When I was growing up, all the kids in my neighborhood used to get together during the summer days to play wiffle ball. I admit I was a bit of a tomboyand LOVED playing backyard ball. I have to say, I was pretty much the star hitter. I batted left-handed and could hit that wiffle ball pretty far. As I got older, my eyesight started to get worse. As my eyes got worse, so did my hitting.
I started striking out. A lot.
It was frustrating because I loved playing, but I hated feeling like I couldn’t control my hitting. so I decided to do something about it. The way I saw it, I had another option – I could just learn to bat right handed. So I set my mind to do just that.
But boy it was hard, and I just could not figure out why. Everyone else said it was easy, but it took me a long time to get the hang of it. When you’re 12 and it’s summer and you aren’t playing, life is not good. But I stuck with it, and after hours of practice, and drill and repetition, I did manage to learn to bat right handed.
So why was it so hard? It was hard because it felt so unnatural and it wasn’t what I was used to. In reality the hard part was learning NOT to bat left-handed. Just as much as I was learning a new thing, I had to let go of another thing that I was far more comfortable with. Plus, I had to do all this in the middle of the season. It’s not like there is off-season training in Maine for 12-year-old wiffle ball players.
Sound familiar? After working with YNABers through private coaching and webinars for over a year now, I’m convinced that there are two main reasons why people have a hard time getting started with YNAB.
1. Learning YNAB isn’t necessarily hard, but UN-learning the way you were managing your money is.
Think about it. About the time you come to YNAB you’ve probably been handling your money one way for a long time – maybe decades. That’s a fairly strong habit to break. I’ve heard it said it takes 21 days to create a new habit. When you are feeling frustrated that’s a long time.
2. When people come to YNAB, things are not going well financially.
Let’s be honest, no one looks for a budgeting or financial solution if your money situation is going great. Often folks are in crisis, stuck in overdraft, mired in credit card debt, in danger of losing their homes. It’s difficult to learn a new skill in the middle of all of that.
It’s like learning to swim while you are drowning. Can you imagine how hard that would be? Of course, if you’re drowning, it’s imperative that you keep kicking so your head stays above water.
But honestly, if you had to learn to swim while you were drowning, you’d take all the help you could get. If someone threw you a life preserver, you’d grab for it wouldn’t you? I’m sure I would have learned how to bat right-handed much sooner if I’d had help or instruction.
So to those of you who may be new to YNAB, don’t be afraid to reach for a life preserver. We have many free resources available to you. There’s no question it’s hard to learn this when things aren’t going well financially, but we at YNAB are glad to help.
Batting right-handed did increase my batting average and learning to manage your money with YNAB will definitely increase your bank account balance.
Keep swinging!
Erin
YNAB Coach
March’s Success Story focuses on Tracy Alt from southeastern Michigan. Tracy’s success demonstrates that YNAB can have an immediate effect on your day to day spending.
Tracy just started using YNAB in February of this year. Her first success was at the grocery store. Using YNAB Tracy was making her spending decisions by the budget, instead of the account balance. She determined how much she was going to spend on groceries – and that was it!
“Before starting YNAB I would “tell myself” that I had a $100 budget, but I was really lying to myself because I knew darn well that I was going to buy everything in my cart even if I went over-budget.
When I got to the check-out lane, I immediately separated the “must-have’s” from the “wants” in my cart. I rang up the “must-have’s” first and then I began ringing up the “wants” in order of priority to me. Once I hit $99.99 I stopped. The only things that I could not get were a box of cake mix and a jar of frosting (which I wanted to have on hand just in case my husband changed his mind and decided that he does want a cake when we celebrate his birthday with his family).
I felt so proud of myself handing those items back to the store clerk and really, truly and honestly sticking to my grocery budget.”
Tracy explained to me that before YNAB she kept a chart of monthly bills.Until recently, her chart only included the bills that she paid regularly, every single month, such as the mortgage, car payments, utility bills, etc. As she paid each bill she would check it off on her chart so she could see which bills she had already paid and which were left to be paid.
Tracy went on to say, “Spending decisions were made based on comparing the bank balance to what bills were left for the month. If I felt confident that there would be extra money, we would spend. If not, we would not spend. We had absolutely no system in place to account for “lumpy” expenses such as hair cuts, dog food, car repairs, etc. We just sort-of winged it with these expenses.”
Now that she is using YNAB, things are much easier to manage.
“In just one short month of using it, YNAB has completely changed our financial outlook. There is no more guess work. Either the money is budgeted for a particular expense or it is not and we can spend accordingly. There shouldn’t be any more surprises now that we are budgeting for the “lumpy” expenses. The next time my husband wants to do an oil change on one of our vehicles, I know the money will be there, allocated specifically for that purpose.
