Are you tired of living paycheck to paycheck, drowning in debt, and feeling like you’ll never get ahead financially? “You Need a Budget” by Jesse Mecham offers a revolutionary approach to managing your money that will transform your financial life. This proven system has helped countless people break free from the cycle of financial stress and achieve their dreams.
Keep reading to discover how “You Need a Budget” can help you take control of your finances, get out of debt, and start living the life you truly want.
Table of Contents
Genres
Investments, Personal Development, Career Success, Personal Finance, Budgeting, Money Management, Self-Help, Debt Reduction, Financial Planning, Goal Setting, Behavioral Economics, Psychology
“You Need a Budget” (YNAB) presents a four-rule system for managing money effectively. The rules are:
- Give every dollar a job
- Embrace your true expenses
- Roll with the punches, and
- Age your money.
By following these rules, readers learn to allocate income to specific expenses, plan for irregular costs, adapt to changes, and spend money that’s at least 30 days old. The book guides readers in setting up and sticking to a budget, prioritizing financial goals, and changing spending habits.
Mecham emphasizes the importance of proactively managing money and making intentional choices aligned with one’s values. The YNAB method aims to help people gain control of their finances, get out of debt, save more, and ultimately achieve financial peace and freedom.
Review
“You Need a Budget” stands out among personal finance books for its practical, actionable advice and empowering philosophy. Jesse Mecham presents a clear, easy-to-follow system that addresses common budgeting challenges and provides effective solutions. The four rules at the core of YNAB are simple yet transformative, helping readers shift their mindset around money and be more proactive in their financial decision-making.
One strength of the book is its emphasis on aligning spending with personal values and priorities. By encouraging readers to “give every dollar a job,” Mecham helps them be intentional with their money and make progress toward meaningful goals. The book also offers valuable guidance on breaking the paycheck-to-paycheck cycle, getting out of debt, and building savings.
The writing style is engaging and relatable, with Mecham sharing personal anecdotes and practical examples throughout. The book strikes a good balance between offering concrete tactics and addressing the emotional and psychological side of money management.
While the YNAB system may require some initial setup and adjustment, the long-term benefits are well worth the effort. The book provides a roadmap for achieving financial stability and freedom that has proven effective for many readers.
Overall, “You Need a Budget” is an invaluable resource for anyone looking to take control of their finances and improve their financial well-being. Its principles and strategies have the power to truly transform readers’ relationships with money and help them create the life they want. Highly recommended for anyone seeking a fresh, effective approach to budgeting and financial management.
Introduction: Learn about the You-Need-a-Budget method
You Need a Budget (2017) is a practical guide to managing personal finances through a unique, four-rule method. It will teach you how to break the paycheck-to-paycheck cycle, gain control over your money, and achieve your financial goals by giving every dollar a job. It emphasizes proactive budgeting, adjusting to financial changes, and building a healthier relationship with money to enhance your overall life satisfaction.
At some point in your life – if you haven’t done so already – you’ll realize you need to take your finances more seriously. Perhaps your monthly finances feel like a rollercoaster – a mix of hope and anxiety every time you make a transaction. Or despite your best intentions and a stable income, you find yourself constantly adjusting for unforeseen expenses that seem to appear out of nowhere. You’re caught in a cycle of relief and dread, checking your account and wondering where all your money has gone.
Managing your finances is about more than having enough money in the bank to keep your head above water. It’s time to face the truth – you need a budget.
You might think you already know what’s involved in budgeting. Maybe you’ve even given it a shot – only to give up after the first month. But if you think budgeting is tedious, unsustainable, or just a tool to guilt yourself into cutting back, you’re doing it wrong.
In this Blink to Jesse Mecham’s You Need a Budget, you won’t learn how to spend your money. Instead, you’ll discover how to transform how you interact with your finances, using the You-Need-a-Budget method to think differently about your money.
The approach is built around four intuitive rules that guide your relationship with money. By the end of this Blink, you’ll be equipped with the tools you need to foresee financial obligations, adapt smoothly to the unexpected, and ease your stress around decision-making.
Why is budgeting so hard?
Sure, you know you need a budget. But there’s a good chance that, like most people, the idea of actually doing it makes your heart sink.
If it’s such a necessary tool, why is it that you feel so reluctant?
There are three big reasons why people struggle to manage their finances, even if they earn a comfortable income. The first is that they lack confidence. In the modern age, there are so many options and thousands of “experts” telling people what they should do with their money. You’re not alone in thinking, How can I know what the “right choice” is? And, What if I’m wrong?
This ties into the second reason. People often don’t have a clear and effective system to make financial decisions. They end up acting on impulse, and their spending or saving habits lack the consistency they need for a stable system.
