't seem to get ahead. So yes, budgeting is difficult starting off but it won't always be difficult. Would you rather endure a short-term difficulty or and endless one?
Most budgeting apps require very little arithmetic from us. It's all been automated and streamlined by design.
For example, YNAB will automatically reduce the income you have available to budget as you assign dollars to different categories and it will tell you when you have $0 left to budget. Your primary concern is making sure your dollars make it to what's most important.
Again, if want to spend as little time as possible in the numbers then the reverse budget is probably best for you.
It's boring
What can be boring about investing into your financial future and pursuing financial freedom? Sure, I'll agree that budgeting isn't sexy but I'd argue that everything that moves the needle of progress isn't sexy either.
Don't be like others and confuse slow progress and boredom. Boredom is linked to indifference and apathy. As long as you're clear about your values and priorities you'll be able to remain engaged with your budget.
Beware that you may come across as boring from the view of others, especially if your values start to deviate from theirs.
I can keep track in my head
What were your last 10 transactions across all of your payment methods (bank account/ACH, debit card, credit card, and cash)? When it comes to keeping track of everything mentally, you can't. You just can't.
Also, tracking isn’t budgeting. Tracking is retroactive while budgeting is proactive.
Trust me, leave your mind to do way more important things than trying to be a high volume ledger.
Create the budget and let it do the heavy lifting for you.
I track my spending
When it comes to budgeting, one of the biggest areas I see people fail is when they don't track their expenses. But the opposite is also grounds for failure, not budgeting and only tracking.
Creating the budget is only half the battle, tracking your expenses is the other half.
Either half without the other makes the entire process moot.
If you create the budget but don't track your expenses then you don't know if your spending is aligned with what you value most.
If you don't create a budget and only track your expenses then you aren't prioritizing the important things in your life. There's no structure to your spending. You’re simply in a perpetual state of reacting.
Both need to be done together. This is true even if you’re running a reverse budget. I recommend doing at least an annual audit of spending if using a reverse budget.
"Tell your money where to go or you'll wonder where it went." - John Maxwell
I don't need to budget because I make enough money
The most successful people and corporations in the world don’t ascribe to this so you shouldn’t either. If you “make a lot of money” then you have opportunities and options that others would dream of. Don’t waste those opportunities because you thought planning doesn’t apply to you.
One of the biggest dangers of believing this myth is the susceptibility to lifestyle creep. Lifestyle creep is the tendency of your lifestyle (discretionary expenses) to increase as your income increases. It is inevitable UNLESS you are proactive about budgeting, tracking your expenses, and staying laser focused on your goals.
Remember, a budget is the only way to ensure that your goals will get funded.
I have to be organized to start
I know many individuals become disheartened with the thought of budgeting because they feel they have to show up all “organized” on Day 1. False.
Budgeting IS the organizing process. It’s the process of creating organization around your expenses and priorities. And let me tell you, once you start to get organized some of those negative emotions will start to melt away.
The silver lining about this endeavor is that there’s so much automation today. This means that while you dig into the budgeting process you can set up things to happen in the future without your permission or attention! What a great way to put organization into place!
So don’t let disorganization be a reason to stop you in your tracks.
The above statements are the lies, and not all of them. But I hope the truth has made a compelling case to reconsider budgeting if you’ve written it off. Maybe you've believed in one or many of these but there’s no longer a reason to!
In short, a budget is simply the structure that aids you in achieving your financial goals, dreams, and more. If we don’t have one in place (traditional/zero-based or reverse) we can’t expect to achieve the things we want to. Time matters so I implore you to start one today!
With the truth in hand I hope you're ready to hit the ground budgeting (see what I did there)!
