Budget Myth Busters

Budgeting is restrictive. Au contraire, my friends! A budget gives you control. You make allocations and allowances for expenses. You decide how and where to spend. There will always be restrictions when it comes to financial matters (i.e. you can only spend what you have, excess spending=debt=interest=bondage=not fun and very restricted.) Those restrictions are imposed by your reality, not your budget.

Budgeting is for poor people. Budgeting does seem to have a broke connotation these days: "how to throw a party on a budget," "remodel your bathroom on a budget;" these phrases imply that you'll be doing things on the cheap. But really, everything we do is on a budget. There's always a cost attached. The implication that budgeting is for scrimpers is warped perception. Budgeting is for people who want control and awareness, for some people that means control and awareness of big numbers.

I'm not a numbers person. We live in a society where almost everything, even our time, is valued in currency which is denoted with numbers. You have to be a numbers person. And with a good budgeting interface, the numbers side of budgeting is simple - the software should do all the calculations for you.

I can't budget - we have a variable income. If we refer back to the original definition of budgeting, it's planning in advance how/where you will spend. So, theoretically, you should already have earned the money when you sit down to allocate it. The budget software we use recommends that you live a month behind your money (that is, you spend this month what you earned last month). This requires a month's worth of saved living expenses before you can begin operating on this principle; it is an ideal way to live if you're on a variable income. Or a fixed income.

We don't need a budget; we have plenty. Can you imagine a multi-million dollar company doing away with their budget because they "have plenty?" It would never happen. There is always a need for planning and awareness. As you become increasingly financially stable and free, you may not need to be budgeting to the dollar for your toiletries, but you'll still want to be planning (budgeting) for things like retirement saving, charitable giving, your childrens' education, etc.

I keep a mental register of my spending; I know we spend less than we earn.
You'll be surprised, when you put pen to paper, what a discrepancy there is between what you think you spend, and what you actually spend. It is frighteningly easy to nickel and dime away a large chunk of cash and feel like you've hardly spent anything at all. With regards to spending less than you earn - that's great. But hopefully your financial goals extend beyond just staying in the black.

I don't have time.
True. Budgeting takes time. But it's not about time, it's about priorities. We are what I would consider marginally efficient budgeters and we spend about two hours a month on our budget. That includes accounting for last month's spending, planning for the coming month, revisiting and reevaluating our goals and then getting carelessly sidetracked into other veins of household/family planning.
Given the importance of household finances, yes, you do have time.

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Several of you mentioned the need for a more efficient system in the comments on Monday; come back tomorrow to learn more about YNAB (YouNeedABudget), my budget software of choice. If you get lucky, it might become your budget of choice, too!