The new year is a great time to reassess saving and spending habits and establish new goals. Developing a budget can help you succeed. You may already have one, but are you taking full advantage of it? Chances are it may need a little dusting off.
The following myths about budgeting can help you get started with your new year plan:
Myth #1: I don’t need a budget because I already track everything I spend.
Tracking is a great start—but it’s not a budget! It means looking back instead of ahead. And simply keeping track doesn’t help you move on to larger goals and greater security. Once you’re in the habit of tracking your spending, you can use that information to create your budget.
Return to Reality: Sit down and start to think about goals for your financial future: for one year, five years, and 10 years. Once you have two or three ideas, you can start to see how a formal budget can help you achieve those goals.
Myth #2: I keep a budget in my head.
You may be one of the rare people who can keep track of everything you earn and spend without needing to write it down, but you’re likely not keeping track of everything.
Return to Reality: Start with a simple budget by using one of the many online tools available (or even just pencil and paper). Writeit down and start to think about goals for your financial future.
Myth #3: Budgeting is too complicated and time consuming.
It doesn’t have to be! There are a wide variety of online and electronic resources available, many of them at no cost. From simple apps that allow you to scan all your recipes to more complex budgeting and investment tools, creating and sticking to a budget is as easy as using your phone.
Return to Reality: Use one of the many online tools or smartphone apps for tracking. When you find the one that works for you, it will be easy to use it regularly. And by having an app pick up information from your online accounts, you can skip that tedious data entry step. Don’t forget to add entries for occasional expenses like car registrations, haircuts, and pet care!
Myth #4: A shared budget is impossible to control.
Start with a “budget date” where you sit down, and just talk about your goals. It’s true that savers and spenders are often attracted to each other. This article from The Balance on “How to Budget as a Couple” even has advice for when one partner resists combined budgeting.
Return to Reality: Set up monthly budget dates, let kindness prevail over being “right,” and focus on your shared goals. Using these strategies, you can make it easy for both of you to track your income and spending together, begin the process of budgeting, and stay focused on your important future goals.
Soon you’ll master your budget and make sure the money you work for is working for you. If you have questions about strategies for financial goal-setting or managing your budgets, please reach out today to schedule a time for us to meet.