The monthly bills are still taken care of and the non-monthly bills are being planned for by budgeting money to those categories each month. I can’t wait for fall, when I normally start worrying about how we will pay for Christmas. It’s only February and I already know how we will be paying for Christmas this year….with money that is already in our bank account waiting to be spent for that purpose.”
So if you find yourself frustrated because you don’t have a buffer in place yet, or you are still working on your credit card debt – remember – budgeting can have an immediate affect on your short term spending, helping you to reach those long term goals.
~Erin – YNAB Coach
I shot this one on the same day that I shot the original Whiteboard Wednesday, so all the progress I made with lighting, markers, and the camera..aren’t here.
But the message still gets across!
I didn’t have time to shoot a new one today because of all the stuff I’m doing for the upcoming tax course (enrollment ends Friday at midnight — it’s free).
What we cover:
- A too-common situation between spouses where, even with good intent, things go awry
- How the budget comes to the rescue
This is a particularly good video to share if you know someone that has maybe run into these issues! (Sharing with high doses of tact — obviously).
A bit late because I had major technical difficulties :) Please leave a comment down below if you have any feedback or ideas for future Whiteboard Wednesday topics! Also, please share this with friends that need to learn a bit about budgeting!
A pretty funny forum thread popped up recently and I wanted to highlight it :) If you can think of another, add it to the thread!
the first thing you do when you get a receipt is say to yourself “ok which category will those go in or better yet, is this a split transaction!”
I can’t wait til the next pay day just so I can go put February’s budget categories in! (And because I get giddy, like you, over entering receipts!)
you antagonize over buying girl scout cookies because you can’t figure out if you should categorize it as groceries or charity.
you get a kick out of coming in under budget on groceries because that means you can throw that money into the car replacement category, even though you expect your current car to last another 8 years.
you find yourself looking longingly at the chocolate bar in the store that costs only 50c and thinking ‘mmmm, chocolate….’, but then realising you don’t have 50c left in your ’snacks/eating out’ category, and you’d have to take it from another category, and you really don’t want to do that because then you might not have enough left in that category, and besides, you really don’t need the extra calories anyway. So….the chocolate bar stays on your shelf, your money stays in your wallet, and you still fit into your favourite pair of jeans!!
your 8 year old comes home from school and tells you they are doing a “Save, Spend & Give” project at school. She raised her hand and told the teacher “we do that and my Daddy does his budget, You Need a Budget, on the computer”!!!
your decision whether or not to purchase light bulbs at the grocery store isn’t JUST a matter of weighing convenience and price…the fact that it will create a Split also factors into it.
the UPS guy is concerned because I have cut waaaay back on getting deliveries from Amazon!
you forget when payday is.
someone mentions the word money and you can’t help yourself and have to mention YNAB and tell them all about it whether they really want to hear or not.
you use the word buffer in daily conversation.
your thoughts switch to ‘Yikes, the balances in my accounts are only ‘$[insert a figure in the hundreds or thousands]‘ instead of ‘Yikes, the balances in my accounts aren’t enough to buy me dinner’.
you go to the bank to make some changes to your portfolio and you end up upselling YNAB to the Financial Planner behind the desk
you don’t notice your account balance is rising because you’re focused on budgeting instead of dwelling in transactions.
you look at a large deposit and smile thinking; ‘I’m glad that those money already have a job.’
You know you are the spouse of a YNABer when you don’t understand why you don’t have enough money to buy a $1.90 cup of coffee when your account balance says you have $ hundreds/thousands!
you immediately recognize a $1.90 purchase is a McDonalds ice tea because you have entered the transaction over and over again!
you no longer have a constant horrible feeling in your stomach.
you don’t feel frustrated when you receive non-monthly bills.
you don’t feel bad about purchasing something that you really want.
you don’t buy something just because it’s on sale.
you constantly have to tell your spouse that we can buy this, but will need to subtract it from another planned expense.
you are a straight guy but still strangely love a guy named Jesse that you have met on the Internet
you no longer stress about how you’re going to pay the next bill. (The money is waiting in the bank.)
You can’t wait until the last week of the month to do next month’s budget.
you take out $40.00 for gas, spend $37.65 and your first thoughts are “hmm…how do categorize the remaining $2.35!
instead of cleaning the house during your baby’s nap, you obsessively read the YNAB forums!
you tell complete strangers about YNAB while standing in the ATM line at the bank.
the end of the month brings excitement as you know you will be working on a new budget!
Hello good YNABers!
