It’s the first day of the month, which means today is the perfect time to start a budget.
Honestly, any day is a great day to decide to take control of your finances. But I’m going to let you in on a little secret… unless you’re a high earner or stand to inherit a large sum of money, starting a budget is the best way to improve your financial situation.
Now you’re probably thinking, “If budgeting is the path to financial stability, then why don’t more people have one?”
The problem is that budgeting has gotten a bad reputation. This is ironic when you consider that a budget is simply a picture of your financial situation at any given time. So let’s dig into the myths about budgeting that are keeping people stuck.
Budgeting is hard
Budgeting doesn’t have to be hard. You can start with a basic spreadsheet or use software, like You Need A Budget, that helps you track your income and expenses and plan for the future. The purpose of a budget is simply to keep track of money that is coming in and going out.
Budgeting is limiting
A budget shows you whether you have money to make a purchase. Can you still buy something even if you don’t have money for it? Sure. But that means you’re going into debt. Your budget helps you make informed decisions before you purchase.
I don’t make enough money to budget
This is one of the most damaging myths out there. If you don’t make a lot of money, you really need to know where the money you do make is going. Starting a budget will help you see your financial situation more clearly and might even help you start to get traction toward financial stability.
I’m doing okay
Many people don’t have a clear picture of their financial situation. They buy something and then figure out how to pay for it later. The average American household carries over $5000 of credit card debt, which doesn’t include student loan debt or auto loans. Unless you know your numbers, it’s difficult to know whether you’re actually doing ok.
Believing these budgeting myths isn’t going to help make progress toward financial stability, so before the day slips away, take some time to make your June budget. After all, it’s just information.