Y N A B You Need a Budget! You have not budgeted like this
The YNAB Methodology Four rules: ● Rule 1 . Give every dollar a job ● Rule 2 . Save for a rainy day ● Rule 3 . Roll with the punches ● Rule 4 . Live on last month's income
Rule 1: Give every dollar a job ● You're the boss. When you earn money, you plan how you'll use it, then follow your plan. ● Make spending decisions based on your budget, not your bank balance ● No budget failures, just lots of adjustments
Rule 1: Give every dollar a job Without Rule 1 ● Account balance has $500 ● Let's have lunch! ● $100 spent on lunch at fine restaurant ● Regular bills come in – ouch!
Rule 1: Give every dollar a job With Rule 1 ● Account balance has $500 ● Budgeted: ● Food $150 ● Eating Out $10 ● Gas $40 ● Utilities $100 ● Car Payment $200 ● Regular bills come in – no problem!
Rule 2: Save for a rainy day ● Break up large, less-frequent expenses into monthly chunks ● There are no normal months ● Plan for high-expense months
Rule 2: Save for a rainy day Predictable rainy days Unpredictable rainy days Car Insurance Car Repairs Property Taxes Home Repairs Vehicle Registration Unexpected Travel (funeral) Vacation! Vet Bills
Rule 2: Save for a rainy day Without Rule 2 ● Car insurance $600 due every 6 months ● Checking account has $1,000 ● Upcoming bills in next few days $770 ● $1,000 less $770 means $230 impulse shopping money! ● Then $600 car insurance bill arrives. Oops!
Rule 2: Save for a rainy day With Rule 2 ● Six months ago you knew the car insurance premium due in six months. ● You've been budgeting $100 per month into Car Insurance budget category. ● The bill arrives, you pay it. You don't even feel the bill!
Rule 3: Roll with the punches ● Be flexible and address over-spending before moving on to the next month ● When you overspend in a budget category for the month, roll with it! ● Look through your budget and move some money around. ● Remember you're the boss!
Rule 3: Roll with the punches Without Rule 3 ● You budget $300 for groceries in April but you spend $325. ● “Budgets don't work!” ● “Trying to guess what I will spend is a waste of time!” ● “I don't need a budget, I need a raise!”
Rule 3: Roll with the punches With Rule 3 ● You budget $300 for groceries in April but you spend $325. ● “No problem! I'll just move some surplus money from Clothing into Groceries!” ● Budgets do work – you just haven't budgeted like this before!
Rule 4: Live on last month's income ● Spend this month what you earned last month ● Save enough money to go an entire month without touching your regular income ● Then spend this month's income next month!
Rule 4: Live on last month's income Without Rule 4 ● Living paycheck to paycheck. ● Timing bills to paycheck every pay period. ● Juggling due dates, cash flow, unexpected expenses. ● What if your company misses its payroll run and your paycheck is delayed? ● Stressful!
Rule 4: Live on last month's income With Rule 4 ● A month's worth of paycheck saved as Buffer ● Pay bills as they arrive ● Freelancers, Realtors, business owners, entrepreneurs - anyone that has a variable income from one month to the next can budget. ● Happy happy joy joy!
● Budgeting involves a lot of moving targets on the expense side of things. If the income side is variable, it’s no wonder those people think budgeting doesn’t work.
Recommend
More recommend
