A budget is a financial tool that is very useful, especially when it comes to managing your expenses. Yet, many don’t create a budget because they feel it may not help them or that it isn’t worth the effort. Here are 5 budgeting myths you cannot believe in order to profit.

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by 401(K) 2013

You Don’t Need A Budget to Manage Your Spending

The biggest myth about budgeting is that you simply don’t need one to manage your spending. Even those that spend wisely and aren’t frivolous with their purchases can run into problems. This usually occurs when unexpected expenses arise, or you simply want to buy something you wouldn’t normally consider buying. With a budget, you can plan your normal expenses and leave a portion of your income available for emergencies, unexpected purchases, and other things.

It’s Too Difficult to Maintain a Budget

The second myth that prevents most from creating a budget is that it’s too difficult. If you can balance a check book, maintaining a budget shouldn’t be a problem. Plus, there are financial software which lets you easily plan your budget on a computer and calculate expenses. Identifying all your expenses is usually the hardest part of the process. The best way is to take a look at your monthly bills, yearly bills, and purchases (even daily expenses such as coffee or parking fees).

Budgets Are Not Flexible

The biggest concern most have after creating a budget is sticking with it. Some of your expenses need to be met such as the mortgage, utilities, and groceries. Other expenses can be reduced or eliminated within the budget, and the new-found cash can be used for other purchases. For example, if you are paying more than the minimum amount due on a credit card or loan, you could pay just the minimum amount for a month or two and use this cash for other expenses. You could also eliminate expenses with alternatives such as preparing your own coffee and driving to work with a co-worker.

Budgets Limit Your Financial Options

Another myth that prevents most from maintaining a budget is that it restricts their financial options. Budgets allow for savings, retirement, and even investments. Simply set aside a portion of your income for these categories in your budget. From industry experts like Ken Fisher, who writes articles for Fisher Investments in Forbes, to your grandmother’s nickel jar, everyone has a budgeting secret that works for them.

High Income Earners Don’t Need to Budget

If you make a lot of money, you probably aren’t too concerned with maintaining a budget. Daily and monthly expenses aren’t a problem, but long-term planning should be a concern to you. Some of the expenses to consider include a child’s college tuition, large purchases, and investments. By saving a portion of your income for these expenses today, you will be ready for it in the future.

Don’t let these five budgeting myths prevent you from sticking to a budget. By reducing expenses and tracking where you spend money, you can easily save money and live worry free.

Annie Davis is a freelance writer from Tampa, Florida. She graduated with her BA in Political Science and she enjoys writing about Travel, Business, Politics and Finance.


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