Budgeting is a fantastic technique to help you manage your money in a better way. It is a simple statement prepared on the basis of your earnings and expenses. It gives you a fair idea of where you spend, how much you spend and where you can curtail your expenses.
However, it is a distressing fact that many people shy away from budgeting. They think of budgeting as a dull and inconsequential task. There are certain myths ingrained deep into their minds. It is necessary to dispel these top 5 myths and show them how budgeting can work wonders if it is done correctly.
Myth 1- I do not need a budget
Fact- Yes, you do need a budget. Keeping an eye on your income and expenses makes sure you put your money to best use. Simple budgeting helps you cut down the unnecessary expenses and put that money in a productive avenue. For example if you spend a lot on eating out, you can put away that money for planning a family holiday instead.
Myth 2- Budgeting needs me to be a math wizard
Fact- Budgeting is a straightforward task that needs you to use common sense. The fundamentals say that the expenses should not exceed the income. A part of income should go into savings and provisions for contingencies. This way you prevent yourself from becoming debt-ridden. Nowadays there are user-friendly budgeting softwares available over the internet to help you keep a tab on your income and expenses. You do not need to be a math wizard but just good at following instructions.
Myth 3- I am safe
Fact- Life is uncertain and nobody is safe. Everyone runs a risk of falling into troubles. Events like job loss, illness, accident, disability, huge unexpected expenses can raise their head at any point of time. It’s better to be prepared instead of fidgeting around later on and end up making wrong decisions. Budgeting helps you save and make provisions for contingency funds as well.
Myth 4- I do not need big things in life
Fact- People who think they do not need anything big in life lack motivation to help them save money. We as humans tend to have changing perceptions from time to time. Today you may not want to buy a house because you stay in Chicago where renting is the better option. Later on you may want to move out to rural Florida where owning a home is cheap and you may wish you had savings to put into the down payment. So it’s always better to have some money in hand to fulfill such requirements in future.
Myth 5- Budgeting demands sacrifices
Fact- Budgeting does not need you to deprive yourself of essentials or make you feel the pinch for every purchase. The bottom-line of budgeting is that you save some part of your income every month so that you can have better things with it as well as face the uncertainties of life. The least you can do is stay out of the debt trap.
So these are the top 5 myths and the facts associated with budgeting. Budgeting is an uncomplicated tool that doesn’t need you to be good at number crunching or deprive yourself of the things you need. It just enables you to have a control over your finances for a better tomorrow.