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14. Guilt-Free Spending: Mastering YNAB’s Original Rules · The Money Clarity Podcast

• 0:00
  on today's episode of the podcast, I am going to walk you through YNAB's original four Rules for Simple Budget.
• 0:10
  Speaker: Welcome to the Money Clarity Podcast.
• 0:12
  Speaker: I'm your host, Lindsey Ciarrocca.
• 0:14
  Speaker: I'm a YNAB Certified Coach and a Certified Money Coach.
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  Speaker: And I am here to help you stop feeling stressed about money.
• 0:21
  Speaker: Together we'll get your finances organized so that you can finally feel confident about not only spending and saving, but using your money as a tool to go after your biggest, wildest dreams.
• 0:33
  Speaker: Let's dive into today's episode.
• 0:37
  Alright, so if you've been around my world for any amount of time, you probably know that YNAB is my favorite budgeting software.
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  Not only do I use it personally and.
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  By personally, I mean I have our household budget in it, but one for each of our two businesses.
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  But I have taught the majority of my clients how to use it as well, and I found that once they're able to learn the ropes YNAB can be a total game changer for their budgeting.
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  But why is that?
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  It's because YNAB, while Yes.
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  It's a piece of software that helps you see your numbers.
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  They also have a system.
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  And they originally started with four rules.
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  So YNAB has actually been around for 25 years, I believe it has been now.
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  And so they started with these four rules.
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  And you know, rules sound a little restrictive, right?
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  So, but they're really meant to guide your budgeting success.
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  So here are the four rules and how I interpret them into my own budgeting.
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  And then next week we'll talk a little bit about.
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  Uh, the shift that they've moved into and the five questions that they now follow.
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  All right.
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  Rule number one, give every dollar a job.
• 1:54
  So you've likely heard me say this if, again, you've been around here for any amount of time.
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  Rule number one, give every dollar a job.
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  So, while the sounds simple than it is, this is really also the key to taking control of your money.
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  It means.
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  It just means giving every dollar a purpose.
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  So by doing this, you gain clarity on where your money's going, and you can eliminate any wasteful spending.
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  So the way, the way YNAB helps you do this is by letting you divide your checking account balance into categories.
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  This is crucial because mental accounting.
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  It's a real problem, right?
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  We've all been there.
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  We think we can afford something.
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  We have a couple thousand dollars in our checking account, and then boom, a bill hits that we totally forgot about, and you're a little on edge.
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  YNAB helps prevent this by showing you exactly what you have available in every single category, and sometimes that's nothing.
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  So here's how it works.
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  So you are shopping.
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  You see a shirt in YNAB.
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  You go to your clothing category and you see 20 bucks, your shirt costs 18, you're good to go, right?
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  Maybe even it's on sale for $14.99.
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  Even better.
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  I love a great sale, so you can go ahead and buy that shirt guilt free.
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  So why giving every dollar a job is key.
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  Again, mental accounting add just unnecessary complexity to managing your money.
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  You can simplify your finances with YNAB and its first rule of give every dollar a job.
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  YNAB provides a user-friendly tool that allows you to see exactly what your money is doing with a quick glance, making your budget straightforward and eliminating that overwhelm of trying to remember everything because we can't all remember everything.
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  All right.
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  Rule number two, embrace your true expenses so beyond your immediate needs, those bills, mortgage or rent, cell phone bill, electricity, things like that.
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  Effective budgeting involves preparing for the unexpected expected expenses.
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  So this is where YNAB's second rule of embrace your true expenses comes into play.
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  This tackles those irregular costs that often catch us off guard and end up feeling like an emergency.
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  So those could be things like holiday shopping, car repairs, vet bills back to school shopping, home maintenance, any of those types of things.
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  We know they're going to happen, we just don't know how much they're gonna cost and when.
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  But by consistently setting aside a small portion of your income.
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  You can take those potential financial surprises and turn them into manageable events, it's totally fine.
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  Why planning for the unexpected is important.
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  Don't let irregular expenses derail your progress.
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  It's so common to be going along.
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  Things are going great, and boom, that expense pops up and it feels like everything is off the rails by following YNAB's second rule.
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  This encourages you to plan for those true expenses, and it gives you a format to do that right within the software by setting up categories for things like car maintenance.
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  Annual subscriptions, holiday bills.
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  You create a reliable system that replaces those popup reminders on a post-it note that you forget about, right?
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  This helps you get clarity and control, right?
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  That's what we're after, clarity and control.
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  Not only over the expected things, but the things that will come up eventually.
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  Rule number three, roll with the punches.
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  So it's super common that many people think that budgeting is restrictive, but rule number three allows you to remove that thinking so it acknowledges that.
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  Monthly spending fluctuates.
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  Right?
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  That's kind of where this budgeting, myth of budgeting is restrictive because you would normally sit down and put yourself in a box and say, this is where I'm gonna spend it every single month.
