Budgeting Myths That Keep You Broke

Budgeting myths keep you from experiencing a financial life free from stress and anxiety. A budget, aka spending plan, brings clarity to how you’re spending your money now and can predict how much you’ll have available to spend in the future. Conversely, mindless spending and a lack of financial goals will empty your wallet faster than you can say “paycheck”.  A budget helps you stay motivated and intentional about your financial future.

A recent National Foundation for Credit Counseling Survey found a steady annual increase in the percentage of young Americans concerned about not having enough money set aside for retirement.  While several factors influence retirement savings, one of the quickest ways to ensure sufficient funds is by establishing a monthly budget. But first, mistaken beliefs about budgeting should be erased since they can cause even the best laid financial plans to crumble after only a few months.

Here are some common budgeting myths and why you should dismiss them if you want to improve your finances long-term and keep more money in your wallet today.


Myth #1: I don’t need a budget. As long as I have money in my account, I can spend it.

Checking your account balance before making a purchase might seem like a good idea. The problem arises when you make a buying decision based on funds that are earmarked for rent, a car payment or your utility bill that haven’t yet cleared your account. A budget will help you establish how much is actually available after subtracting your fixed and variable expenses from your monthly income. This is the figure that should be referenced for discretionary spending, not the available balance in your checking account.


Myth #2: I have to pay off my student loans before I can save money or even think about budgeting.

The realities of high student loan debt payments shouldn’t be ignored but should be seen in light of the need to also save for emergencies. The likelihood that you will have a financial emergency during the 10 – 30 years of student loan repayment is relatively high. Without a financial cushion, an unexpected job layoff, car repair, or medical expense might cause you to rack up more debt. Start an emergency fund by setting up an automatic transfer of $20 a week to a dedicated savings account. Build your account until it equals three to six months of living expenses. This is the amount of emergency funds recommended by financial professionals.


Myth #3: Credit unions are too low tech and can’t help me budget.

Credit unions offer a variety of personal financial management tools to help manage your money. Online banking that includes bill payment is only the beginning. Most systems allow you to track transactions, transfer funds, and view check images all at the click of the mouse. Community Credit Union members can even make remote deposits from their mobile devices.


Myth #4: Following a budget is only for people on a “fixed” income.

A fixed income is often associated with seniors receiving state or federal assistance each month. They may indeed have limited earning potential. Unless your income is increasing every month and will continue to do so throughout your lifetime, you too are living on a “fixed” income. A budget allows anyone with an income (of any size) to make smart decisions about how available funds are spent each month.


Myth #5: Budgets are boring.

Creating and sticking to a budget that includes clear and realistic financial goals is key to maintaining a budget that brings results. Without the momentum of achieving your goals and the excitement of seeing your savings increase and your debt decrease, having a budget will likely trigger your yawn reflex.

Consider gamifying your financial life to help encourage budgeting with the assistance of a mobile app.  Companies like SavingsQuest, Ramp It Up, and SaveUp use badges and savings challenges to encourage smart money management using their mobile and online platforms. Making budgeting fun and interactive might make the process more enjoyable and rewarding.


A monthly budget lays the foundation for all of your financial goals. It helps determine if there is enough money to do what you really want to do now and in the future. Since income and expenses change during your lifetime, so will your budget. Make budgetary adjustments that align with those changes, and you’ll be armed with the best tool to make your financial dreams a reality.