Finally, people have a natural fear of truly understanding their financial state. It can be daunting to confront the reality of your finances, which can feel like a black box of money-in and money-out. The prospect of uncovering what lies within can be so overwhelming that you might just want to avoid it completely.
Shame, frustration, and self-doubt around money are huge barriers to proactive financial management. So, forget about the money.
Okay, don’t forget about the money completely. Obviously, money matters. But the real question you should be asking yourself is, What do I want my money to do for me?
Each of the four rules of You Need a Budget, or YNAB, is based on this foundational question. Budgeting should be a tool to align your finances with your values and goals. It’s about getting a truthful perspective of your situation and using that newly found perspective to make better decisions for your happiness.
Ask yourself questions like, Does it make sense to impulse buy these clothes when I can’t afford the holiday I picture wearing them on? And, Is it worth ordering takeout now, when I’m going to feel guilty spending money out with my friends next week?
Of course, there’s nothing wrong with buying clothes or ordering takeout. The point is to spend your money in a way that makes sense for you.
Rule 1: Give every dollar a job
There’s a certain sense of relief that comes on payday when that lump sum finally gets deposited after weeks of hard work. Unfortunately, this moment of joy is when you’re most likely to make short-sighted decisions financially.
Time to slow down and think about the first of the four YNAB rules: give every dollar you receive a job.
This rule is as simple as it seems. Before any of that paycheck leaves your account, you should assign every dollar you own a “job” that answers that golden question, What do I want my money to do for me? You’re essentially writing a to-do list for your money.
How these jobs are assigned is different for everyone, but it’s a good idea to start with the essentials. Think shelter, food, safety, and utilities. What do you need this money to do before you’re paid again?
Now’s the exciting bit. It’s time to map out a plan for the life you want to live and assign these jobs to any money left over. By assigning every dollar a job, you remove the ambiguity of whether you can afford something because you’ve already decided what you want it to do. It curbs the stress of financial decision-making.
What you actually want is a personal question. Don’t jump straight to the things you want to buy. Ask yourself, What do I want my life to look like? Then think about how your money will serve that vision.
Let’s say you want to save up and treat your kids. So, should you do up the backyard or take them on a family holiday? If you value stability and building a good home life, maybe the backyard is the best option. If you want your kids to see the wide world and build experiences, go on vacation. Neither is wrong. It’s about what is best for you.
The power of this first rule lies in its simplicity. By knowing exactly what your money is supposed to do, you automatically avoid overspending and undersaving. Even if you change your mind, you need to make a conscious comparison between this change and what you originally intended. You’re naturally building a proactive relationship with your money.
Rule 2: Embrace your true expenses
Sometimes, life throws you a curveball. Your car needs repairs, or you need to call a plumber. These things are unpredictable, but that doesn’t mean they have to derail your financial plans.
The second rule of the YNAB method is to embrace your true expenses. This means that you should take a proactive approach to budgeting by acknowledging both predictable and unpredictable expenses as ongoing monthly obligations. While something like a car repair might be unpredictable, this sort of financial hurdle is part of life. You don’t know when, but at some point, it’s going to happen.
So start treating all your expenses, even the infrequent or large ones, as if they’re monthly bills. By doing so, you distribute the financial impact over several months, which smooths out your cash flow and reduces the month-to-month fluctuations that make budgeting feel like a rollercoaster.
Identify your larger, less frequent costs, and set aside a portion of your budget each month so that when the time comes to pay these bills, the money is already allocated. No need to scramble for funds.
For example, if you know your car insurance is $600 every six months, instead of trying to find all of that when the bill is due, set aside $100 each month. This way, when the insurance payment rolls around, you’ve already budgeted for it incrementally.
You can do the same thing for costs that you know are likely to occur at an unknown time in the future. Maybe you’ve got to pay a vet bill, or you’re invited to a wedding and need to buy a gift. This second rule helps you to develop your intuition for financial consequences, beyond a number in your bank account. You begin to sense how much of a difference it makes to your life.
By embracing your true expenses, your budgeting process becomes less stressful and more predictable. By implementing this rule, you can maintain financial stability regardless of what life throws at you.
Rule 3: Roll with the punches
Sometimes, being well-prepared isn’t enough. Sometimes you need to be flexible. This is the essence of the third YNAB rule: roll with the punches.
Life is unpredictable. The future, even more so. Your budget needs to be flexible enough to accommodate those inevitable life changes without causing stress or guilt.
If your budget isn’t working for you, then it’s time for you to re-evaluate it. Your priorities will change throughout your life, and you need to recognize those shifts and adapt to them.
When unexpected expenses arise, or you overspend in one category, you simply need to adjust your budget by shifting funds from another category where they’re needed less. This adjustment helps you handle surprises effectively without derailing your financial goals. No budget is perfect and adjustments should be a normal part of managing money effectively.
