As the season of spontaneous summer spending comes to a crashing halt, we thought it might be a good refresher (for all of us!) to get back to basics. A little “Budgeting 101” to help us reset and refocus on the “why” and “how” of budgeting, prioritizing, saving, spending—all of it! There may even be a little homework. Class is in session, so grab your budgets and follow along!
Before I started budgeting, I recall the all-too-familiar, queasy notion that something was amiss with my finances—that I’d need to pay a bill or two late, and that there’d be no more eating out that month. Back in those days, as I slurped down creamy chicken-flavored Ramen noodles, I’d wonder, “Where did all of my money go?”
It’s a question that leads many a YNABer to our virtual doorstep and, unlike with the lost sock phenomenon, there’s an answer to be found (if you dare). But a far more valuable piece of data lies in the future … forget about where you’ve spent dollars in the past. Instead, if you really want to get control of your cash, your best bet is to focus on your desires.
What Do You Really Want?
When you know what you want, you take action to make it happen. It’s that simple. If you don’t want to miss an early flight, you set an alarm and get to bed early. If you want mashed potatoes at Thanksgiving, you make sure to get the serving bowl before your cousins get hold of it. And, if you want to have enough money to live a life that you enjoy, you budget.
Did that last one surprise you? If so, then perhaps you haven’t discovered how to make your budget irresistible—with goals.
Take it from this quasi-rebel, goals are a lot more fun than they sound. See, when you have money, you will inevitably spend it. But, when you have money and goals, you’re incentivized to set aside some of that cash to make your goals a reality.
And goals don’t have to be boring. Sure, you might want to be debt-free. You might want to break the paycheck-to-paycheck cycle. You might want to repair a cracked foundation in your home. But, you can also aspire to go on your dream trip to Spain, enroll in yoga teacher training, start your dream business, or buy a vintage saxophone. Your goals can be anything you like!
… the key is that you actually set goals, specific goals (because saving for a trip to Spain with your sister in August 2019 is far more motivating than vaguely saving for a vacation that maybe you’ll take, one day, if work ever lets up).
How to Set a Goal in YNAB
To set a goal in YNAB, create a budget category where you’ll save up. Click on the category name and, in the inspector (the right-hand pane), click “Create a goal.”
Next, choose a type of goal:
- Target Category Balance (e.g., save $4,200 for a saxophone)
- Target Category Balance by Date (e.g., save $1,200 by February for your flights to Spain)
- Monthly Funding Goal (e.g., save $50 per month to seed your online side hustle)
Depending on the type of goal that you choose, you’ll be asked to enter the amount you need to save, the date and/or a monthly funding goal. Follow the prompts, and click “OK.”
Now, the “Available” column in your budget shows an orange progress indicator:
When you click on the category, you can also see the progress that you’ve made in the inspector. Once you’ve fully funded your goal, the category turns green, and it’s time to celebrate.
So, What Do You Really Want?
What inspires you? Practical goals go a long way (life gets uncomfortable without food, shelter and electricity, and becoming debt-free is fantastically freeing), but don’t be afraid to think bigger. Dream a little, and use your desires to motivate you.
Sure, you’ll still encounter the urge to splurge, but when your budget is the key to unlocking your biggest life goals, it’s so much easier to stay on track!
Set a fun money goal, big or small. If money’s really tight, how about a monthly funding goal of just a few bucks to treat yourself to a coffee/donut/parking meter? Or go for a target category balance and save up for something bigger!
And, if you’ve already set budget goals, can you make them more specific? Don’t just save up for a new car—pick it out, and label your category accordingly. If you’re craving new hardwood floors, get some estimates so you know how much you need to save. Make it real, and make it happen.
Your Next Step
Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?