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You Need A Budget: Book Review

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“You Need A Budget”, shortened hereafter to YNAB, is the book from the creator of the software of the same name. I have been using the YNAB software for many years, and I have found it to be by far the best budgeting system and methodology that I have used in my personal life.

As such I was very interested to read through the creator’s newest book, breaking down budgeting and finance for everyone. Having been using the software for years and knowing the “4 Rules” he discusses in the book for so long, I was wondering if I would get as much out of the book as someone who was coming into it new. In the end, I absolutely did!

The 4 Rules

The meat of the book, the 4 rules are the foundation of budgeting that YNAB is based around, and I find to be a great way to reframe money overall. This is what can be used no matter what you use for budgeting (in fact, Jesse even says you don’t have to use their software at the start of the book). I’m going to do my best to break them down here, but I highly recommend going through YNAB’s resources on youtube or signing up for one of their free classes to dig in more (as well as reading the book of course…).

#1: Give Every Dollar A Job

When you get paid, throw that money into the categories where it will be used, instead of just keeping it as an unknown pile of money. To add to this, you should only be doing this with money you currently have right now. You may be in a case where the money you get from your paycheck is not enough to cover every category or every bill at the moment, but that’s perfectly fine! The point of this is to make sure that you are allocating your money to where it matters most right now in your goals, needs in priorities. Rent may not all be covered by your 1st paycheck, so throw more into groceries or your utility bills. The rent can wait until next month’s paycheck so thats not the job for it at this time.

By giving every dollar a job, you help guide your funds to where they most matter to your right now.

#2: Embrace Your True Expenses

The best way I’d describe this would be to consider anything that you only have to pay every once in awhile as monthly obligations. Have you ever thought you were on track money wise, but then forget that this month is when your 6 month car insurance payment is due? This rule is made to prevent this kind of thing from throwing you off. By breaking down what these “True Expenses” are, you can start ensuring they won’t sneak up on you again.

My “True Expenses” category to give you an idea

#3: Roll With The Punches

Far too often I find people consider their budget to be iron clad. There is only 100 dollars in the grocery budget, too bad! You replace your veggies with Ramen!

That sounds crazy because it is. Budgets change because life changes, and there is nothing wrong with changing your categories up or moving money around. Especially when starting out, its easy to assume you spend X on something but then find out its actually Y you’re spending. By rolling with the punches, you can accept that these changes are okay, and reflect on if this is where you want to be, or if you may want to focus on working on this more as time goes on.

#4: Age Your Money

This can also be considered breaking the “Paycheck to Paycheck” cycle. By over time saving your funds to the point that you are able to live on the previous month’s income (that use to be the name for rule 4 “Live on last month’s income”), you can relieve a lot of financial stress in life. I will say from experience, just paying your bills the moment they come in, without thinking if there’s enough money in your bank account is an extremely satisfying experience.

What My New Insights Were

I found the book did a great job going into detail of the rules, with several personal tales of the author and others working with their budgets that would be worth everyone reading.  However, having been using the software for so long, what I put in above just flew out of my head onto my keyboard almost without thinking about it, which is why my main concern getting this book would be that I would not get that much new info out of it. What I got instead was a lot more insight that I was expecting!

The Fresh Start

Jesse talks in detail about why its worthwhile doing a fresh start on your budget every once in awhile. I saw this as an option in the software but considered it more as a do over for not budgeting correctly.

Jesse explained it as an ability to see if your funds are really where you want them to be right now. By recreating all your categories and giving your funds jobs again, it can be a great exercise in seeing if your priorities in life have changed. In my case, I created new categories and eliminated others because if where I am now versus where I was when I last did my budget.

Thoughts on the Emergency Fund

I’ve always had my emergency fund as a specific category in my budget, hidden from view after it was filled. Even with this being the case, every once in awhile I’d be tempted to pull money from it for a different goal, which is the opposite of what these are made for. In the book, its discussed to instead of having your fund be a category, instead just fill out your budget for as many months ahead the fund puts you.

By doing it this way, you will likely be less tempted to spend the funds, as its already been distributed to the jobs of providing your security versus just being a big number just sitting there.

Budgeting with an SO, and teaching budgeting to children

While I don’t plan on having children, having two chapters each dedicated to budgeting in a family were extremely valuable. I got a lot of value of seeing how Jesse discussed finances with his wife, and I will definitely take the advice to heart when I’m in a relationship again!

….Ladies…. 😉

In the end, if you’ve never used YNAB, or budgeted before I can’t recommend the book enough! Even if you’ve already used their software or embraced their “4 Rule” style of finances, you will still get a lot out of the book.

Have you read You Need A Budget? What are your thoughts?

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