When It Comes to Budgeting, What Do You Tell Yourself?

For many, this is the time of year for regrouping and starting fresh. Unfortunately, the word budget is kinda like the word diet — it conjures up all sorts of feelings, oftentimes negative. But a budget just means you’re keeping track of your money and being deliberate with your financial decisions.

Whether or not you plan to go on a diet, you want to be aware of the foods you put into your body. Setting financial parameters can give you a sense of control and freedom, whether they add limits to your life or give you permission to spend without worry.

So if you’re one of the many people who’s averse to having a budget (only 42% of Americans track their spending and keep a budget, according to a 2024 survey by the National Foundation for Credit Counseling,) ask yourself why and whether your reasons really hold water. They might be on our list of common myths and misconceptions about budgets.

Busting Budgeting Myths

Myth: “A budget means I can never have any fun.”

Bust: Not at all. A budget will tell you how you can have fun. Let’s say you want to take your girlfriend out for a fancy birthday dinner. Keeping track of spending is how you’ll know you can easily afford it if you pack your lunch instead of hitting the fast-food drive-through a few times in the month.

In fact, you may have even more fun with a budget. Once you have a rough dollar amount allocated for non-essentials, you won’t feel guilty about using that money. A budget simply means you’re deciding what’s important and making sure you get what you want without piling up debt.

Myth: “It’s annoying to track down every penny I spend.”

Bust: You don’t have to document every nickel and dime you spend to get a sense of where your money goes, and none of us has the time anyway. Thankfully, a budget with broad categories is really all you need. You can leave the tracking and math to one of several good budgeting apps, including SoFi’s Relay app.

Myth: “I make enough money. I don’t need a budget.”

Bust: If you don’t have debt and make a good living, you may feel you don’t need to worry where your money goes. But being comfortable financially is just as much of a reason to have a budget. If you want to protect what you’ve got and maximize the potential for your money, make sure you’re setting a clear and deliberate path for it.

Maybe by tracking, you discover that you’re somehow spending twice as much as you used to on Ubers and food out, but with nothing to show for it. Or you realize that after that last raise, you can put 40% of your income into your retirement account, rather than 30%.

Just like a report card tells a student how they’re doing academically, a budget tells you where you stand financially.

Myth: “Why bother? My finances are just a big mess.”

Bust: Plenty of people are struggling to make ends meet. In the latest Survey of Household Economics and Decisionmaking, fielded by the Federal Reserve each year, 17% of U.S. consumers reported they couldn’t pay all their bills, and 18% said their savings wouldn’t cover an emergency expense of more than $100.

No matter what your situation is, a budget isn’t a lost cause. In fact, not having one can make things even worse.

If your income isn’t covering your bills, you’re probably adding to your credit card debt, which can be a slippery slope of mounting finance charges. Building a budget can help you determine where to cut back, or show you when bigger life changes like moving may be needed. It can also help you establish an emergency fund so a job loss or other unexpected bill doesn’t derail you again.

Myth: “I’m young. Budgeting and saving for retirement can wait until I’m older.”

Bust: Budgeting so you can make regular contributions to a 401(k) or IRA is one of the best moves you can make when you’re young. Waiting even 10 years to start saving for retirement means you’ll need to invest much more to get even close to the same result.

Here’s an example: Let’s say you invest in an account that has a 7% annual return. If you contribute $50 a week for 40 years, you’d have $517,454 at the end of the 40 years. But, if you start 10 years later, you’d have to contribute twice that much — $100 a week — and you’d still only wind up with $490,818 at the end of 30 years.

Taking Control

Creating a budget may not be your idea of fun, but keeping track of your money — even in broad strokes — gives you the visibility to make more intentional choices and gauge your progress on your financial goals. And when it comes down to it, you may find taking control to be liberating and motivating. Plus, having a solid financial footing can give you confidence in other areas of your life.

Thinking you might want to try it? Here are five steps to get you started.

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