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It's crucial to tell fact from fiction when it comes to budgeting. If you Google "how to create a budget," not only will you end up with an overwhelming amount of information, but you also will find that a lot of it isn't remotely true.

Here are 12 common budgeting myths we all need to stop believing — right now.

1. You can absolutely not go over budget — ever

Woman at the supermarket checkout, she is paying using a credit card
OK, let's clear this myth up right away.

OK, let's clear this myth up right away. Yes, you should aim to stay on or under budget, but the reality is that life happens and no one is perfect.

Many of us realize this. A 2017 survey from Coinstar found that more than three-quarters of consumers who set holiday spending budgets expected to go over them.

Unfortunately, when some people go over budget they tend to get defeated and just give up on budgeting.

Really, the situation doesn’t have to be that dramatic. Just make sure you're covering your fixed expenses — your mortgage, debt repayment, savings, child care, car payment, etc. — and adjust your variable spending to stay within your means.

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2. Budgeting's a snooze

Young man having fun with a smartphone
Budgeting apps can make saving fun.

Who says budgeting is boring? Wrong! Plenty of apps are available to help you make a game out of staying within your saving and spending targets.

One example is Toshl, a free app that uses monsters to nudge you when you're overspending, to help you stick to your goals. With Mvelopes, you set up virtual saving envelopes so that every dollar has a destination.

If you prefer a more low-tech method to make budgeting less blah, see if you can follow the popular 50/20/30 rule with your money. It says you should devote 50% of your income to essentials, 20% to savings and 30% to personal stuff.

The personal category gives you the flexibility to treat yourself occasionally. That's important for your mental, as well as financial, health.

3. Budgeting is another word for depriving yourself

Lonley pancake on a plate
Remember: It's your money and your budget.

This is perhaps the most well-known and influential myth when it comes to turning people off to budgeting, but it really couldn't be further from the truth.

A budget is meant to be a personal tool that will help you prioritize your spending and reach your financial goals. It doesn't mean always telling yourself "no."

You might have to sacrifice some shopping or restaurant meals in the short term, but only so you can eventually reach a more important goal than finding a great new pair of jeans.

Remember: It's your money and your budget. You just have to decide how to make it work for you.

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4. Budgeting is a hassle. Who has time?

Stack of disorganized receipts
Elena Elisseeva/Shutterstock
The variable stuff is harder to control at first because you have to resist that spending each day.

The reality is that when you first start budgeting, you might spend an hour or two at the beginning of each month sorting everything out. But this ritual will last only a few months.

Focus on making sure you pay and/or lower your fixed expenses first, which are monthly bills like your cellphone bill and rent. Then, work on reducing your variable expenses, like your spending at restaurants.

The variable stuff is harder to control at first because you have to resist that spending each day.

But you'll find that spending less on small daily items can turn into a habit very quickly.

5. You can just keep a budget in your head

Young woman calculating home finances
If you don't write it down, is it really a budget?

If you don't write it down, is it really a budget? Not quite.

How can you hold yourself accountable to something if you cannot be 100% sure how much money you've designated to every category?

Yes, taking a few minutes to write down your budget might seem silly, but it will help you visualize where your money is going and actually see what you have to work with.

Reviewing your spending at the end of the month and writing down approximately how much you spent in each category will show you what you have to work on.

6. I hate math. There's no way I can budget

Man frustrated calculating finances
Simply write out what you plan on spending in each category.

While determining how much of your income to spend in each area can take some time, the actual math involved is quite simple.

Simply write out what you plan on spending in each category (rent, utilities, phone, food, fun), add it all up, and then subtract this total from your income.

If you end up with little or no money left from your paycheck, then you need to either:

  1. Find a way to make more money.
  2. Adjust how much you plan to expense until your numbers equal 0 (that is, you have spent all your money) or higher (meaning you still have some money left!).

7. I have a good job, so I don't need to budget

Young businessman in a suit using a touch pad
You could easily lose your job and its great salary.

Don't kid yourself: No job is completely secure.

During the first three months of 2019, employers announced more than 190,000 job cuts — a 10-year high for the January-through-March quarter, says the job placement firm Challenger, Gray and Christmas.

Uncertainty about the economy and fears that it could take a turn for the worse are fueling an increase in layoffs, says Challenger, Gray and Christmas Vice President Andrew Challenger, in a news release.

Experts recommend that you have emergency savings to cover three to six months' worth of expenses, just in case you lose your job. A budget can help you get there.

8. Budgeting's not necessary if you're debt-free

Two hands tearing up bills
Having everything paid off isn't common — and is no reason to feel complacent.

But surveys routinely find most Americans don't have any money set aside for a layoff or other financial emergency, such as an unexpected $500 vehicle repair or a $1,000 emergency room charge.

You live within your means and don't owe anything? Or, you had some debt but you paid it all off? That's not very common, so good for you! But don't get smug.

You could easily and quickly find yourself on the hook for a costly surprise.

As you create a budget, make sure you build yourself a financial cushion — just in case. Compare today's best savings rates, open an account and start saving as soon as possible.

9. Budgeting matters only if you're saving for a big purchase

Young couple looking at a home to buy
Serhii Krot/Shutterstock
You may meet someone and decide to settle down and buy a home.

Budgeting isn't for you because you're not trying to save for something big, like a new car, a vacation or your first house? Not so fast!

Just because you don't have a major financial goal right now, that doesn't mean you won't at some point in the future.

Maybe your current car will start giving out and you'll realize you're going to need a new one. Maybe a friend will begin making plans for a group trip to Mexico, and you'll want to go.

Or maybe you'll meet that special someone you've been waiting for. If you've been budgeting and saving, you'll have a head start toward a down payment on a home, for your life together.

10. I have way too much debt, so what's the use?

Couple struggling with bills, working on a laptop
Fabiana Ponzi/Shutterstock
No matter how much debt you have, it's not hopeless.

Don't ever throw up your hands and assume that your debt is hopeless.

Just as it's not difficult to find inspiring stories of determined people who've lots of weight, you can easily come across personal accounts of consumers who worked hard to pay off tens of thousands of dollars in credit card, student loan and other debt.

A budget can help you make certain that you devote part of your income to chipping away at what you owe, until that mountain of debt is gone.

11. Budgeting can wait until I'm older

Clueless young woman
Don't waste time — develop good financial habits early.

So you're young and starting out — and think you have plenty of time to budget. But why put off controlling your debt and building up savings?

Developing good financial habits early can really pay off.

If your goal is to have $1 million at age 65, when you're ready to retire, you can get there if you start at age 20 and save $4,500 every year, according to Vanguard.

If you don't start socking money away until you turn 30, you'll need to save about $9,000 each year to meet your goal. If you procrastinate until you're 50, you'll have to save more than $40,000 a year if you hope to hit the $1 million mark.

12. I've never made a budget. Why start now?

Older man in a garden with his arms folded
Andrii Zastrozhnov/Shutterstock
Budgeting is an important skill, no matter where you are in life.

It doesn't matter what phase of life you're in. Budgeting is one of those skills that absolutely everyone should understand and put in place as soon as they can.

Without it, you risk losing control of your finances and not having any money tucked away for a rainy day, and those rainy day expenses are what push people deeper into debt.

Remember that budgets have to be a bit flexible, because life happens. At the end of the day, your money is your money, and you have the power to move it and make it work for you.

Creating a budget is the first and most important step toward gaining control of your spending and learning to live within your means.

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About the Author

Katie Winterburn

Katie Winterburn

Freelance Contributor

Katie was formerly a freelance contributor to Moneywise.

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