Budgeting Myth #1: I Don’t Need to Budget

Last time you were at the dentist, did they ask you if you floss regularly? What did you say? To be honest, I don’t floss on a regular basis. Every time I get my teeth cleaned, I feel bad and floss for about a week.

Dentists are smart, and they know flossing is a key component to a healthy mouth. We all should floss on a regular basis, but sometimes we don’t.

I’m here to say you should budget every month. It’s a great and wonderful habit to get into, and below are some of the budgeting myths I’ve heard.

I’m Too Rich to Budget

It doesn’t take much thought to prove this wrong. Lottery winners, professional athletes, and entertainers come to mind.

There are lottery winners who take their luck and use it as a gift, but we’ve all heard of those who spend themselves back to the poor house. There a couple of more recent cases, but the main reason these families failed to stay out of trouble was they weren’t keeping track of their money.

The same goes for NBA stars who think they have it made by signing contracts for millions of dollars. If you don’t know how to handle money, more money doesn’t solve the problem. But some athletes—like Rob Gronkowski—are a little bit better at it.

Finally, cases of mega-famous actors and musicians—like MC Hammer—who spiral out of control and file for bankruptcy are common enough.

Whether you have a large income or have a large amount of investments, it’s still important to budget because it keeps you out of trouble.

I’m Too Poor to Budget

Believe it or not, this is believed by many families as well. They believe they don’t have enough money to worry about keeping track, but I have seen firsthand how that’s not true.

One example was a single mother (let’s call her Cindy) with two kids, and Cindy had troubles. The car kept breaking down, her daughter was in cheerleading, and her son needed regular medical attention. Once Cindy started budgeting, I saw two changes in her.

The first change was a lot less stress all because Cindy started writing everything down. It turned out her finances weren’t nearly as bad as she thought.

The second change was a sense of empowerment. Cindy started to find ways to save money. The best example was when she had overdraft fees of over $360. Cindy knew she couldn’t afford all those fees, so she drove to the bank with her budget and showed the assistant manager her situation. The nice man started taking away the overdraft fees one at a time. The system stopped him after removing ten fees.

Even though the assistant manager wasn’t able to get rid of all the fees, Cindy was able to save $300. Just by talking!

Budgeting is even more important for families with a low income or small bank accounts.

Bad Things Won’t Happen to Me

You don’t know when something terrible will happen to you. The death of your spouse or a cancer diagnosis upends your world.

Families start to believe when they’re in a good position, the need for budgeting goes away. There is money in the bank, their job is going great, and everyone’s healthy. Hopefully, all of these facts will stay true forever, but chances are something sudden will happen.

Budgeting is a habit that needs to be kept up in the good times and the bad. When tragedy strikes, knowing how to budget helps you make decisions faster. Your family will understand what luxuries to cut out and what necessities to focus on when the time arises.

If you budget every month (in the good times and the bad), you will be equipped when emergencies arise.

I’m Too Smart to Budget

This last excuse is much less common, but I want to warn you against thinking it. I would like to say some families think this, but it’s usually an individual.

Dan Gilbert talks in his book, Stumbling on Happiness, about how people generally remember events as being better—or worse—than they were. It turns out, when we are in the moment and experiencing a fun time (or a bad time), our opinions aren’t nearly as strong as what we remember.

When it comes to budgeting, your memory will fail you. A meal at Chick-fil-A ends up more expensive than you remember. You might be fuzzy on how many drinks you had last night. You don’t remember how expensive movie tickets are for an IMAX screen.

Write your budget and expenses down. It be more accurate, and you will use less energy trying to remember everything. There are apps for that.

The Other Budgeting Myths

Budgeting Myths #1: I Don’t Need to Budget
Budgeting Myths #2: Budgeting is Too Hard
Budgeting Myths #3: Budgeting Means No More Fun
Budgeting Myths #4: I Must Create the Perfect Budget