Budgeting gets a bad rap, so most people don’t give it a chance. It’s unfortunate since creating a cash flow plan is one of the best ways we can improve our monthly net income.
There are essentially 10 budget myths that create mental roadblocks and keep us from creating and using a plan. Let’s debunk each of the myths below, so we can develop a successful strategy and become masters of our money.
Myth #1: Budgets Are Boring
Some people don’t want to use budgets because they think they are downright boring. Well, that can be true if you’re not using the right cash flow strategy. If all you’re doing is using your budget to track all of your “have to” spending rather than making goals for your “get to” spending, then creating your budget will be boring.
Budgets are not meant to simply track the ins and outflows of cash, rather they are meant to help you fulfill your financial dreams. In order to make your budget fun, you need to allocate money to your goals, your dreams, the adventures you want to take as a family, and your future.
If money and budgets just aren’t your thing, then maybe being broke and wishing for vacations that will never happen is. Financial freedom doesn’t just happen. You have to make a plan and force it into reality. Make your budget exciting! Design it around your life!
Myth #2: Budgets Are Complicated
One of the reasons people fail to consistently budget is that they make their budget too complicated. Overly complicated budgets kill consistency and prevent people from getting the most out of their dollars.
You don’t need 50 different spending categories. You don’t need a complex Excel spreadsheet. You don’t need a different budget for every store you use. You don’t need to manually track and document every dollar you spend. You don’t need a complicated budget! You need something that works!
For most people, the simpler the budget, the better. With all the free online budgeting platforms available, there’s no sense in manually tracking all of your income and expenses with pen and paper—unless that’s what works for you.
Here’s what I recommend: keep it simple, keep it online, keep it consistent, and keep using it!
Myth #3: Budgets Are Constraining
Another reason people fail to budget is because they believe budgets are too restrictive. Budgets are constraining but they are for more liberating if done properly.
It’s liberating to know how much money you have coming in. It’s liberating to know what you need to do to be able to pay all your bills. It’s liberating to know you’re saving for your goals. It’s liberating to know that you have control over your money!
Those that think budgeting is too constraining think the goal is cut, cut, cut, but that shouldn’t necessarily be the objective. Rather, the goal should be to spend less on things that don’t matter, so you can spend more on what does.
Our primary objective with budgeting should be to allocate our money in ways that are going to bring us and those around us the most happiness possible. The goal is to get more meaning out of our dollars.
Budgeting helps us sacrifice what we don’t really value, so that the things we do value don’t have to become the sacrifice.
Myth #4: Budgets Are For Poor People
Many people think that budgeting is for poor people or at least those in the middle class. This is far from the truth. Everyone should use a budget—whether rich or poor.
Yes, the budget of a multimillionaire is vastly different from a family generating less than $50 thousand a year, but a budget is still important. The dollar amounts, what type of spending categories you use, and how detailed your budget is isn’t nearly as important as allocating your dollars in the most productive ways possible.
Using a budget is one of the greatest ways to ensure we get the most out of our hard earned dollars regardless of how much money we’ve earned. Whether rich or poor, we’ll always fall short of what we could do if we’re not smart with what we do do.
Budgeting is a great equalizer. It helps both the rich, poor, and middle class live with more purpose.
Myth #5: Budgets Are Too Time Consuming
Another reason people fail to budget is because they fall prey to the misconception that budgeting is time consuming. That’s a lie.
If done correctly, budgeting shouldn’t take much time at all.
With the help of online budgeting platforms, you can create a budget in less than 10 minutes. And it only takes a few minutes each week to review your transactions, categorize them accordingly, and ensure you’re properly following your cash flow plan.
Budgeting can take less than an hour a month. That’s about the same amount of time the average Facebook user spends aimlessly scrolling their life away every day!
If you don’t think you have time to budget, then look at how much time social media, pointless internet shopping, or other meaningless activities are sucking from your life.
Creating and using a cash flow plan can add massive amounts of value to your financial freedom, and it costs very little time.
Myth #6: Budgets Just Track Everything You Spend
Some people fail to budget because they think budgeting is all about tracking what you spend. Well, that’s only part of the story. Budgets do help us track our expenses, but that’s not even their primary purpose.
The primary purpose of budgeting is to enable us to become intentional with our money—to give us a tool to command our dollars to be used as we see fit.
Budgeting enables us to be proactive with our money. It helps us solve money related issues before any problems arise. We are able to see where our dollars are going before any of them leave our pocket.
Myth #7: Budgets Are Depressing
Some people argue that budgets are depressing. They can highlight too many problems.
Knowing that financial problems exist isn’t depressing—everyone has them. What’s depressing is having problems and not knowing where they are or how to fix them.
Budgeting helps solve these issues. If you can’t seem to pay down your credit card, or you’re worried about being able to make next month’s rent payment, or you just can’t save for the vacation you’ve been wanting to take, then a cash flow plan can help you identify what’s causing the problem and give you a road map to fix it.
With an effective budget, you’ll know what you can cut back on, where you need to make more, and you’ll be able to identify how to allocate your cash more effectively.
Using a cash flow plan brings hope and a stronger sense of purpose to your financial life.
Myth #8: Budgets Create Conflict
Money is the leading cause of conflict and stress in relationships, so many people try their best to avoid it all together.
But guess what? Money is here to stay and there’s nothing we can do about it.
Like an ostrich, we might be tempted to jab our head in the sand, but just because we can’t see the problem, doesn’t mean it’s gone away.
By using a budget, we put money front and center, which scares most people. But it shouldn’t. By setting a budget, we make money the focal point of a conversation, and we resolve money related conflicts before they ever begin. We agree upfront where our money is going before we ever spend a dime of it.
Budgeting is the proactive solution that helps us avoid money conflicts rather than fighting our way through them.
Myth #9: I Can Budget In My Head
Many people avoid creating a real budget because they suppose they can create and follow a spending plan all in their head.
Now that would be amazing, but a budget in you head is not a real budget at all. It’s a vague idea that you kind of, sort of know what’s going on with your money.
When you keep your “budget” in your head then you miss out on the most powerful benefits of budgeting. You don’t have the same ability to analyze your income and spending. You don’t have the same control over where you allocate your money. You don’t save as much for your most meaningful goals.
Trying to “budget” in your head is a shortcut that’s not worth the cost.
Myth #10: Budgets Are Ineffective
Some people argue that budgets are ineffective since many people fail to use their budget shortly after creating it. That may be true but it’s not the budgets fault. If used correctly, budgets are very effective—it’s individual discipline and strategy that isn’t.
In order to make budgeting as effective as possible, you need to have the correct strategy and system in place. You need a system that enables you to analyze your financial performance so you can improve it.
If you have the proper system and strategy in place, then with the help of your budget, you’ll be able to achieve financial freedom sooner.
Budgets are one of the greatest financial tools we have at our disposal. Unfortunately, many of us don’t use them like we should. Rather than maximize their potential, many of us fall victim to the myths that surround cash flow plans.
Budgets should be exciting and motivating, not boring and debilitating. They should be simple and liberating, not complex and constraining. The should be efficient rather than time consuming. They should clear conflict rather than create it. They should give us a stronger sense of financial purpose rather than be depressing. They should be effective and provide insight that helps us improve financially, rather than a waste of time.
Cash flow plans give us the ability to command our dollars to be used in the ways we see fit. They enable us to be masters over our money.
Create a simple, online budget that enables you to set financial goals and track how much you make, spend, save, give, and invest.
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