For example, let’s say you have to pay for that car repair a little earlier than you planned. You might decide to reduce your dining-out budget for the month to cover those repair costs. Think back to your priorities and allow your money to do the jobs it needs to for your overall well-being.
Sometimes, the changes are something big. Maybe you get engaged and need to start planning for a wedding. Maybe you’re asked to move abroad for your job. Big changes in your life mean big changes in your budget. This rule essentially gives you permission to update your budget, reflecting your new priorities.
The goal is to reduce the sense of guilt or pressure associated with strict budgets, making it easier to stick to your financial plan over the long haul. It empowers you to adapt to circumstances as they change, allowing you to strategize with your money based on new information.
By embracing this rule, you align your budgeting practice more with real life, which is rarely predictable or linear. Adjustments aren’t failures, and you don’t need to start from scratch every time something big in your life happens. Instead, by letting yourself roll with the punches, you ensure your financial plan is both resilient and responsive to your ever-evolving financial needs.
Rule 4: Age your money
The fourth and final rule of YNAB is to age your money. What does that mean? Well, you need to break free from the paycheck-to-paycheck cycle by increasing the time between when you earn money and when you spend it. Ideally, the money that you’re spending today should have been earned at least 30 days ago, if not longer.
Here’s why it works.
By letting your money sit in your bank account for a longer period, you create a buffer that insulates you from the need to live off every paycheck immediately upon receipt. This reduces your stress levels and improves your overall financial stability because it lessens the impact of the unexpected twists of life.
Basically, you’re working toward giving the paycheck you earn now a job for the future. You’re effectively using money earned this month to cover the costs of the following month.
The more you continue this practice, the age of your money – that is, the average number of days your money sits in your account before being spent – will increase. Older money indicates a healthier financial state – you’re less dependent on incoming paychecks to meet your obligations.
Aging your money requires discipline. Resist the temptation to spend your paycheck in those exciting moments right after you’re paid. Prioritize your future needs over your present desires. You’re moving from a just-in-time funding model, where every dollar is allocated and spent as soon as it comes in, to a more sustainable approach that allows for planning and flexibility.
Ultimately, aging your money means you stop budgeting for money you don’t have yet, and instead plan for something that is truly in your control. No more worrying about payroll delays over Christmas or if your client will pay their invoice on time. By extending the life of your money, you create a cushion that puts your financial decisions in your own hands.
Go debt-free
By now, you should have a pretty good idea of what the YNAB method is all about: planning for your financial future through budgets that bring you stability and freedom. But what happens when your financial future is being held back by your financial past?
YNAB doesn’t tell you how to spend the money that you have, but struggling to tackle debt is often a trigger for people to realize they need a budget in the first place. There’s only one solution. Pay it off – as quickly as you can.
The issue that you might have is that your debt keeps money away from your future priorities by paying off something that’s already happened. That’s the exact opposite of what you’ve been trying to achieve through applying the four rules.
If rule four is aging your money, debt takes you in the opposite direction. It’s giving your money a job before it’s even yours to allocate. Don’t allow debt to even become an option.
But what about your mortgage or your student loans? Sometimes debts are necessary, or even good for things like improving your credit score. Not all debts are created equal. The rule of thumb is that you should never borrow money for something that will go down in value.
A car loan? Not a great choice. A mortgage is better since land costs generally go up over time. Education is more of a mixed bag since it depends largely on what you study and how much of a return you get from that piece of paper.
If you do have debt though, that doesn’t mean you should beat yourself up over it. You can do the math on how much money you’ll save paying off your loans earlier, but the real incentive to knuckle down is the mental relief from being debt-free.
The sooner you pay past obligations, the sooner you can get serious about your future.
Conclusion
Managing money effectively is about more than just keeping track of expenses – it’s about transforming your financial mindset and habits. The four rules offer a mental guideline to assign every dollar a job, embrace your true expenses, roll with the punches of life’s unpredictability, and age your money to break free from the paycheck-to-paycheck cycle.
This holistic approach helps you create a buffer against financial surprises and empowers you to align your spending with your values and long-term goals.
Through practical steps and a change in your perspective, adopting the YNAB method can help you develop financial peace and stability. It’s possible to live your life without stressing about your money. Build a budget that works for you, so you can focus on what truly matters.
Jesse Mecham is the founder of You Need a Budget, a financial platform that introduces an innovative, effective approach to personal budgeting. He’s a former accountant and has utilized his expertise to develop a system that helps individuals and families gain control of their finances through simple, adaptable principles. In addition to his work with YNAB, Mecham has contributed to various financial blogs and podcasts, sharing insights on budgeting, saving, and the psychological aspects of financial planning.