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9 Budgeting Myths

By: Steve Johnson

2/3/2009 - 159 Comments

The number of Americans that are going to start a family budget this year is going to be a record high.

Maybe I’ll have to make an investment in a company selling budgeting software. 

People don’t budget for fun, they budget because they have to and as soon as they have enough money to stop budgeting, they usually quit.

With that said, here are a few budgeting myths to help you start thinking about how to better understand what a budget can and cannot do for you personal finances.  I got many of these ideas from the book, “Family Financial Workbook” by Larry Burkett.

Myth #1: We have tried a budget once before and it didn’t work.  Truth: New skills are not perfected on the first try. You cannot expect to ride a bike, cook a meat or hit a home run on the first try either.  If you tried budgeting before, you are in a great place to succeed because you can benefit from what didn’t work. You know it takes effort and you can be more determined to make it work this time.

Myth #2: We live on a variable income and therefore cannot budget. Truth: More than anyone, if you have a variables income, than you should budget.  A budget will help you plan your expenses with regard to your whenever your income comes in.

Myth #3: It is impossible to budget for contingencies and unplanned expenses. Truth: Contingencies are one of the most important items to budget for.  We never know what will happen, but you can plan for many of the things that could happen – like an unexpected Dr. Visit or car repair.  The sooner you begin your budget and establish some history of these unplanned expenses, the better you can start predicting them. Companies estimate contingencies that same way.  The entire insurance industry is based on estimating contingencies.

Myth #4: We are not mathematically inclined. Truth: A budget does not involve advanced math like, calculus or geometry.  All you have to know is addition and subtraction, and if you use a computer program or spreadsheet than you wouldn’t even have to do that. If you don’t have any experience or training on using a computer, you should consider taking a few community education classes.

Myth #5: We are not ‘financial’ types. Truth: A budget is the most basic and important financial planning tool that a family can have and you don’t need a business degree or an accounting background to start.  You simply keep track of your income and expenses.

Myth #6: We don’t earn enough income to budget. Truth: You definitely need a budget. The smaller your income, the greater the need for a budget. When you budget, you control spending, which increases your savings and contributes to growing your income.

Myth #7: We earn too much income to worry about a budget. Truth: It’s good to be blessed with an above-average income. A budget can help you be a good steward of your money so that you can plan for your retirement and education of your children.  Unfortunately as incomes rise, so do expenses at the same or greater rate.  Establishing a financial plan will help you keep and grow your income for the benefit of your family and others.

Myth #8: We have money problems because we don’t have enough income. Truth: Usually, financial problems result from overspending.  Not having enough income is a relative term, which is relative to who you are comparing yourself with.  If you compare yourself to someone that has more income they you and you are trying to live their lifestyle, then you may be overspending.  Budgeting can help you locate the area in which spending may be out of control.

Myth #9: We don’t have time to keep track of a budget. Truth: It takes far more time to handle a financial mess than it does to keep your finances in order. Establishing a budget takes less time than you think.  The hard part is getting started.  Once a budget is established it only takes about 15 minutes per week to maintain.

Well, there you have it – nine myths about budgeting.  Rich or poor, budgeting can help your family personal finances in a big way.  I hope these budgeting ideas encourage you to start a family budget today.

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