This post is sponsored by You Need A Budget.
Remember how I just talked about how proud I am for setting up my life with my financial advisor? Well I have a confession to make. While I work with him for my savings and retirement planning and overall “big decisions,” my day-to-day budgeting is non-existent.
Thinking about money stresses me out and so I do what anybody would do… I ignore it. (This is terrible financial advice, by the way.) For years, I have meant to set a budget and just never figured out a system that worked for me. One that was robust enough to actually feel worth it and one that felt like it was serving me more than the effort I was putting into it. I’d grow frustrated (or anxious) and put my head back into the sand.
I’m a fairly organized person in most areas of my life, and this is one place where I am sorely in need of help. I have a somewhat unique financial set up as I pay myself a small salary every month, but receive a lump sum payment at the beginning of the year from my business’s previous year profit. Technically speaking, this works for me, but I know I’m missing a huge opportunity to be in more control of what I spend and understand exactly where my daily spending is going. Instead of just rolling with it, I want to set a budget and stay on track of additional savings goals.
YOU NEED A BUDGET (AND I DO TOO)
Honestly when I agreed to do this sponsored post with You Need A Budget, I did it mostly because it was something I was so desperate to do but have been procrastinating for years. I knew if I had a deadline to talk about my experience that I would actually…. DO IT. My friends Ashley and Ryan absolutely swear by YNAB and I knew from their experience that I would like it too. (Ryan and I are like two peas in a pod, ha!) Spoiler alert: I’m sold.
What better time than January to kick off a brand new budget for the year! I dove head first into everything You Need A Budget offers in terms of getting set up and understanding the YNAB principles. I learned quickly that this is more than a boring “budget”– it’s a way of life. As I watched every video, I became more and more hooked on this idea. It is absolutely brilliant. Instead of feeling overwhelmed by setting and creating a budget, I was excited to get mine up and running. Now I’ve got my budget ready to go (!!!) and for the first time feel totally confident. I’m excited to see how this changes my spending habits throughout the year.
The YNAB software is award-winning with a cult-like following, for a reason. It takes the guesswork out of budgeting and puts you in the driver seat so you can fully take control of your finances.
YNAB has four main rules of thumb:
1. GIVE EVERY DOLLAR A JOB.
This is kind of like the envelope method if you’ve ever done that– where you put cash into designated envelops. You know what you have to work with, and put each dollar to work based on what needs to be taken care of.
2. EMBRACE YOUR TRUE EXPENSES.
So genius. A true expense is an expense that will pop up, but isn’t considered a monthly expense. For example, a monthly expense would be “mortgage” and a true expense would be “auto repairs” that you expect to need this year. Basically you are incrementally setting aside the money, before you need it. So when you do need it, you have it!
3. ROLL WITH THE PUNCHES.
This is my favorite YNAB principle. One of my biggest issues with other budgeting software and services I’ve tried before (even my handmade ones in Excel) was that I had a hard time guessing exactly how much money I’d spend in the future. Some expenses are easier to know and more consistent and other ones less so. By “rolling with the punches,” it’s okay to be flexible with your budget and change it as needed. When you overspend in one category, like “groceries,” the software will prompt you to reconcile this by taking the money from another category where you still have the budget available, like “dining out” in this case. This allows you to be flexible with where your money goes, while still living within your means.
4. AGE YOUR MONEY.
This rule is what will help you get out of the cycle of living paycheck to paycheck if that’s something you’re currently in. If you feel like you’re never able to get ahead and your paycheck is completely accounted for the minute it hits your bank account, YNAB will help you get out of this. Using Rules 1-3 of the YNAB system will help you determine how to spend less money, which then allows you to budget gradually further and further into the future. The goal would then be to get enough money to let this month’s pay cover next month’s expenses and so on and so on. I love how they break it down: instead of having the bills in hand waiting for the money to arrive, you’ll have on the money on hand waiting for the bills to arrive. (Talk about a powerful shift.)
The software itself is key, because it allows you to see your “true” bank account balance. Every dollar that will be spent (monthly expenses, and “true expenses”) have been accounted for. If you saw, for example, your balance on your bank’s website you’d see a larger number, and maybe think you had more to spend, without realizing that those dollars had to go other places first. This lets you GET AHEAD of your budget and takes the guess work out of how much money you’ll have to work with between paychecks.
YNAB offers free, daily workshops that you can sign up for to get onboarded as seamlessly as possible.
(This to me is such a huge selling point. You can ask questions live and get immediate help from their expert instructors. Perfect for people like me who start to shut down when I get lost!) Beyond just getting set up, they also offer workshops to tackle money problems you may be facing like how to pay off debt, how to reach your savings goals, how to budget with a partner, and how to get into a routine of budgeting.
Thank you to You Need A Budget for sponsoring this post!