This July marked one year since I’ve been tracking my family’s income and spending through an online tool that I adore: You Need A Budget (or just “YNAB” to aficionados, like me). Go ahead and congratulate me—it’s my YNAB-iversary!
If you’re unfamiliar with YNAB, it’s a tool you can use to forecast how you’ll spend and save all of your money and then reconcile your actual spending against your plan. To me, this anniversary represents the end of many lifelong destructive habits, including:
- Excessive spending (light years beyond my means)
- Retail therapy to make up for dissatisfaction in other areas of my life
- Fully handing over the reigns of my finances to someone (my husband) who will just “take care of it”
- Avoiding online accounts and paper statements for fear of what they’ll reveal
- Arguments with my husband about what “we can afford” when neither of us are grounded in the data
- Reacting to large annual bills as if they’re a crisis (instead of something we know that we should expect every year!)
I knew I’d never be able to run a successful company with this approach to personal finance—and I mean business when it comes to my business, so …
Time to Transform My Financial Life
While I was still in the clouds about our personal finances, I was kicking butt with my business finances. All of my expense, projection and invoice i’s were dotted and t’s crossed. That was the evidence my husband and I needed to agree that I would take over control of our finances completely—paying bills, projecting earnings against expenses, becoming the point of contact for our accountant and our financial advisor and, most importantly for us, budgeting and reconciling our budget against actuals with YNAB.
I’m not going to lie—getting started was a daunting task—and I quickly realized I couldn’t do it alone, so I hired a money coach/YNAB expert to get us up and running. Within three months, we exploded past the learning curve and into a place of financial control.
We’re still at the beginning of our journey paying off our IBAR (Invoices For Blessings Already Received, a.k.a. debt, thanks for the new lingo Kate Northrup!) and investing at the level we want to be, but we’re no longer operating out of a stressful, needless crisis-mode. Now we know what we have. We know what we need. We know what we want—and we know what we need to earn and spend to have what we truly want.
What a Difference a Year Can Make!
If you’ve talked to me for more than 15 minutes in the past year, I’ve probably already talked your ear off about the impact this shift has made in my life, but to crystallize it for the two or three of you who haven’t had this conversation with me (yet!), here are the top four things that I’ve learned. I hope they’ll inspire you to get grounded in your own financial life.
1. Data Is Freedom
Here’s where I tell you, if I can do it—so can you. Let’s just say, when I was telling one of my besties about my recent financial enlightenment, she took in the gravity of my life change by saying, “You were always good with money … I mean, you were always good at spending it!”
As I was grounding myself in the numbers, I forced myself to look at all of my mistakes—the years of overspending, the accumulation of IBAR and all my previous choices—but without judgment. I chose to say, “This is where I am. It doesn’t mean anything about me. This is my opportunity to learn how to nail this—just like I’ve done with so many other things in my life.”
And removing that negative force field—the judgement—freed me to take leaps I never thought possible.
2. Tracking Can Change Your Life
Why now, you ask? I was in the middle of a multi-year career transition. I wanted to leave my digital marketing income behind, but I had no idea what I needed to bring in with my new-ish business to do that. I could’ve just assumed that I needed to make exactly what I was making in my previous career …
Instead, by working the numbers and making some lifestyle choices, I was able to leave that job earlier than expected. Now, when clients come to me feeling overwhelmed by the thought of a career transition, one of the first exercises I advise is to “know your numbers.”
What do you really need to bring in to meet your responsibilities to your family? With some optimizing, the number may not be what you think, and you may be able to make the switch sooner.
3. Match Spending to Your Values
Because I’m a coach (and lifelong self-improvement junkie), I check in on my core values regularly. Most recently, I’ve identified that my core values are community, connection, courage, inspiration and peace.
In her book, Money: A Love Story, Kate Northrup asks readers to compare their spending with their values to see where the two are in sync (and where they’re completely off!). With this filter in mind, my life feels more like a set of choices, based on what I want my life to include.
We’re not fully there, but I no longer spend on things because it’s important to other people. If it’s not a priority for me and my family, we don’t choose to spend money on it.
4. A Gift to My Daughters
Like nearly all of us, my family’s story with money is complex. While many of my family members have imparted useful wisdom when it comes to making money, I wasn’t explicitly taught how to save it or wisely spend it. Even as a lifelong feminist, somehow I always assumed that my husband would take on this job—but I want my two daughters to be independent and financially literate …
So I let them take part in tracking our finances in YNAB! They see what funds are available to us and how we’re choosing to spend our money. Occasionally, the topic of going out to eat will come up, and my nine-year-old will say, “We should eat home instead because we only have $50 left in our “Dining Out” budget for this month.”
She says it with a casual Zen that reminds me we’re truly doing this. I’m breaking a family and cultural cycle. I’m standing up for them so that they grow up knowing that financial control and freedom are possible—as individuals and as women.
Full Speed Ahead!
With all that I’ve learned, all of the habits I’ve changed, and the life I continue to choose daily—the best part is my pride in turning the ship around. I did it! (To be fair, I’m still doing it, but it doesn’t make me any less proud.)
My family is on an inspired financial path, with gratitude to a couple of great coaches, a cool tool that makes finance—dare I say it?—fun, and an accountant who was as shocked as me to see my financial prowess evolve. To everyone who’s been willing to listen to my frequent reflections on my transformation this year, here’s to celebrating with a massage (that will come out of my “Take Care of Me” category)!
Having It All …
Rachel Garrett is a career and leadership coach who helps women re-invent their careers and create their version of “having it all.”
She inspires clients to advocate for themselves, ditch perfectionism, turn up the volume on their leadership skills, and build a personal brand that makes them stand out in any crowd—in a good way. To learn more, visit her website or email [email protected]
Rachel is not sponsored by YNAB, just an avid user and fan.