Nevers Full disclosure: I received a free copy of YNAB in exchange for a post/review of the book.
Every year I always aim to finish at least one book a month. So far I’m crushing that goal because I just finished book number two, “You Need A Budget” also known as “YNAB” by Jesse Mecham. You Need A Budget is all about creating and sustaining a flexible budget; if implemented correctly, it can help you break the cycle of living paycheck to paycheck. I call Mecham’s approach a “flexible budget” because honestly, this is the first time I’ve seen a written approach to budgeting that doesn’t make it seem/sound so restrictive.
One of it’s main objectives is to provide guidance on how to budget with where you are in life right now. The book does a deep dive into four rules that establish a framework for how you should create and implement a personal budget. What I love about this is that it will give you the tools to create a solid foundation and have a more confident outlook with budgeting for the future.
The Four Rules
Rule #1: Give Every Dollar A Job.
The approach to getting started is simple, ask yourself “What do I want my money to do for me?” Prioritizing all the needs, wants, and competing interest for your hard earned money is KEY! To take it a step furtherer, this rule emphasizes working with the money you currently have on hand or available at the bank. Think of it this way, if you have $1,000 in cash and your next pay check is a few weeks away, what are you going to ensure you pay first? You’re probably going to want to cover the basics first like food and shelter because who knows what could happen in a few weeks from now. You could very well lose your job tomorrow; so this is where creating your budget around your priorities and the money you have on hand is crucial.
I actually repurposed my budget after reading this first chapter because it made a ton of sense. Generally, I make sure money is allocated to each line item without taking into consideration how important each item is. This first rule alone made me rethink my approach and allowed me get more intentional about reorganizing.
Favorite quote from rule #1
“If you have debt, a chunk of your dollars is already spoken for. That means your debt is literally stealing from your ability to fund your current priorities (page 44, paragraph 3).” Can I run that back like a good CD track or get an AMEN? That sentence alone should set off the alarm bells in your head if you are in debt but don’t feel like budgeting. You are literally taking from your future pool of options to throw money at past decisions. Debt gives you no other option BUT to look back at the past, that means you are going nowhere fast.
Rule #2: Embrace true expenses
I like to think of rule #2 as what is commonly referred to as a “sinking fund” or funds in the personal finance space. The idea of rule #2 is to incorporate/budget money for long term expenses, the ones that you know will eventually compete for your hard earned money at some point. True expenses, as explained in the book, “are all of your expenses – the daily, the monthly, and the irregular ones that we often forget about (page 58, paragraph 1).” Things like christmas gifts, car maintenance, car insurance, a new phone, or school shopping would be considered “true expenses”. Prioritize and budget for things down the road now so you aren’t hit with a big unexpected bill.
Take the time to take inventory of all your “in this for the long hall” expenses and write them all out. Almost all of what you write out will be predictable (your set car insurance cost, the cost of summer camp your kids attend every year, becoming debt free etc) long-term expenses. The book however encourages you to think outside the box and think about “unpredictable” expenses. The unpredictable expenses are the ones that you know will occur just aren’t sure when or exactly how much. Sporadic life occurrences such as attending a wedding, purchasing gifts, getting a flat tire, those are unpredictable things you can plan for to a degree.
There is also a slight twist in this chapter as it relates to saving an “emergency fund.” YNAB’s rule #2 is around reshaping your mentality about your planned emergency fund. Mecham’s philosophy is throw this thinking out the window! No more large pile of cash in case of emergency, instead now every dollar has a purpose. While this idea seems a little unconventional and doesn’t necessarily align with the top shelf financial guru advice, it makes total sense.
Favorite quote from rule #2
“When your long-term goals are on your radar, your bank account balance is no longer the deciding factor in whether or not to buy something (page 65, paragraph 3)”. Once you begin to think long term and prioritize all of your money goals via rule #2, your behavior will start to shift. In the book, he mentions that it will no longer be a matter of asking yourself “can I afford this?” but rather “will this push me closer to my goals?”
Rule #3: Roll With The Punches
This is probably my favorite rule because it reminds you that budgeting is not an exact science especially when this thing call life happens. Rule number three is exactly what it sounds like, rolling with the punches life throws your way and getting comfortable with the idea of “adjusting.” Adjusting your budget to meet your needs and the needs of life that is happening all around you is super critical.
This chapter lays out and reminds you that you’re human and adjustments to your budget will be inevitable. This is important because so many of us come down hard on ourselves when we budget for $200 dollars in groceries and keep spending $350 at the store. Cleary $200 was a nice goal but $350 is more realistic for your family’s needs. Rolling with the punches means that it’s ok to adjust and recalibrate your budget. A lot of people tend to view having to do this as meaning they suck at budgeting. People are seeking perfection through an imperfect process and fail to remember that reallocating money is OK!
Favorite quote from rule #3
“If you don’t allow yourself change, you’re going to quit. What other choice is there when you’re holding a bill that is more than you’d planned to spend? You can roll with the punches and reassign your dollars, or you can resolve that you’re just not cut out for this (page 91, paragraph 3).”
Rule #4: Age Your Money
The last rule of YNAB is aging your money, getting to a point where you don’t need your next paycheck. If you can manage to get ahead of your money by 30 or even 60 days, you will have successfully eliminated living paycheck to paycheck. In order to get to that point however, you’ll have to make short term sacrifices in order to be successful. Once the momentum builds from a side hustle, second job, or not spending extra money for a month, the money will stack up quicker than you can count.
Favorite quote from rule #4
“When you don’t know where you stand, you don’t know what you’re capable of (page 101, paragraph 1)”.
Overall, I really enjoyed this book and would highly recommend it to anyone that has a tough time with the word “budget”. Old conventional budgeting tips are tossed to the way side and a more flexible innovative approach is introduced. The book has plenty of great quotes and provides a ton of real life examples/stories to illustrate each point and tie it all together. What I like most is that the author DOES NOT have that “you’re stupid with money” condescending tone like some other totted financial gurus have. He has a practical and flexible approach which is surprisingly refreshing and seems to get the job done. Jesse won’t tell you what to do with your money but rather guide you to do what’s best for you and your money. This book gave me some new ideas that I am incorporating with my overall budget and money for the future.
He also has chapters dedicated to teaching kids about money and budgeting as a couple. While I don’t currently have kids, I still found the chapter to be super insightful and thought provoking. The chapter on budgeting with a partner is very helpful as well, especially for anyone struggling to make a budget work in their current relationship.
In essence, I recommend you grab this book, read it, and pass it along to someone who thinks budgets are boring. This book will definitely change their tune!
If you’re interested in purchasing a copy, you can do so via any of the links below!
HarperCollins | Amazon | Barnes & Noble
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Heather J @ TLC Book Tours says
Thanks for being a part of the tour for this book!
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