Budgeting may take some trial and error and a little bit of homework but it’ll be worth it when you’re sunning yourself in Bali rather than looking at an empty bank balance!
Following on from last week’s story in which I debunked five of the top 10 myths about budgeting, here are the rest:
Myth 6: Money mentors are so expensive and I can’t afford it – that’s why I’m in this situation to begin with!
This is valid but not all advisors are created equal and costs vary considerably. If I meet with a client who I can see is clearly in an extremely difficult financial situation and cannot afford my services, I would never take them on. That being said, some clients benefit from only one consult and my long-term clients have made the money back that they’ve spent on my services ten-fold because of the skills and knowledge they’ve developed.
Myth 7: I know that I’ll need to cut out those little luxuries like a coffee in the morning and I’m just not prepared to do that.
I’ve coined them ‘sanity savers’ for a reason. If something brings you enough happiness, it is well worth the money. However, if you find yourself buying a designer dress every time you’re down in the dumps we need to look at the psychological reasoning behind that and work out a cheaper (or free: way to perk yourself up when life gets tough.
Myth 8: A budget will stress me out because I’ll constantly be watching myself.
Actually, the opposite is true. It’s a proven fact that a budget gives people peace of mind because they feel in control of their finances and on track to achieving their goals. Instead, every time you hand over money, you will know that it is planned and will not impact the greater goal.
Myth 9: A budget is pointless because life is unpredictable and an unexpected medical bill is going to throw the entire thing off.
Bumps in the road are inevitable and at some stage, there will be an unforeseen expense, but even the unexpected can be planned for to a certain extent so that you can still meet your goal, but does binging on a family sized pizza mean you should throw in the towel and give up on eating healthy foods? No! The most important thing is to get back on track as soon as you can and not to beat yourself up about things that are out of your control.
Myth 10: Budgets are redundant because you are just plucking numbers out of the sky and as a result saving becomes unrealistic.
People do tend to come up with random numbers when deciding how much to save. If you are consistently trying to save $500 every fortnight and constantly pulling money out of your high-interest savings account, it will only make you feel like you are failing. You need to record your expenses and work out a realistic amount to stick to. This may take some trial and error and a little bit of homework but it’ll be worth it when you’re sunning yourself in Bali rather than looking at an empty bank balance!