There are a lot of myths about budgeting that need to be debunked. These budgeting myths are perpetuated in a lot 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. These can prevent you from taking action on something that will help you improve your finances!
Budgets – the Original “Spending Plan”
We 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 you. 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!
Coddling doesn’t help anyone.
YOU are far more capable than you think. Rather than try and “protect” you from things that are difficult – I’m going to 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.
Are you giving words too much Power?
When you give a simple word so much power over your emotions – you’re giving that word too much power over your life.
Allowing simple words to dramatically impact your emotional state, makes it harder to accomplish difficult tasks. Triggering harmful narratives and negative messages about yourself, can also damage your self confidence. Making it less likely for you to overcome the challenges necessary to reach your goals.
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 to think you can 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 a strong initial response can oftentimes be an indicator of something deeper. Something that is 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 stories am I telling myself about budgeting?
- What anxieties, fears or concerns do I have surrounding a budget?
- Where did I pick this thought pattern up?
- How does that make me feel about my ability to overcome difficulties?
- How does that affect my ability to make positive changes in my life?
- What is the truth about budgets?
- How can I replace the negative narrative with something 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 believe the lie that if you can’t say “yes” to every single thing, then you have a scarcity mindset.
No one has an unlimited amount of money to do anything and everything they please.We all have needs and responsibilities that are very much based in reality.
Your 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.
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 “restricted” by your income, which you can and should have a strategy to increase!
Myth 3: I don’t need to budget – I just need a higher income.
No one accidentally becomes wealthy. Those who have built wealth were intentional, and believing this myth 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.
If you can’t manage your current income, what makes you believe you can manage more money, better? Odds are pretty good that if you’re not optimizing your current income, a higher income will not be used in a strategic way.
If you want to be a good steward of more, later. Learn to be a good steward of less, now.
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. Practice makes perfect.
While that might sound frustrating – 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 budgeting isn’t exactly thrilling. But when you view budgeting through the right lens it can be fun!
Your budget is the tool you will use to improve your finances and by extension your life! 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 teach clients how to budget, they often surprise themselves with what is possible for them to accomplish. They learn to put their money to work the right way. How to be intentional, align their spending with their values, and give every dollar a purpose. When they execute that plan and see results, their confidence skyrockets!
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 still find ways to make the task more enjoyable. Incorporate 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!
As you get better at budgeting and more comfortable with it, the process takes less than 30 minutes a week.
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.
Back to the finance gurus 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 in reality is just a budget. 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.
Contrary to this myth most people who are extremely frugal and want to retire early, get too carried away with the numbers. They end up on the other side of the spectrum and need help keeping their 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 only half of the budgeting process. Tracking only lacks the planning aspect which is so critical to success. Just Tracking expenses is a great way to see how you’re spending money, but that alone will not accomplish anything. Which is why we’re not really fans of most budgeting apps. Tracking expenses is really all they do.
If on the other hand you want to be successful you have 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? Take our online course to learn how and get access to the tools we created for our clients.
What other budgeting myths should we debunk? Let us know in the comments.