Many of us have some type of money story which can translate to several budgeting myths.
A money story is a personal narrative or script about money and finances. It’s a collection of your thoughts, feelings, attitude, and beliefs related to money and can include generational, cultural, or passed down beliefs.
Most people’s money story started early. It started forming as a child and encompasses the many memories surrounding money. It may include the arguments you recall because of strained finances in the home, your exposure to how money was handled in your household, and the conversations that surrounded it.
These experiences form your story which influences your behavior. Because money is not a required topic of discussion informal education, many of us are forced to learn about money from our family, peers, or by self-education. This can lead to a lot of misinformation and negative beliefs and attitudes.
A budget is a major foundational tool for managing your money but for many budgeting has a negative connotation despite its many benefits. These limiting beliefs can hold you back from achieving financial success. By identifying these money beliefs, you can begin taking back control of your spending and other financial habits.
Below is a list of budgeting myths you may have told yourself and the truth behind them.
MYTH: Having a budget will make me feel bad or ashamed.
The best decision I made in my financial freedom journey was the decision to start budgeting. Before having a budget, I found myself feeling guilty about the money I was spending on myself, including leisure activities.
It wasn’t until I established a budget that the weight of shame was lifted. Because a budget is a financial plan for money, it can allow you to create a plan and be ok with the decision that is made, including personal pleasures.
Giving money an assignment can free you from burden or shame when you know you are being responsible and that the money you use for yourself is planned and assigned.
Budgeting tip:
Create a line-item specifically dedicated to yourself. Pick an amount you’re comfortable with spending each month (you can adjust the amount as you see fit). Use this to spend on anything your heart desires as long as it’s within the budget.
MYTH: It won’t be helpful
Budgeting provides awareness and insight and helps with prioritizing spending, which can help you reach your goals faster. It can also help you get ahead by planning for certain expenses, leaving fewer surprises and negative impacts on your finances.
Planning your expenses decreases the amount of stress you will experience because you know where your money is going. A bonus is that budgeting gives you control of your finances.
You end up learning a lot from your budget as you use it throughout the year. You will have a better understanding of your habits, your ability to establish goals and it will allow you to examine your expenses. Budgets will make you better at prioritizing and understanding your wants and needs.
MYTH: It has too many restrictions
One of the biggest advantages of budgeting is that you set your limits. Budgeting can be as strict or flexible as you want. You can adjust planned expenses based on your needs and wants. You can move money between categories as you need to throughout the month.
You can also plan for additional expenses and or decrease your expenses to reach goals. You are the master of your budget; you determine your restrictions based on your lifestyle and goals.
MYTH: It is complicated
You don’t need much to budget. It can be as simple or as sophisticated as you want it to be. There are several different types of budgets to use based on your preference and personality.
If you like simplicity and are old school, you can use pen and paper or a downloadable template. If you like spreadsheets you can use excel or google sheets. If you like a more hands-off approach and love technology, you can use an app.
There are also a variety of budgeting methods that range from using cash envelopes to the 50/30/20 Rule where you budget 50% of your income on needs, 30% on wants, and 20% on savings or debt.
Budgeting can be as much of a personal experience as you would like.
MYTH: It means I’m broke
The term “I’m on a budget” is sometimes used as a translation for being broke. The reality is deciding to budget does not make you broke. It makes you intentional. Making the decision to budget is a decision to take control of your life and finances. It empowers you to work towards riches and freedom.
Most financially independent people know where their money goes. They tell it what to do and work towards their financial goals using tools like a budget to achieve them.
While you assess your money story it is important to remember that a budget is not a burden of restriction and denial. It is a powerful tool that can help you bring you freedom. Freedom from debt, freedom to choose, and freedom to live the life you want.
Assess your money story to identify budgeting myths that may be holding you back.
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