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Budgeting is a potent habit that helps set priorities and goals, establish financial milestones, and track expenses on a daily basis. However, there are a lot of people who think that budgeting is too hard or useless practice to integrate into their daily routine. Here’s a compilation of the top budgeting myths debunked, which will prove that budgeting is essential for your financial security.
1. Budgeting is time-consuming
Do you know what else is time-consuming? Watching your favorite series on Netflix or playing Candy Crash on your smartphone. Budgeting is a question of priorities. By dedicating a few hours a month, you will be able to set your financial goals, evaluate your expenses, and make necessary changes in your daily spending. If you want to set up an emergency fund and reach your short- and long-term financial goals, then it’s high time to integrate budgeting into your monthly routine.
2. Budgeting is not for me
The truth is that budgeting is a practice that is beneficial for everyone. If you’re short on money, tracking your expenses will help to repay your personal or payday loan from companies like Payday Depot, set emergency funds, and cover other necessities. Even if you’re earning enough to cover your expenses with money left over, budgeting will help you maximize your savings and reach long-term financial goals.
3. Budgeting is for math geniuses
Luckily, budgeting doesn’t require you to be a math whiz. Some basic third-grade math skills are enough to start setting up your budget. You will be able to calculate your net income (basically, your monthly earnings less taxes), list your monthly expenses, and add other relevant details. There are multiple ways to track your budget. If you’re old-school, you can write the budgeting details on the paper. We recommend you simplify and mechanize the process by using Microsoft Excel’s templates and various apps.
4. Budgeting is restrictive
Budgeting is often associated with frugality and cutting back on unnecessary expenses like entertainment, vacations, and going out to eat. The truth is that budgeting is aimed at tracking your expenses, and shows you a more conscious approach to money-spending. Therefore, it doesn’t mean that you will never go on vacation or visit a music festival. All you have to do is allocate a certain amount each month for fun stuff.
5. Budgeting is the same as tracking spending
Tracking your expenses is a great starting point, but it is not the same as setting up a budget. While budgeting is your goal for a future month, tracking your spending is a post-factum activity — something that has already happened. Basically, budgeting makes you plan in advance and be more conscious of your finances.
There are many more budgeting misconceptions that are not restricted to the ones listed above, such as the notion that only disciplined individuals can create a budget or that budgeting is not important if you are debt-free. The fact is that budgeting is a powerful tool that will help you arrange emergency funds, attain your short- and long-term financial goals, and be conscious of your spending.