Don't worry. You'll make the right decision.


I love Rule Three. In fact, I’ve decided that it’s my favorite rule. I love that it removes the shame associated with overspending. You’re no longer punished for not being able to predict the future with 100% accuracy. I love that it gives you a way to answer the question, “Where’s the money going to come from?”. I love that it keeps you nimble and flexible.

The truth is it’s more important to stick to the process of budgeting – the give and take of priorities – than it is to stick to one set of numbers that made sense a week ago, but that doesn’t make sense today. When information changes, we change and adapt. Lee, one of our teachers, always says, “I never understood why people would tell me I couldn’t change the budget.  I’m the one who typed those numbers in there in the first place.” Exactly.

Rule Three is a beautiful thing.

However, when I teach this concept in the “Getting Started with YNAB” course, inevitably a few people express concern that you could be too flexible, and then you could lose sight of goals and what you’re trying to accomplish. The concern is, if you’re changing things whenever you want, why budget in the first place? It’s a great question.

But Rule Three doesn’t mean changing everything. It’s about evaluating your priorities and adjusting as needed, if needed. During class as I’m walking through the software demonstration, we get to a point where I overspend on a gift. Here’s what the budget looks like at that point:

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I ask the class to tell me where they’d take the money from. Then I pause and wait while attendees look over the screen.

Then the responses start coming in. There are usually several votes for clothing, some for restaurants, maybe one or two for car repairs.

Of course, it’s a little bit of a trick question, isn’t it? This screen just shows you a budget, it doesn’t show you the life and person behind the budget. What if the cupboards are full and there’s 2 days left in the month? In that case taking the money from groceries might be ok. The same could be true for fuel.

Maybe this person is driving a newer car and just had a bunch of work done. So taking $17.50 out of car repairs would be fine. It really depends, and that’s always a worthwhile discussion. But here’s the interesting thing, and the big point I want to make.

No one has ever suggested taking the money from the car payment category. Not once. The responses are always thoughtful and responsible. I’ve always believed that people will make the right decisions for their lives, when they have the right information. But the key is having the right information.  The budget gives you that.  You can look everything over and decide what to do. You’ll know where you can shuffle funds from, and you’ll know what you shouldn’t touch.

I have certain categories in my budget that I’m more likely to shuffle from. I have some that I wouldn’t touch unless I absolutely had to. Everyone draws those lines in different places.

It’s important to the trust the budget when making decisions, but it’s equally important to trust yourself to make those decisions.  Look things over, think about what’s going on financially, and you’ll make a good decision.