What is a budget? Plus 10 budgeting myths BUSTED

One of the hardest things about budgeting is starting to draw up a budget. Not because it’s a hard thing to do, but because you probably believe in one of the budgeting myths that we will be BUSTING below.

Budgeting Myth #1: Budgeting is only for the expenses that you NEED and not your WANTS

One thing that you will need to know and remember from now on is that budgeting is not only for your needs. Budgeting is a system that helps you keep track of your spending habits so that you can see where your money is going.

So whether it is going to needs such as housing (rent/mortgage), utilities, insurance, transportation, and food or whether is going to eating out at restaurants, busing some shoes that you don’t need, or buying a new car.

Budgeting is not only for needs and wants either, what you can also add to your budget is savings.

You can use this section of the budget to save for the new car that you want or a vacation that you want to go on.

This is the part that makes budgeting fun because you do not only have to think about giving out money for your expenses but also planning to buy or plan for stuff in the future that you can pay for in cash.

Imagine going on vacation and having the money to pay for everything in cash, not having to worry about having to pay for that vacation when you get back home.

Budgeting Myth #2: Budgeting is only for people with no money

It is a common belief that budgeting is only for people with no money. But this cannot be further from the truth.

Budgeting is for everyone who wants financial stability. It can only be a good thing to see where your money is going and make smart decisions regarding money.

A budget can help you do this.

So if you were under the impression that budgeting is only for people with no money, now is the time to change your mind regarding that.

Everyone needs to keep track of their income and expenses regardless of how much money they have or make.

So if you do feel like you have enough money and don’t need to budget, below we do outline why you still need a budget when we bust the Budgeting Myth #7: You have a lot of money so you do not have to budget because you will always have money.

Budgeting Myth #3: Budgeting takes a lot of time

Drawing up a budget does not have to take a lot of time, especially in this day and age where you can just download a budget template from the internet.

What can take a lot of time is drawing up your budget for the first time, because if you have reoccurring expenses then you do not have to record those every month, you can just change the amounts if they do change.

In the first month of drawing up your budget, you will have to make a list of all your expenses. This can be done over time if you do not remember all your expenses, so you can just add expenses to the list as you remember.

You will then be able to see the total of your expenses and will be able to see how much you have left over after your expenses.

There are different budgeting methods that you can go through to see which one will work for you.

Budgeting Myth #4: If you are not good at math you cannot draw up a budget

You do not have to be good at math to draw up a budget. A budget is just your income minus your expenses.

Just get your total income and total expenses, punch it into a calculator, and get your answer.

There are no fancy formulas when it comes to budgeting.

The main aim of budgeting is to see your income and expenses and if your income can cover all your expenses.

Yes, some people may have a complicated budgeting system that they use, but that’s for them, that’s what works for them.

You should figure out what works for you, and if you want the simplest form of budgeting with the least amount of math, just draw up a simple budget where you get your total income and subtract your total expenses from that.

Budgeting Myth #5: Drawing up a budget causes you to deprive yourself of nice stuff

Drawing up a budget can make you get nice stuff in a stress-free way. Because you have a budget, you can outline all your needs and wants.

Since you included your ‘nice stuff’ under your wants in your budget, you will be able to enjoy it stress-free, knowing that the necessities are already taken care of and you can now enjoy your ‘nice stuff’ in peace.

If something that you want to do turns out to cost an amount of money that is a bit out of your budget, you can then save up for this thing so that you do not have to pay for it all at once when you do not have the money and then having to stress about not being able to pay for expenses that are a necessity.

Hence why you do not have to deprive yourself of anything you want to have or to do, you just need a tiny bit of self-control for a short while to enjoy anything you want stress-free.

Budgeting Myth #6: You do not have enough money to budget

If you think that you do not have enough money to budget, you are in the perfect place in your life to start a budget.

The reason for this is that you will then be able to see where all your money is going and where you may want to cut some unnecessary expenses.

To have a visual representation of where your money is going is a good way for you to see why you may not have enough money, or why you may THINK you do not have enough money.

Just think about it, you will not lose anything when drawing up a budget, so why not try it as it can help you have a clear view of where your money is going?

You may see that you have more money left over after you cover your daily or monthly necessities and then you can move on to savings or wants.

Budgeting Myth #7: You have a lot of money so you do not have to budget because you will always have money

Budgeting does not mean that you are restricted from spending as much money as you want. It helps you to prioritize what you spend money on so that you can be stress-free.

If you do have enough money to do everything else then you are allowed to spend money on that as well.

Drawing up a budget should be a fun activity to do when you have a lot of money. This will help you keep track of how much money you’re making and spending.

Yes, you may always have money, but what if you don’t? it is always a good idea to have some money in savings for a rainy day.

You can add one line to your budget for savings. Imagine how stress-free it can be to have that safety, knowing that you have that money put away for when something unexpected happens.

Budgeting Myth #8: Budgeting does not work because unexpected expenses can pop up

Budgeting is also to prepare yourself for when unexpected expenses pop up.

It can be as easy as adding one line to your budget for savings. This will be an expense at the time for you but it is money that you will have access to when you’re in a pinch.

Having a line for savings in your budget means that you can consistently put money away for when unexpected expenses pop up.

The fact that unexpected expenses popped up in your head as a reason why budgeting is not for you means that this is something that stresses you out.

So one way to deal with this would be to put away money every month so that you can have that money to access whenever you need it.

Wouldn’t you feel more stress-free knowing that you have the money for any expenses that may pop up?

Budgeting Myth #9: Budgeting is only for expenses and not savings

A budget is not only for expenses. Yes, the most basic budget is to line out your income and expenses and deduct your expenses from your income.

All you have to do then is to add one line for your savings and put in an amount that you will then put away in a savings account.

Technically this is not an expense, but this is money that you are not able to spend at the moment so you can add it under expenses for now.

This is when you have an easy and basic budget. If not, you can have a section in your budget for savings and set this money aside for your savings.

Budgeting Myth #10: You can budget in your head

Some people can keep a budget in their heads, but most can not do that.

Having a budget holds you accountable and helps you reach your goals. So it is always a good idea to write down your budget so you can have somewhere where you can tick off what you have done and what you still need to do.

Budgeting in your head can also make you overspend because you do not have a way to track what you can spend and what you cannot spend.

If you want to be serious about having a budget, budgeting in your head is a no-go.

You will have to set out the time to draw up a proper budget, outlining your income and expenses, and keeping track of your spending.