Popular Myths In Budgeting
This is a guest post by Jonny of The Finance Wand.
There is so much to personal finance and budgeting that people may get confused thinking where to start. Just taking care of the dues and keeping a steady income is not enough. You need to save money for the future and your budgeting activity can never be complete without a proper plan. Some may feel that having a budget is not their cup of tea. It requires a lot of planning, a lot of stressing on math and a lot of other things that may be difficult to remember, but it is not true. Budgeting can be made simple. Yes, it does require a lot of planning but it is good for your financial future. There are a lot of misconceptions that people have about budgeting.
Let us address top 3 popular myths that are associated with budgeting and personal finance:
- There is no need for a budget: A lot of you may think that you do not need a budget because it is all in your head and you know exactly what to do. Most of the times things do not work out as you have planned. There is surely going to be a snag and your plan can burst. However, if you do have a budget set for yourself before hand, you can have an idea about what you can afford to do and what you cannot. Budgeting is a very important tool to track your monthly income and expenditure and manage your personal finances well.
- Budgeting is all about math and so it is difficult: Earlier when people were not so advanced on the Internet, budgeting could have been a problem because you had to do it yourself. Today, there are several free budgeting tools available on the Internet, which can be extremely helpful for you to maintain your personal finance. The software is easy to download and as easy to use. You can even create a spreadsheet of your own if you know how to use one.
- I have a secure job, so I don’t need a budget: The truth is, no one has a totally secure job. Hence, you must always be prepared for the future. The company you are working for might suddenly dissolve, recession might cause the company to ask you leave or you may get laid down for any unforeseen reason. In a situation that you are not working, you should have enough finances to get you though 3 months of living expenses. Plan your personal finance in such a manner that you do not have to depend on anyone else to take care of you and your family. You can still be in charge.
It is really important that you take good care of your personal finance if you want to secure your future. Start now if you haven’t started yet.
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Budgeting is drop dead easy. Just start with your total income per unit of time (like a month). Then start subtracting everything you can think of that you would spend. Money for gas, mortgage, savings, car repair, haircuts, gifts…whatever. Once you’re done, whatever you’re left with is what you get to blow