Budget Nerds You Need a Budget

It's a common story: a person finds YNAB and starts using the software, only realize months (sometimes years) down the road that they weren't actually following the YNAB method. They were just tracking expenses using YNAB's software. Tracking expenses is not a bad thing -- tracking brings awareness of your spending habits and where your money and energy is going -- but the magic of YNAB is in the method, encapsulated in the Four Rules:
 
Give every dollar a job Embrace your true expenses Roll with the punches Age your money  
Here's a primer on the Four Rules if you are new to this way of thinking about money.
 
Most personal finance tools are all about tracking your expenses. What the Four Rules do, however, is make you feel tradeoffs. Tradeoffs occur all the time whether we know it or not. By choosing to spend on one thing, we choose not to spend on other things, or we go into debt because we did not make a tradeoff! When we only track expenses, though, we only discover the tradeoffs after they have already happened. You get the spending report at the end of the month, only to realize that you had overspent your restaurant category, for instance, by the end of week two. Tracking expenses after the fact does not give you enough information to make decisions going forward.
 
As Ben and Ernie explain, YNAB asks you to assign your current money to spending in the future. In this way, you save up money in categories for expenses you anticipate ahead of time. Instead of going to a fancy restaurant and hoping that you have enough money to pay for your other bills afterwards, or worse putting it on the credit card and taking on new debt, YNAB would ask you to assign dollars to the meal ahead of time (Rule One). If you don't have enough cash lying around to assign to this, then you will have to pull money from another category to cover it. In doing so, you have made a tradeoff. Importantly, you made the tradeoff ahead of time, so you can determine if it's worth it to you, rather than potentially regretting the decision later.
 
YNAB is all about tradeoffs, and bringing awareness to the tradeoffs you make every day in your spending. By following the Four Rules, you can move beyond tracking expenses and finally get ahead with your money. Most importantly, the Four Rules can help you spend with less stress and anxiety, and more joy.
 
Budget Nerds episodes referenced in this show:
Find the Money First: https://youtu.be/InTcf78558A?si=FqaIb6fc2t5wGvkj
YNAB Is All About Tradeoffs: https://youtu.be/tfIk5UTYDtg?si=ACLRM3rC_6775gCf
 
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
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Ben and Ernie chat with Jeremy Schneider, an entrepreneur turned personal finance teacher who aims to demystify the confusing world of investing with simple, unbiased information. In his early 20's, Jeremy founded an internet startup and ran it for 12 years, never taking home more than $36k/year -- while living in San Diego, CA! This experience required him to get surgical with his spending, and during this time he became an avid YNAB'er (using the old YNAB 4 software). At the age of 34, Jeremy sold his company and became a multimillionaire. After this windfall, Jeremy continued to work for a few years while figuring out how to manage his newfound wealth. This experience, along with his YNAB habits, drove him to found Personal Finance Club, a site with simple, easy to understand information for beginners learning to invest their money.
 
In this episode, Jeremy shares his tidy YNAB plan, with possibly the fewest categories of any guest so far! As a long-time YNAB'er, Jeremy organizes his categories using some of the logic from YNAB 4, but he also shares how his categories have evolved over time and how he has simplified his budget as he became more comfortable with his financial position.
 
Find more about Jeremy Schneider and the Personal Finance Club:
Nectarine Investing Advice: https://hellonectarine.com Personal Finance Club: https://www.personalfinanceclub.com/author/jerschneid/ Personal Finance Club IG: @personalfinanceclub  
YNAB Fan Fest - September 21, 2024
https://www.ynab.com/events
 
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
Follow Budget Nerds on YouTube:
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Ben and Ernie open their inboxes for another mega round of YNAB wins -- stories from YNAB users about positive outcomes, reduced stress, and newfound confidence with their money. In today's mega episode, they have broken up the wins into several themes:
Partner wins Gaining control Getting a month ahead Paying down debt Clarity Stress reduction Building confidence Simplifying Priorities Saving  
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
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YNAB is well known for the Four Rules, or what many YNAB'ers are now calling the Four Habits, which describe the process of gaining control of your money and learning to spend with joy rather than shame or regret. The Four Rules are:
Give every dollar a job Embrace your true expenses Roll with the punches Age your money In today's episode, Ben and Ernie discuss a concept that is implicit in the rules, but perhaps should be it's own rule -- find the money first! Findng the money first means that when you want something that is not in your plan, you need to find the money somewhere else in the plan, that is, re-allocate money from one category to cover your new purchase. This action makes it clear that you are making a tradeoff -- in order to get one thing, you must give up another thing. It may seem arbitrary, but it's an important move! All too often, people will buy something they want without finding the money first, which sets of a cycle of anxiety and fear over whether they can afford it, or whether they will be able to pay off the credit card bill when it comes due. At the very least, spending before you find the money distances you from your money and your priorities, because it obscures the tradeoff.
 
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
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In today's episode, Ben shares a story about swimming at the YMCA. One of Ben's favorite forms of exercise is swimming laps at his local YMCA, and while it's a great solitary form of exercise, sometimes you can't help but notice how your pace compares to others in the pool. One day Ben started swimming laps only to notice an older lady absolutely hauling in another lane. Which was... discouraging, to say the least. However, as she was exiting the pool Ben noticed she was wearing swim fins, and her blazing performance began to make sense.
 
This woman had a huge advantage, but it was hidden under the water. In the waves and froth of the water, Ben couldn't see it. It's a good analogy for financial circumstances. For the most part, we only see the outward indicators of other people's financial life -- the things they can afford to buy, the places they can afford to live -- and even those obversations can be greatly skewed if those people are buying things with debt! It's important to realize that other people have different advantages in life, and those can significantly influence their financial circumstances. So Ben urges you not to compare yourself to others, because you don't know what advantages they've had, and you can't see their full financial picture from your standpoint. As the saying goes, comparison is the thief of joy!
 
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
Follow Budget Nerds on YouTube:
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Ben and Ernie respond to a recent survey reported by Jill Schlesinger on CBS Morning about American's 2024 financial resolutions. The top responses: save more money (41%), pay down debt (38%), and spend less (30%). BORING! Ben rants about why "spending less money" is not a good financial plan, and Ernie highlights the importance of putting a why behind goals like paying down debt. There's nothing wrong with paying down debt, of course, but to be successful, and to to truly practice the YNAB habits, there needs to be a reason why you want to pay down the debt. Maybe it's to fund a vacation that you haven't been able to take before, maybe it's to buy something big for your favorite hobby, or maybe it's to fund a charitable cause. As Ben explains, your spending is part of the way you express yourself in the world, so you need to be clear with your priorities and values.
 
To that end, Ben and Ernie share some of the most interesting financial goals and resolutions sent in by fellow budget nerds. From buying a forever violin, to founding a college endowment, to traveling the US in a custom-built bus, there are very creative and meaningul responses!
 
 
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
 
Follow Budget Nerds on YouTube:
https://www.youtube.com/channel/UCuIUGmbCDklkDCDm-cQqv2g