I’m pleased to announce the first installment of Whiteboard Wednesday. Today we talk about On/Off Budget Accounts. Forgive the beanie. My hair is atrociously long (by my standard), but I can’t cut it until I reach a goal that I set in October.
Enjoy..
Leave a comment below telling me what you’d like to see in future Whiteboard Wednesday episodes :)
For the next little while I’m going to be highlighting some key differences (read: improvements) between YNAB 3 and the now retired YNAB Pro. Today, we’re talking about the improvements we made to the workflow of imported transactions.
This first video shows the old method.
This second video shows the new method. The difference is simple, but saves keystrokes, and that’s what we’re all about.
0:00 – Why/How I started YNAB.
0:50 – Numbercrunching, realizing we would run out of money before I finished school.
1:30 – Julie says selling YNAB “won’t work” :)
2:00 – Stumbled onto the methodology.
2:40 – Monologue, tongue-in-cheek confession of a Budgeter.
7:35 – Definition of a Budget
7:56 – Diving into the Rules. Started with Rule Two.
9:00 – I want to buy a new putter. The process.
0:10 – Guilt attached to every single spending event (and why there shouldn’t be).
1:10 – Budgeting is a goal-setting session every single month.
1:50 – The importance of His and Her money.
3:30 – Rule Three: Saving for a Rainy Day.
4:00 – Christmas as a classic Rainy Day — “Every month is a little bit of Christmas”.
5:15 – The Cash Flow Dip, and how Rule Three eliminates it.
6:30 – Rule Three’s importance for people with highly variable income.
7:00 – Elimination of “crises” in your household.
8:00 – Decision quality with Rule Three (hint: it’s better).
1:20 – handling overbudgeting (Rule Four)
1:48 – Rolling with the punches (in Boxing)
3:00 – Why you don’t care about your checking account balance
3:40 – An easy trap for people with shared finances (and no budget)
3:58 – Max, my newborn, cries out.
5:15 – First of month, implementing Rule Four
5:45 – Borrowing from yourself instead of Visa or Chase.
0:00 – There is no normal month with your finances.
1:20 – Will likely change the order of the Rules (eventually).
1:35 – Talking about the Buffer.
2:10 – All about timing, the sprint, belt cinch, firesale, etc.
3:20 – A demonstration of Rule One with envelopes.
3:50 – The horrible inefficiency of bill timing to paychecks.
5:40 – Batching bills = efficiency = probably 3 hours per month and no stress.
6:00 – Variable income EXCUSE debunked.
0:30 – With variable incomes, forecasting is always, always, always wrong.
1:40 – Reaching Rule One (the transition).
2:05 – Why I was afraid to originally introduce Rule One when selling YNAB (and why I was totally wrong to be afraid).
Q & A Begins
3:15 – Break expenses down weekly? Or just do it as a month? What’s the optimal period for a budgeting session?
3:42 – Increased frequency of budgeting is tough, worth it if you’re struggling though.
4:28 – Frequency of entering receipts for our household (now that we have the HABIT!)
5:28 – Multiple bank accounts? Does YNAB care where the money is? The colored dresser scenario.
0:48 – Why cash is sometimes really helpful for stick-to-it-iveness.
1:30 – Do you track cash in a different way? Nope.
2:10 – No demo of the software…but we import.
2:48 – One spouse that’s motivated…and one that isn’t.
4:00 – Handling split transactions.
4:30 – Don’t force yourself to do the tedium, if the tedium will make you quit.
4:48 – Some tactics to use at the grocery store’s conveyor belt.
5:35 – A nice testimonial for Rule One from a very wise man :) – “Your life will change.”
6:25 – How we cheated to get our buffer. Sort of.
7:00 – My own testimonial of the methodology as it works in relationships.
0:00 – Establishing responsibilities among spouses with the budget.
1:00 – A funny story about my dry humor getting me in trouble.
2:05 – A “hot” thing to do with your fun money.
2:20 – Money laundering — it’s BAD. Don’t do it. Confess if you are doing it and get things right.
3:30 – Worse than hiding excess cash…
4:10 – YNAB was not in my life plan, a conclusion.
When people set out to “do their budget” they go about it with an approach that is just completely counterproductive. It’s rigid. Formal. Stifling. Ineffective.
One of my favorite board games is the old classic Risk. Great family fun guaranteed every time.
If you want to win in the game of risk, you need to possess one attribute in spades: adaptability.
Yes, you have a plan. And once you see how the other players are placing their armies, you move to your second, third, fourth… eighth plan. If you’re sitting there from the get-go saying North America is yours regardless the cost, regardless the surrounding circumstances, regardless what happens to you from externalities…you’re hosed.
