You're listening to Talk Wealth To Me, the safe-space money podcast where we discuss anything and everything related to personal finance.
One of the first questions you may be asked when you ask for help with your money - whether that be through a wealth manager, tax preparer, or financial advisor - is whether or not you have a budget.
Myth #1: Budgets are for the Mega-Wealthy
Did you know nearly 93 percent of the public believes everyone should create a budget, but a majority of us are not creating budgets?
Yep, about 63 percent of us are not creating a budget whatsoever. The number one reason why? Most of us don't think we earn enough money to necessitate the use of a budget, but a budget is even more valuable when you have less.
How can that be? When we use a budget, we are tracking our income and our spending to ensure that we are not spending more than we are earning.
Myth #2: Budgets are great for limiting big-ticket spending
You may think if you're not in the market to purchase a home, a new car, boat, or plan a vacation, you don't need to create a budget.
Oftentimes we view those in debt as individuals who were irresponsible with their money and used a credit card to purchase an item out of their price range. But as it turns out, most budget-busters are items that cost on average $20 or less. Why? Because we are not thinking about how these little items add up over time and cost us big time.
You've likely heard the example of getting coffee from a coffee shop in the morning. If you plan to spend $5 on coffee every morning in your budget, you likely won't be surprised by the amount of money you spent on coffee in a month. However, if you think your $5 daily habit isn't that expensive, what do you think about spending $25 on coffee per week or $100 a month? Is it more than you realized you were spending?
Myth #3: I have to cut cable if I'm on a budget
Another myth about budgets is that if we're in debt we can't spend any money on any entertainment. A budget is a PERSONAL decision. Meaning, if you don't drink coffee or you're content with brewing your own at home, you can apply the money you save from coffee toward an HBO or Disney Plus subscription.
The point is that a budget is a personal decision. The only MUST with a budget is that your spending MUST not be greater than your earning. If it is, well, that's a topic for another day.
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