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  And when something goes wrong, it feels like you've lo lost.
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  It feels like you failed.
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  Maybe you might budget $500 for groceries this month, but then.
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  Spend less next month.
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  Maybe the following month you'll spend slightly more.
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  That's okay.
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  YNAB provides the solution with flexibility.
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  Not only is it easy to move money between categories, it's encouraged if needed, so you don't have to stress over small overages like an extra $20 spent on groceries this month.
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  YNAB lets you quickly move those funds around.
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  From one category to the next, but maintains your overall budget so you can still see where everything else is accounted for.
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  It's this ease of moving money around that keeps you in control and positive about your financial progress.
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  Again, flexibility is the key with YNAB by following Rule three of rolling with the punches.
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  This allows for dynamic budgeting, so it means you're not locked into that rigid box, that plan that says you can't spend more than X amount of dollars.
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  YNAB gives you the real time information that you need to be able to make adjustments once a month or even day to day?
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  And this proactive approach helps you manage your money more effectively.
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  Making small corrections before they become big problems.
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  And finally, rule number four is age your money.
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  Imagine this for a second.
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  Imagine a life beyond the paycheck to paycheck struggle.
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  That's the power of YNAB's* Rule four.
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  Basically what we're doing is we're creating a time buffer between when you get paid.
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  And when you spend that money, this will help you build a financial foundation that allows your money to work for you, and it helps you relieve some of that stress, really.
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  And that's really the one of the biggest things we're looking for, right?
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  Because the ultimate aim is to reach the point where you can live comfortably on last month's income.
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  So you, so the paycheck that came in last month is what is what you're using to pay your bills today.
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  So if you get paid tomorrow, it's not turning around and being spent, it is being budgeted for next month's expenses.
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  That's where things start to get really great.
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  So again, breaking that paycheck to paycheck cycle, if you're tired of what I lovingly maybe refer to as.
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  Banking roulette.
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  You know that nerve wracking game of which is gonna hit first your paycheck or the bill.
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  I've been there.
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  It's not a place that I recommend anyone being, it's not where we want to be, it's, it's not Provide a stress free financial situation.
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  YNAB's Rule Four offers that solution by creating that financial cushion.
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  Y NAB helps you avoid those close calls and those fears of overdraft fees, providing you the financial peace of mind that you're looking for.
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  All right, let's do a quick recap of the four rules.
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  Rule number one, give every dollar a job know exactly where your money is going by assigning a specific purpose to every single dollar, whether that's $50 or $5,000.
• 10:21
  Give every dollar a job.
• 10:24
  Rule number two, embrace your true expenses.
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  This rule emphasizes planning for the irregular but predictable expenses and helps prevent them from derailing your entire budget.
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  Rule number three, roll with the punches, acknowledging that life is unpredictable.
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  This role encourages flexibility and adjustments to your budget as needed.
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  Again, it's okay.
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  It's not a failure.
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  You are making informed decisions with new information.
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  And rule number four, age your money.
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  This rule again, focuses on building a time buffer between earning and spending, allowing you to move away from living a paycheck to paycheck cycle and start gaining financial stability.
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  Of course this process takes some time and de dedication and achieving financial mastery with these rules requires consistent effort and time.
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  However, I promise you the reward is well worth it.
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  The increased awareness of your spending habits, which often relate.
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  Actually leads to reduced spending and increased savings for your long-term goals.
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  Those greatest life things that we always talk about.
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  What is it that you truly want more money for?
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  Those things that creates that positive cycle of financial growth.
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  So instead of fearing these guidelines, take a moment to let them digest, and then embrace them as a starting point for your journey to financial freedom, because with patience and commitment, you can build a more secure and prosperous
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  future.
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  There you have it.
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  Those are our four original YNAB rules, like I mentioned.
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  Again, next week we will talk about the new five questions they share.
• 12:33
  If any of this resonated with you, I would love to invite you inside my membership on school.
• 12:38
  It is a supportive place to heal your relationship with money.
• 12:41
  Get practical help using YNAB, and finally feel confident in managing your finances.
• 12:47
  You can check it out@theexuberantelephant.com slash e mc for Empowered Money Circle, and I will leave that link in the show notes below.
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  Thanks so much for joining me today.
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  I will talk to you on the next episode soon.
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  That's all for this episode of the Money Clarity Podcast.
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  My hope is that today's conversation gave you a little bit of clarity and confidence to take the next step.
• 13:17
  If you're ready to dive deeper into your relationship with money, you can find more resources both free and paid at theexuberantelephant.com /everything.
• 13:27
  You can also find that link in the show notes, and if you're enjoying the podcast, please leave a rating interview.
• 13:33
  It really helps the show reach more people just like you.
• 13:36
  I will talk to you next time.