When it comes to improving your personal financial situation, there are few tools more valuable than the right budget. If you want to build up a net worth like Steph Curry, it isn’t necessarily impossible (though unlikely). A good budgeting strategy can transform your life, giving you more control over the money you earn, so you’re less likely to lose sleep over your spending habits. Unfortunately, budgeting doesn’t come easily to many people. It’s hard to convince yourself that you need to keep a close eye on every penny that comes into your bank account or goes out of it. On top of that, to make things even more confusing, there are some myths out there that can affect the way you think about budgeting.
Here, we’re going to busts 3 crucial budgeting myths so that you can get to the truth of your personal finance strategy.
Myth 1: Budgets Need to be Detailed
The more you know about your incoming and outgoing expenses, the easier it is to make budgeting decisions. That much is true. However, that doesn’t necessarily mean that your budget has to be overly detailed and complex. If having a spreadsheet with countless items to tick through at the end of each month works best for you, then that’s fine. However, if you just want a simple way to make sure that you’re not spending too much, try using the 50/30/20 model, where you spend half of your income on bills, and 30% on the things you want. The other 20% goes to savings – it’s that simple.
Myth 2: You Can’t Have any Wiggle Room
It’s essential to be strict with yourself when it comes to budgeting. You can’t simply ignore your plan every time you want to buy a new game or a new pair of shoes. But there will be times in life when you need to give yourself some wiggle room too. For instance, it’s no good telling yourself that you can’t have any space for fun in your budget – even if you’re trying to save as much cash as possible. If you don’t give yourself any discretionary spending allowance, then you’re going to drive yourself insane. Additionally, remember that you might need to adjust your budget at time to allow for unexpected expenses or fees that you didn’t think about when you’re planning at the start of the month.
Myth 3: Budgets are Time Consuming
Finally, budgeting doesn’t have to take over your entire life to be effective. Sometimes, all you need to do is keep an eye on your expenses by checking your bank statements once a month. You can even download apps today that allow you to keep a closer watch on how you’re doing with your savings goals and your expenses. Budgeting doesn’t have to be a nightmare or an exhausting experience that has you dreading every statement you get from the credit card company. Used correctly, a budget can be a source of freedom and a way to make sure that you’re not over-spending in any part of your life. If your budgeting strategy is getting you down, it might be time to consider a different approach.
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