This is a guest post from Victor Lim, who was inspired to become financially responsible after becoming a father. You can read more about his journey into fatherhood and finances at Dad is Cheap.
Throughout my career I’ve been a numbers guy. I worked in real estate, finance, and am currently a market analyst. You would think that I would be the one in the relationship handling the finances, right? That couldn’t be further from the truth.
My wife grew up poor, so she was always raised to worry about money. I, on the other hand, was spoiled rotten and didn’t really put much thought into our finances. So naturally, I let my wife handle our finances since I had no opinion of our money. Everything my wife and I have before we became parents I attribute to her. We have a house,two paid off cars, and a decent amount in savings. While we made good salaries and lived comfortably, there was never really a feeling that we were working towards any kind of future.
In the past, our concept of budgeting was simply looking at our checking account balance and making sure it had enough money to pay the next bill. We were content as long as we had enough to go out to eat, buy the latest gadget, or get a new pair of shoes.
That all changed when our daughter was born in April 2014.
Being responsible for the well being of another person is such a huge responsibility. My perspective about finances completely changed as soon as I became a father.
When you read articles about how a child can cost up to $13,000+ per year, it can be overwhelming. How can we possibly afford this child? I worried about the cost of feeding her, clothing her, paying for her extracurricular activities, and putting her through college.
My wife and I knew it was time to get on a budget.
I must admit I shunned You Need A Budget when I first heard about it. Sure, it got great reviews, but it cost $50! So, I tried everything else. I tried the free programs that linked to your accounts and even created my own budgeting spreadsheets. No matter how motivated we were, nothing really stuck.
The free program that linked to all our accounts was reactive rather than proactive. It showed us what we spent our money on, but it didn’t really change our behavior. The budget spreadsheets didn’t work because we couldn’t consistently input our transactions. And neither of these methods helped us figure out what to do when we overspent or had money left over.
We finally caved and decided to give YNAB a shot. I downloaded the free trial, watched some training videos, and I was hooked. YNAB isn’t simply a budgeting software, it is a philosophy and a method that shows you—teaches you—how to actually stick to a budget.
The Four Rules changed the way we thought about budgeting. Rule One allowed us to optimize our spending so that we could save and invest more (while still fitting in fun!). We were able to treat irregular expenses such as taxes into monthly payments with Rule Two. The flexibility of Rule Three freed us from the guilt we used to have whenever we overspent.
With Rule Four, we achieved true Budget Nirvana. By living on last month’s income, we don’t have to check our bank balances before we pay a bill anymore. We just pay it. It’s completely liberating.
YNAB worked for me and my wife by making us active participants in our budget on a daily basis. Anytime we made a purchase we would immediately log it into our mobile apps. Seeing the budget balances move up or down with each transaction created hyper awareness in both of us. We are now more conscious of our spending and we make sure that our purchases fall in line with our values.
Since we started using YNAB, our marriage has never been better. In the past, oftentimes any discussion revolving around finances would lead to an argument. Now we discuss money openly on a regular basis. Budget meetings are even scheduled monthly on our calendars! We talk about longer term goals such as retirement, saving for our daughter’s college, and paying off our mortgage. We no longer have issues if the other person wanted to buy a video game or a new outfit. It’s in the budget.
YNAB has paid for itself many, many times over.
While we lived a comfortable life before we had our daughter, we wanted more for her. When it came to finances, we finally realized that good enough is not good enough. Our daughter deserves to have every opportunity in life that we can afford to give her. Creating a plan with YNAB will help ensure that she will always be taken care of.
For the past nineteen months we have followed the Four Rules and my family’s future has never been brighter.
For more from Victor Lim, visit Dad is Cheap or follow him on Twitter at @dadischeap.