If you’ve spent any time at all learning about personal finance, you’ve likely heard that you should be creating and following a budget. But for something that seems like common wisdom, far too many people avoid drafting a budget — and usually not for a good reason.
Of the many reasons commonly given for avoiding budgeting, most are founded on myths rather than reality.
Budgeting Takes Too Much Time
One of the most common excuses for not doing anything in life is that “it takes too much time.” While your very first budget may take you a few hours, it’s highly likely that after that, you won’t have to tinker with your budget much at all, except perhaps in response to major changes in your life such as getting married or getting a raise. Some would also argue that taking a bit of time, even a few hours, to get your financial house in order is a small price to pay for the benefits you’ll receive.
Budgets Are Too Constraining
Budgets may seem constraining since you’re limited to what you spend in certain financial categories. However, a properly drafted budget should actually feel liberating. For example, if you really want a daily cup of coffee, you can draft your budget to include this indulgence. It’s true that you might have to make a cut in a different area of your budget, but you’re still in charge of where you want your money to go and what you want to prioritize in your life.
Budgets Are a Waste of Time
Budgets are only a waste of time if you don’t follow them. It’s hardly a waste of time to set yourself on the path to financial success, and that is exactly what a properly drafted budget can provide. Think about the time and effort you put in to maintain the things in your life you prioritize, such as your car, your home or even your hobbies. It’s unlikely that you would consider the time you put in to care for these things “wasted.” The same is true with your budget, which is the roadmap for your financial life.
Budgets Aren’t Realistic
Remember the old adage, “garbage in, garbage out”? The same thing that’s true for computers is also true for budgets. When you create a budget, you can put as many pie-in-the-sky numbers in as you like, but you won’t be doing yourself any favors. The key to a successful budget is utilizing real-world numbers, even if it’s hard to face the financial truth in black and white. If you find that budgeting isn’t realistic, it’s likely due to the numbers that you yourself are using. Start with your actual bank statements and record real-world information about your cash flow if you want to end up with a budget that is indeed realistic.
Budgets Don’t Need To Be Written Down
There’s no way of getting around the fact that a budget that isn’t written down is much more likely to fail than one that is. Although you may think that you have a good handle on your income and expenses, it’s incredibly easy to overlook the “one-time” expenses that invariably continue to pop up. Many people have the same blind spot when it comes to budgeting as they do when trying to diet: It’s only when you write down everything you eat every day that you see things that you might overlook by just trying to remember.
Budgets Are Never Accurate
Some non-budgeters claim that budgets never work because there are always unexpected expenses in the real world. While the second part of that statement is true, a good budget actually accounts for the unexpected. All you have to do when drafting your budget is include a line-item for miscellaneous expenses, in addition to your regular, recurring expenses like rent and insurance payments. You won’t always hit the nail on the head in terms of the exact number, but over the long run, you’ll be able to create a realistic, long-term average for “unexpected expenses.”
Budgets Are Only for People With Low Incomes
A popular myth about budgets is that only those with low income need them. The idea behind this myth is that lower-income people have less space between their income and expenses and therefore are the only ones who need to budget. While it’s true that budgeting can indeed help those with low incomes, higher-income individuals need budgets just as much. In most cases, those earning more also spend more, and the gap between income and expenses can be just as tight as with low-income individuals.
Budgets Limit Your Fun
A commonly cited reason for avoiding budgeting is that “budgets don’t allow me to have any fun.” This concept is a complete myth because the exact opposite is true about a budget. Budgets actually allow you to decide just how much “fun” you want to have — you’ll just have to balance the ledger somewhere else. For example, if it’s important that you take three vacations per year, a good budget will allow you to do it, although the cost might be your daily latte, your eating-out budget or your streaming subscriptions. When you make your budget, it’s important to remember that you can do anything you’d like, you just can’t do everything.
Budgets Require Too Much Math
A budget for an individual or a household shouldn’t be confused with the balance sheet for a Fortune 500 company. For the most part, all you’ll need to successfully create a budget is basic addition and subtraction. If you find the thought of even that too daunting, you can use budgeting software to help you with the math. In other words, “there’s too much math” is not a realistic reason to be avoiding a budget.
Budgeting Doesn’t Help
Tools are only as useful as people allow them to be. If you’re remodeling your house, for example, even a top-of-the-line set of tools isn’t going to get you very far if you don’t use it properly. The same is true with a budget. If you create and follow a budget, it’s almost a certainty that you’ll find it helpful, either in reining in your overall spending or in identifying areas for improvement. Most people who say that budgeting doesn’t help aren’t using their budget properly — or never drafted one in the first place.
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