4 Myths About Budgeting

Don't let these misconceptions about budgeting prevent you from taking control over your money.

Budgeting is something that everyone should do, but many people don't. There are many reasons for not making a budget, but unfortunately, sometimes it's misconceptions about the budgeting process that prevent people from creating this important financial document.

The good news is, learning the truth about these common budgeting myths may prompt you to make a budget that you can stick to. Here are four facts to correct common misunderstandings about the budgeting process.

1. Making a budget is difficult and time consuming

Budgeting can be a challenge the first time you make one -- but it doesn't have to be.

If you want to manually make a budget using a spreadsheet, it's going to take a little bit more effort. But usually once you get your initial framework underway, you can adjust your budget quickly and easily in a matter of minutes.

There are also a lot of great budgeting apps out there that walk you through the process. Often, making your budget is just a matter of linking your financial accounts, answering a few simple questions about your preferred spending, and letting the software do much of the work for you.

Spending a short time and a little effort to make a budget that you can tweak and live on for years to come is well worth it.

2. Budgets are impossible to live on

Another big misconception is that it's really difficult or even impossible to live on a budget. You may believe this if you've tried to budget before and failed, or if you find yourself facing a host of unexpected expenses that you aren't sure how to budget for.

The reality is, budgets are only impossible to live on if you make them unrealistic. If you track your spending for 30 days before making a budget and make reasonable, sustainable cuts to carefully considered spending categories, you should find sticking to your budget isn't much of a challenge at all.

That's especially true if you budget in some extra money each month for unexpected expenses so you have cash at the ready and don't have to reach for a credit card to cover them.

3. Budgets are too restrictive

Many people avoid making a budget because they feel like doing so will be too limiting. After all, it may not sound fun to live with rigid restrictions on where you can spend your dollars -- even if you're the one who puts those restrictions in place.

The good news is, if you don't want a budget that's extremely detailed and sets strict spending limits for each type of spending, you don't have to make that type of budget. There are lots of different budgeting methods to help you create a spending plan.

A 50/30/20 approach could work well for you if you chafe at the idea of being told you can only spend $100 a month on clothes or $200 on dining out. With this type of budget, you save 20% of your income, spend 30% on whatever you want, and keep fixed costs to 50%. Since you're working with broad categories, there's a lot less limitations that you have to live by.

Of course, some people like the idea of allocating every dollar of their income for a specific purpose, and that's OK too.

4. Budgets aren't fun

If you have bought into the myth that budgeting isn't fun, it's time to change your mindset. The reality is that budgeting allows you to use your money as wisely as possible so you get the absolute most value out of it.

It's a process that allows you to make sure you're hitting goals you really care about, whether that's early retirement or traveling the world. And when you make your budget, you can make sure you're setting aside money to spend on things you enjoy guilt-free since they'll be worked right into your budget. What could be more fun than that?

Now that you know the truth about these four budgeting myths, hopefully you'll be inspired to work on your budget today. Once you've found a system that works and you see how enjoyable it is to have your personal finances in order, hopefully you'll never go back to living without a budget again.