How long has it been since you sat down with a pen and paper to plan your budget?
Budgeting far more important than you think. It is a tool for financial planning that helps you spend wisely, save diligently and have enough money left each month to invest in assets. Sadly, most people become victims of backward thinking that keeps them poor.
There are myths about budgeting that keep people from taking their finances in their own hands and lead their life in the direction they want it to go. Clearing your doubts about budgeting and busting such myths is the main purpose of this post.
Here are a few shocking myths about budgeting.
1. Budgeting is time-consuming
This is a serious concern for a newbie budgeteer. Someone who has never performed an audit of their finances would naturally believe that thinking about all your future expenses and writing it down in an excel sheet is a major task. But it is further from the truth.
In today’s world, you do not have to rely on the old school way of budgeting; although budgeting the old-fashioned will also do the job. There are apps available for phone, that do everything without you having to intervene.
Apps like Mint track your expenses and compare them against a budget that you have initially set. lt categorizes your spendings and offers you weekly/monthly reports on your phone. It is also equipped with VeriSign security scanning, so you have to worry about data theft.
2. Budgeting is poor people
This is another myth about budgeting that a select middle-class people believe to be true. Someone who lives paycheck to paycheck cannot perceive the idea of planning your expenses; as they spend all their monthly income in paying bills, buying things they don’t need and investing in get-rich-quick schemes. I know I am massively generalizing but someone who believes that budgeting is only for people needs a reality check.
3. The all or nothing mentality
Perfectionism is the root cause behind inaction. The belief that budgeting needs to very detailed and precise is certainly not true. It is true that accountants(while budgeting for an organization) use complex software and create reports that may make a newbie budgeteers puke. But creating a personal budget is not the same.
Just make a list of “Fixed Expenses” and “Flexible Expenses“. Things like rent, cable bill, phone bill, grocery store bill, etc come under “Fixed Expenses”. You already know how much you need to spend. Likewise, hospital bills, hosting surprise parties, etc come unused “Flexible Expenses“. It is as simple as that.
It does not matter what budgeting technique you use. Nothing good can come from getting riled up in finding the best ways to budget. Whether you use Mint or a spreadsheet or a piece of paper, stick to it.
You will only know how successful you are the end of the month when you will count the extra cash that you can now save for the future.