Myth 1. Why start now when I’ve never made a budget?
Budgeting is one of those skills that everyone should possess and put in place. You risk losing control of your finances without it.
Rainy day expenses are what put people into debt.
Your budget has to be flexible according to what happens in your life.
Myth 2. You have to be a mathematician to set up a budget
The math involved is quite simple. As long as you know how to add and subtract, you can set up a budget.
Get your total income and total expenses separately. Subtract your total expenses from your total income. Keep the difference on the positive side to stay on track.
Take the stress out of the process with the use of budgeting tools available online.
Myth 3. If you have a job, you don’t need to budget
Doing a budget is not only for people who have trouble making ends meet. It’s better to still have a budget and allocate your money to regular expenses as no job is truly secured.
There’s no regret if you keep building a safety net for rainy days — for there’ll also be unforeseen expenses at some point.
Myth 4. If you don’t have debt, budgeting is not necessary
So, you live within your means? You don’t owe anything? Good for you!
But, that’s not so common. It can easily switch and you could find yourself with a costly surprise.
Be sure you build yourself a financial cushion as you create a budget.
Myth 5. Budgeting is depriving yourself
Budgeting, in its simplest form, is to track your spending more closely. It doesn’t mean always telling yourself “no.” A budget is meant to be a personal tool to help you prioritise your spending and reach your financial goals.
Ideally, you have to put aside 10% of your income into savings.
You can still go out to watch movies or have dinner with friends once in a while, without feeling guilty. Make sure to avoid spending more than you can.
You can sacrifice some shopping or restaurant meals for a short time to reach a more important goal. You just have to decide how to make it work for you.
Myth 6. There’s no big purchase to save for
False! Maybe your old car will give out soon and you’ll need a new one. Perhaps a friend will make plans for a group trip and you’ll want to go.
A new car or a vacation doesn’t have to be a rush purchase, but it can be your motivation to save.
Myth 7. It’s so boring
There are apps available to help you make a game out of staying within your saving and spending targets.
MyFi has its own budgeting tips and tools available once you became a member.
You can also adapt the 50/20/30 rule. It’s devoting 50% of your income to essentials, 20% to savings, and 30% to personal stuff.
Myth 8. You should budget when you’re older
It really pays off to develop good financial habits early on. Just because you’re young and starting out, doesn’t mean you have all the time in the world to start budgeting. Why put off building up savings and controlling your debt?
If your goal is to hit the $1 million mark, and you procrastinate until you’re 50, you’ll have to save more than $40,000 a year.
Consider that!
Myth 9. You can mentally keep a budget
Write it down!
You need to hold yourself accountable in designating your money, so you have to write it down to see if your doing it right. You won’t have a scapegoat as it’s noted.
It will help in your visualisation — to see what you have to work with and where your money is going.
At the end of the month, review your spending and (again!) write down your progress.
Myth 10. What’s the use if I have way too much debt?
There’s hope! There’s always hope.
You can come across personal accounts of consumers who worked hard to pay off their student loan, credit card, and other debt.
While recovering from debt, a budget can help you devote part of your income to pay off what you owe — until you realised they’re gone.
Personal finance with MyFi
MyFi has you covered with the right financial service, customised for you!
Note: MyFi and other sources of finance are options that should only be used for once off funding requirements.
