5 Common budgeting myths

By glblguy

My wife and I have been living on a budget for a little over two years now. The first few months were a little frustrating as we got used to the process and learned a few things but since then we don’t even really think about it that much. As a result, we don’t overdraft our accounts, we see our debt consistently going down, and our savings going up.

The best part about budgeting is that it significantly reduced our stress. We frankly don’t stress about our money anymore. We allocate enough to pay our bills, allocate enough to grow our savings, plan for upcoming expenses, and know where each and every dollar goes. We used to worry about how we would pay our bills or upcoming expenses. Living on a budget removed that worry from us.

I’m surprised at the number of people I encounter who don’t budget. When I’ve asked them why, I’ve received the same types of responses and all of them are myths:

Budgeting is too hard

Budgeting is as simple or hard as you make it. For some reason, people seems to have this idea that you have to utilize this overly complex spreadsheet and complex mathematical formulas in order to budget. That’s simple not true. To budget you need to know how to add, subtract and/or use a calculator.

The most simple and easiest budget is an 8×11 sheet of paper. List and total your income at the top, just below that list and total your expenses. Subtract the difference and it should be zero. If the difference is negative, reduce your expenses or increase your income. If the difference is positive, congratulations, you spend less than you earn! Add the difference to your savings or debt snowball until the total difference is zero.

That’s it. You just created a budget. Of course there are more automated means as well, like the spreadsheet I use. There are even a number of software programs specifically targeted at budgeting. My personal favorite is You Need a Budget.

Budgeting is for poor people – I don’t need a budget

Sure you do, you just don’t know it. Everyone needs a plan and a way of tracking and managing your expenses regardless of how much you make. Even major corporations that are highly profitable like Apple, Microsoft, GE, etc have budgets.

Budgeting allows you to see where your money is going and make better choices about what you can do with that money. It’s about optimizing how you spend it. Regardless of how much or how little you make, making smart choices about each dollar you earn and spend is smart. A budget allows you to do this.

Budgeting is too time consuming

I always laugh when I hear this one. This is just not true and is generally said by someone who hasn’t ever done a person and would therefore no know how long it takes or it’s from someone who is trying to budget but doesn’t understand how.

Using an 8×11 sheet of paper, you can make a budget in less than 15 minutes. The trick is to have all the info in front of you and to go into the budgeting process knowing the first few budgets you do aren’t going to work out perfectly. Until you start budgeting, it’s difficult to know exactly how much you spend each month. Therefore it’s difficult to know how much to allocate to each category. Once you budget for a few months, you’ll know.

I budget using a combination of my own spreadsheet and You Need a Budget. It takes my wife and I all of 10 minutes to do our budget for the upcoming month, and then about 5-10 minutes every other day or so to quickly update it. If you don’t have 5-10 minutes a day to dedicate to your finances, you have much bigger problems to worry about.

Budgeting is too controlling

I would argue the exact opposite. Budgeting gives you freedom. Freedom from worrying. Ever go to the grocery store or ATM and say that little prayer in your head: “God, please, please,  please don’t let it reject. Please let me have enough to cover this.”  I have been there far too many times in the past. But no more. With a budget, I know exactly how much money I have and I never worry about it. I can go shopping, to the ATM, and on vacation without fretting about whether I have enough money or not.

But what if something unexpected happens? The bank screws up, your account gets over drafted, or someone steals your debit card? That’s why I have a fully funded emergency fund that I built my allocated money in my budget to fund it each month.

Budgeting is for people with fixed incomes

Sure, but it’s for people with variable incomes as well. In fact, people that live on variable incomes are the ones that need to budget the most. Budgeting on a variable income is different though. Lynnae from Being Frugal has a great article on how to budget with an irregular income.

Photo by: Torley

20 Responses (including trackbacks) to “5 Common budgeting myths”

  1. Laura Says:

    Having a budget has empowered me to take control of other parts of my finances.

  2. Miranda Says:

    I love that a budget can help you see where everything is going. My husband was very surprised when I made him look at a budget I had created using personal finance software. He didn’t really “get” where all the money was going until he saw it right there, in an easy-to-read graph, how much we were spending on entertainment and eating out.

  3. Paul Says:

    Your links to YNAB are broken (I think you misspelled your domain name).

  4. Mrs. Micah Says:

    Overall, I think not budgeting is much more frightening than budgeting. You have to rely entirely on guesswork and keeping a mental tally (unless you do some rudimentary budgeting by keeping an eye on your accounts and planning what you’re going to spend). Keeping it all in your head can feel overwhelming, at least if you’re me…

  5. Trixie Says:


    I agree completely. Bugeting is not wrought with as many problems as most people thing. I also like what Mrs. Micah said about it being more frightening to NOT budget than to budget.

    My husband and I really enjoy haveing a budget — WE control the budget and our money. It does not control us.

    Take Care,


  6. glblguy Says:

    @Paul – Thanks, got it fixed. Typing URLs at 5:00am before coffee is hard ;-)

  7. No Debt Plan Says:

    Budgeting is awesome. I get a kick out of budgeting and seeing the right accounts grow. :) I wish everyone felt the same way!

  8. Lin Burress Says:

    Making and sticking to a budget just makes sense for everyone regardless of income level, and it’s important for parents to teach their children/teens how to make a budget so that once they’re out on their own and leading their own lives, grown children will have the knowledge and skills necessary to be financially independent.

  9. Curt Says:

    These are but just a few of the excuses people use to avoid the discipline of budgeting. Yet, budgeting is one of the most productive tools to manage personal finance and increase personal wealth.

  10. BJ Says:

    I used everyone of those excuses before I finally broke down and said “enough.” My only regret now is that I didn’t start to budget sooner.

  11. Eugene Says:

    I am seaching for some idea to write in my blog… somehow come to your blog. best of luck. Eugene

  12. Bill R. Says:

    I always encounter customers of our bank that believe these (plus a few more). I think the biggest barrier is just getting started.

    I think the biggest problem is that “ignorance is bliss” and many are reluctant to open up what they consider a Pandora’s Box. Next “it’s a lot of work”(/time consuming). I think the other four point factor in afterward…

    Thanks for a good post.

  13. ChristianPF Says:

    I completely agree about what you said about it reducing stress. We have experienced the exact same thing. Paying bills is ALMOST fun and when unplanned expenses come up we often have money budgeted for them. It really does make life a lot easier…

  14. clare Says:

    Budgeting is essential and really does take away a lot of headaches. we have a budget for our household expenditure and then we also save separately for Christmas and holidays. We have everything set up by standing order so that on pay day all of the money comes out of our account – what’s left we can spend on what we like that month.

  15. The Debt Helper Says:

    Budgeting is for poor people – I don’t need a budget – This is a classic myth and I’m glad you mentioned it in your post. I think that this is about cultural aspirations those on higher incomes often feel that they will some how be judged if they admit to having a budget, but that is just madness. Having a budget actually creates financial freedom in my opinion and releases people from the stress of continually going overdrawn and worrying about whether they have enough in their account to meet another bill.

  16. Make Friends, Earn Money Says:

    Some excellent points you make. Budgeting can be time consuming the first time you do it, but i find it takes around 30 minutes per month to complete our househol budget, which is in my opinion a good investment.

  17. Frank Says:

    I agree with all of these points. I think the only thing I’d have said differently (though I think I understand why you said it) is that it’s considered an essential part of a business. There is a entire division in all companies devoted to making sure the company stays “in the black” and making recommendations to make that happen, either to increase the income or decrease the expenses. You say “even…corporations that are highly profitable…” I’d say that a budget is what allows them to be profitable. They know what they can spend on marketing and research and staff salaries.