Anytime there’s a big change in your home, family or career, it’s a good time to look at the foundation of your financial plan: your budget.
Everyone needs a budget. It doesn’t matter how much or how little you earn, or how boring it sounds – you do need one!
I want to break down some of the biggest budget myths I hear about, and maybe convince you that it’s well worth your time and energy to create one ASAP.
Budget Myths 1: I make too much (or too little) to budget
Fun fact: Budgets have absolutely nothing to do with how much money you make.
Some people think they can’t budget at all because they don’t have enough money coming in to manage. Others think you don’t need to budget once you earn a certain amount.
But the truth is that all money should be managed. If you’re savvy with your money, you can grow a fortune on a moderate income. If you’re reckless with your money, you can be poor on a substantial income.
A budget is just a plan for your money, and that’s something that everyone should have.
Budget Myths 2: Bringing up budgeting will start an argument
It’s true that money is often a big point of contention for people, but it doesn’t have to be. It’s not usually the budget itself that makes people nervous, it’s facing their money mistakes (and those of their partner) head-on.
It can be uncomfortable to lay out your whole money situation, especially if you know you haven’t been managing your finances as well as you’d like to. But sitting down, looking at your statements, opening the bills, tallying up debts…that’s the starting point for getting your money under control.
If you’re worried about addressing money with your significant other, make a pact beforehand that you’re not going to judge each other’s past mistakes or fight about them. Instead, you’re going to have an honest discussion about your current situation, your goals, and your plan to move forward.
Budget Myth 3: Budgets are restrictive
So many people avoid making a budget because they feel like they suddenly won’t be allowed to spend money.
The truth is, budgets give you the freedom to spend money without guilt.
Yes, it might have been easier to blow money without paying attention to your account, but that rarely ends well.
When you come up with a plan for your money, you might be surprised to find that you have a little wiggle room to budget for the things you love. Those purchases become a reward instead of a regret.
Budget Myth 4: Budgets are too hard to stick to
I’d be willing to bet most people have tried a budget or two, especially around New Year’s. But as time goes on, things come up, and the budget is forgotten.
I have good news and bad news about that.
The bad news is…you’re going to need to try again if you want a stable financial plan.
The good news is, there are so many ways to budget. You can use apps, an envelope system, different online accounts, spreadsheets, accountability partners…the list goes on and on.
Think about what did, and did not, work for you in the past.
Is your weak point that you don’t check your account often enough? There are banks and apps that will text you your account balance daily.
You spend your money faster than you save it? Set up automatic deposits to move that money for you.
You hate tracking and categorizing your spending? There are tons of really great apps that do that for you.
Whatever you need to make your budgeting a success, it’s available. But the most important factor is understanding the importance of actively managing your finances, and sticking to a system.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.