9 Budgeting Myths – Debunked
There are a lot of myths about budgeting that need to be debunked. These budgeting myths are perpetuated in all sorts of ways. From money conversations and spending pressures in your circles of friends, to advice from family members, and who can overlook the impact of the media.
In general, we still live in an age where using a personal budget has a bad wrap! Even some finance gurus think you should skirt around the concept of budgeting. Instead of helping you outgrow a limited mindset, they coddle it. Calling it a “spending plan” instead, Like you aren’t smart enough to realize that it’s still just a budget.
But we take a different approach. One that’s focused on your So we’re digging deep into the dreaded “B”- word. Debunking many of the budgeting myths that are keeping you from getting the most out of this useful and irreplaceable tool!
Budgets – the Original “Spending Plan”
If there is one thing I have zero patience for, it’s coddling people.
It is my personal belief that YOU are far more capable than you think. Rather than try and “protect” you from things that are difficult – I’d rather show you how to overcome challenges and help you develop a growth mindset.
So when I see Financial Coaches and other professionals calling a Budget a “spending plan” it irks me. Who do they think they’re fooling anyway? It’s still a budget. You’re smarter than that!
As much as I hate to have to say it. If you’ve found yourself calling it a “spending plan” to make yourself feel better, you’re avoiding a bigger problem.
When you give a simple word so much power over your emotions – what are you really saying about yourself? How does that make you feel about your capacity to overcome things that are actually difficult? How does that affect your perception of yourself and your ability to make positive change in your life?
So instead of renaming things to avoid discomfort and make yourself feel warm and fuzzy. Dive into the problem and solve it. Work to understand yourself and grow in your ability to be self aware.
It is easy enough to think you can just avoid or skirt around these things, but I guarantee you that is the wrong approach. It only addresses the issue at a surface level. That is to say that an initial response of strong feelings is oftentimes an indicator of something deeper. Something worth uncovering and understanding so that you can plan accordingly.
So if the word “Budget” makes you uncomfortable, try to understand why it unsettles you.
- What feelings or thoughts does this bring up for me?
- What anxieties, fears or concerns do I have surrounding a budget?
- Where did I pick this thought pattern up?
- What is the truth about budgets?
- How can I replace the negative narrative with what is more positive and true?
Only then will you truly be a master of your money and in full control of your life.
With that said, let’s take a look at some other budgeting myths that could be keeping you stuck.
Myth 1: You only need a budget if you are “broke”.
This could not be further from the truth. Whether you have a lot of money, or very little has nothing to do with whether you need a budget or not.
Using a budget is for people who are INTENTIONAL! Anyone who wants to be a good steward of their income and use their money with purpose, needs to have a budget! Regardless of Income or Net Wealth.
Myth 2: Budgeting is restrictive and creates a scarcity mindset.
“Your budget is not what is limiting you – your mindset is”
Don’t buy into the lie that just because you can’t say “yes” to every single thing, that you have a scarcity mindset.
The facts are these – no one has an unlimited amount of money to do anything and everything they please. Even those who do have insane levels of wealth, aren’t necessarily happier people. But we all have needs and responsibilities that are very much based in reality.
Even still, a budget isn’t focused on what you can’t do. It’s literally the opposite! When you’re budgeting you are making decisions about what you can do with your money. With the added importance of keeping spending within your means.
When used correctly, a budget is a tool that helps you prioritize saving and investing your money first. While assisting you in making spending decisions that help you avoid going into debt. You are only limited or “restricted” by your income. Which again, you can and should have a strategy to increase!
Myth 3: I don’t need to budget – I just need a higher income.
Thinking this way can get you into a lot of trouble.
Yes, increasing your income can make things easier and you can reach your goals faster! In fact, we encourage everyone to have “increase income” as a part of their personal finance strategy.
But if you’re not optimizing the income you already have, odds are pretty good that a higher income will not be used in a strategic way either.
Learning how to be a good steward of less and make the most of what you have is necessary if you want to be a good steward of more later.
Myth 4: I’m not good at budgeting.
No one is naturally good at budgeting! Whether you’re a Math wunderkind, an Economics PhD or a Business Analyst, your personal finances are a different animal!
Budgeting is a skill like any other. With practice, comes perfect.
While that might sound like a bad thing – it’s actually good news! It means you can give yourself permission to fail. You can let go of the need to be perfect and start the learning process now!
Myth 5: Budgeting is boring
OK so this one isn’t entirely a myth.
I confess that budgeting isn’t exactly thrilling. But when you look at it through the right lens, there are ways it can be fun!
Your budget is the tool you will use to improve your life, and if that isn’t exciting for you I don’t know what is! Not kidding. Your budget can surprise you in the best way!
When we’re teaching clients how to budget, it is not uncommon that they surprise themselves with what is possible for them to accomplish. It’s all about learning to put their money to work the right way. When you make an intentional plan and give every dollar a purpose. Then you execute that plan and see results?! It’s the best feeling in the world!
But if you’re still not convinced…you can always make the mundane task more enjoyable. Try incorporating happy little rituals into your budget routine. Pour yourself a cup of tea, grab a snack, turn on some fun music. Put yourself in a positive mindset before taking on a task that you find stressful or uninteresting!
Myth 6: I don’t have to budget to reach Financial Freedom
Opinions aside, I’ve never seen this to be true. Do you think you’re the exception? If so, I would love to hear your strategy. But I bet it involves something that looks a lot like a budget.
Again back to the fin-fluencers who act like a “spending plan” is any different than a budget. They’re just pandering to you for likes. Hoping you will buy their half-baked spreadsheet that is definitely just a budget with a different name. In my opinion – they think you’re mentally weak and they’re trying to cater to you.
But in reality, every single one of the fin-fluencers and finance gurus use what is in all essence, a budget. 100% of those who want to FIRE (Financially Independent – Retire Early) use a budget in some form.
In fact, most of us who are extremely frugal and want to retire early, get too carried away with our numbers and need help keeping our lives in balance. Because believe it or not, you can be too good at saving money.
Myth 7: All I have to do is track expenses.
Strictly tracking expenses is a great way to accomplish nothing. Which is why we’re not really fans of most budgeting apps. Tracking expenses is really all they do. That and push credit card ads.
If on the other hand you want to be successful you need to not only track expenses, but review them and make observations. Most importantly, based on what you observe, create a budget for the next month. Making any necessary adjustments based on the upcoming months special events, holidays, periodic expenses etc.
The magic happens when you take a step back. Compare your planned expenses against what actually happened and identify any changes or improvements that can and need to be made.
Myth 8: If you want a budget to work, you have to track every penny.
This is a great way to drive yourself crazy. It is not a great way to save money. In fact, we don’t track change at all and we suggest you do the same.
We round every expense up to the nearest dollar and call it good. This works in your favor by overstating how much you’ve actually spent. Which helps you spend less in reality. It also means less work for you when you’re balancing your Budget or Cash Flow.
Believe it or not, eventually your spending behaviors become so habitual that you barely need to track your spending at all. This is not a myth – but it does take consistency and time to get to this point.
Myth 9: You need to find the “perfect” budgeting app.
We get the question all of the time – “what is the best budgeting app?” Our answer is always the same – it’s the one you stick to.
Budgeting apps, spreadsheets, even pen and paper will all work if you just stick with it. Sure there are different features, user interfaces etc. But regardless of the one you choose there will always be a learning curve and a habit to build.
So what matters more than which budget app you choose – is if you choose to stick with it.
Are you ready to master Budgeting and take control of your Cash Flow once and for all?
What other budgeting myths should we debunk? Let us know in the comments.