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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
Y N A B You Need a Budget! You have not budgeted like this The - - PowerPoint PPT Presentation
Y N A B You Need a Budget! You have not budgeted like this The - - PowerPoint PPT Presentation
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
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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
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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!
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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!
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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
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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
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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!
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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!
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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!
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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!”
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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!
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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!
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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!
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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!
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- Budgeting involves a lot of moving targets on