We do this in traffic to. We’ll have a plan B. “Hey, take Mill, but if it’s looking bad we can always head south on 16th and then back over on Washington.”
We do this all the time. It’s a built-in survival instinct perhaps.
But when it comes to money, we have this other emotional side of the equation that is just absolutely insane. Financial academics that study investors continually prove again and again that investors aren’t rational, and that we make completely insane (read: stupid) decisions when it comes to money, how we deal with loss (and gain), risk, etc.
Out of the box, we’re also equally poor at budgeting.
You’ll sit down and begin to build either one of two budgets:
1) The Castle of Fairy Godmother Perfection, with you perched on top. If everything goes right this month, absolutely everything, then you’ll stay on budget. It will be the first normal month in your entire history of adult existence. It’ll also be the first normal month in the history of mankind.
2) The Alcatraz of Unrealistic Miser-y, with you locked inside. This is the budget where you’ll lose 10 pounds because you’ve budgeted $120 to feed your family of four with the main plan being to fill up on complimentary coffee creamer while at work.
In both of these unrealistic scenarios, you’re going to fail. The main reason being that you’re not coming at your budget with multiple plans — just one all-out-this-better-work-or-I’m-never-trying-again-plan.
Listen. You’re the Commander in Chief. Your money salutes you. Tell it to do what you want, but be flexible. Recognize that there are no normal months, that you do have to eat, and that you will go over-budget in a few categories pretty much every single month.
Do I lock my sites on the strategically-superior location of Iceland (in Risk) and just go after it with tunnel vision until I either finally get it (at what cost?) or fail? (At what Cost?)
One of YNAB’s great strengths as a piece of software is the extreme ease with which you can shuffle money around. It was meant to be shuffled. Flexible. Adaptable. That’s what will keep you in the game for the long-haul!
You live in a world that isn’t real. You’ve been basing your financial decisions on everything you’ve seen around you, and you’ve allowed yourself to believe that what you’re seeing is true. What you’re seeing is very rarely true.
This may sound harsh, or insensitive, but the guy that just rolled up two doors down with the brand new lawnmower is going to be paying for that thing (twice over) for five years.
The lady whose house is decorated immaculately is late on her credit card bill.
The parents whose kids have all the latest toys are up to their eyebrows in debt.
The young, successful salesman across the street refinanced his home three months ago to free up $400 in monthly cash flow. He has no idea where that $400/month has gone.
The doctor is working himself into oblivion, but can’t make headway on his student loans.
The husband that bought his wife the new car she’s been wanting is now sleeping less. He doesn’t know it, but his wife secretly wishes he hadn’t bought it.
The happily married couple simply avoids the topic of money.
You don’t see any of that, but it’s all there. And, unfortunately, you’ve lived most of your life making decisions based on assumptions that are entirely false. The people you see around you, and who you aspire to be are all broke. They’re all stressed.
There’s a scene in The Matrix (the original, good movie, not the sequels) where Neo is just finding out a bit about the Matrix. He knows enough to know that something with the world he’s always known isn’t right. Morpheus gives a great line:
Like everyone else, you were born into bondage.
Morpheus is talking about the fact that all Neo has ever known is the Matrix. A façade. A fake life. There’s nothing real about it. In a lot of ways, until we kick some seriously bad financial habits and starting doing things that are liberating (I won’t say, *AHEM* exactly what those things are), we’re stuck. Zero progress is bondage — period.
To end the scene, Morpheus gives Neo a choice of two pills. If Neo takes the blue pill, he’ll wake up and not remember anything about their encounter. He’s allowed to push a big Reset button.
If Neo takes the red pill, he gets to see “how far the rabbit hole goes.” He’ll get to see the reality for what it really is.
Since Neo is the hero, and since he chose the red pill, what type of parallel do you think I’m going to make? The red pill — the REALITY pill, is your budget. Nothing about what you see around you is true. The only thing true is what you care about, what you bring in, and what you let flow out of your life. Your values are real. Your perception of the financial situation of others around you is not real.
Once you’ve taken the red pill, your financial potential is greatly enhanced. Please take a few seconds to view this clip from a classic:
Once Neo saw reality, he was able to control his own destiny. Could the similarities be any clearer here? Once you get a strong dose of your own reality (through effective budgeting), you’ll also be much more empowered to control your own financial destiny.
What’s the financial equivalent of stopping a speeding bullet in mid-flight? I have no idea. But my guess is that you can do it.
Oh, and in your financial world, you are The One.
This is The Wallet. My name is Jesse Mecham, founder of YNAB. Here I focus on the YNAB methodology, software, personal finance, and more.
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