12 Steps (?!) for How to Make a Budget — A Rebuttal :)


Moneycrashers has treated YNAB well over the years, writing some nice reviews of the software and giving us a shout now and again. I appreciate that.

What I want to do is hopefully not burn a bridge, but offer another view on their article re: how to make a budget.

Pat, the author, outlines the 12 steps necessary to make a budget:

  1. Decide to start a budget.
  2. Know how much you have.
  3. Know how much you make.
  4. Know what you owe.
  5. Determine your net worth.
  6. Determine your average recurring monthly expenses.
  7. Enter this information into a database (Pat mentions YNAB as a solution for this. Thanks!)
  8. Look at the bottom line.
  9. Make adjustments accordingly.
  10. Adjust categories based on reality.
  11. Pay yourself first.
  12. Track, monitor, and be disciplined.

I would revise the steps as follows:

  1. Write down what you have on hand (Pat’s Step Two)
  2. Answer one question: “What should I do with this money before I’m paid again?”
  3. Follow your plan.

If we could get people to stop thinking that a budget means they have to suddenly become   an accountant, we might get more people on board!

It really is that simple. Don’t worry about what you owe (that will get flushed out with my second step). Don’t worry about your net worth (follow your plan, and your net worth will climb automatically). Don’t worry about the bottom line (step three takes care of that on the fly!).

I did like Pat’s advice re: making adjustments. You should feel great when you adjust your budget. It means you now have more information than when you first started! You’re like a basketball coach making halftime adjustments so you can win the game. That’s good stuff.

Finally, being “disciplined” just sounds scary. It’s your plan. Just make your money do what you want.