How Much Time Do You Have?
On average, new budgeters save $600 by month two and more than $6,000 the first year! Pretty solid return on investment.
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There’s a cool feature in YNAB’s mobile app that, with just a few taps on your phone, makes it dead easy to cover overspending in your budget.
It’s a great feature, too, but I’ve discovered that—if you want to crush your debt, save for your dream motorcycle, or accomplish whatever your money goal is—you really have to be mindful when you use it! I’m raising my hand over here, fully admitting that I could do better.
It’s not that moving money around is a bad thing. Rule Three, Roll With The Punches, is part of what makes YNAB work so well. We need our budgets to be flexible so that they can support us when life starts throwing curveballs.
Lately, though, my use of Rule Three has looked more like this: Purchase something based purely on a whim, and then cover it (usually with money from the grocery budget.)
There’s a big difference between scooting money around to cover, say, dinner with a long-time friend who’s passing through town and eating Chipotle-with-guac (yes, I know it costs extra) because I can’t even with cooking. And the net effect?
This kind of half-hearted budgeting is actually more akin to expense tracking—the aimless recording of purchase details. If you’re lucky, it might help you spend within your means (i.e., without racking up debt), but it certainly won’t get you ahead.
If you really want the big pay-offs, like complete peace of mind and full control of your life, not to mention things like saving $6,000 in your first year of YNAB (the average for new YNABers!), then you have to actually budget:
Budgeting is when you make a concrete, realistic plan
for the dollars that you have in your possession, this minute,
in order to attain your desired future outcome.
Concrete plans indicate a fair amount of commitment. I was focused more on the “realistic” part—poorly translated to “totally flexible”—which meant not enough progress paying off my credit card and a love/hate relationship with guacamole.
No, I didn’t start an avocado farm. I’m talking about wish farming. Dave, a fine human and one of YNAB’s teachers, is the original wish farmer. He came up with this brilliant concept to plant virtual seeds that will blossom into just about anything your heart desires.
Wish farming helps you stick more closely to your budget because:
Lucky for you, you do not need to budget for a new pair of overalls or a plow to get this operation off of the ground. All you really need is a pen and paper, although I can’t more highly recommend YNAB. Here’s how it works:
Create a category in YNAB for your wish list. Your wish list is like a giant bag of seeds tucked safely away in your shed, just waiting to be planted. When you find yourself daydreaming about buying a new gas grill, room-darkening shades or a fancy, new pet stroller, add it to the list!
Be crystal clear that everything on this list is a “nice to have” and not a true expense—true expenses command much higher authority in the budget.
As Dave explained, “The (S), (M), and (L) are for Small, Medium, and ‘Look How Much That Costs!’ (or Large, if you prefer).”
Create a second category in YNAB for your wish farm—this is where you’ll grow your wishes. Only wishes that have been assigned a dollar value, in the form of a YNAB goal, are ready for planting. (The vague ones never take.)
Now, this is a small plot, which is the beauty of the wish farm: you can only plant three wishes at a time—one small, one medium and one large. Wishes grow faster when they have room to breathe in the soil.
When you get paid, after you’ve budgeted for essentials, then you water your wishes with any dollars that you have left. Be careful not to let them wither—water as often as you can.
As if growing your wishes wasn’t magical enough, there’s more. Dave explains, “Unlike with seeds, you get to change your mind about what you will harvest right up until the very second you pull it out of the ground (a.k.a., spend the money).”
So, if birthday season rolls around and someone gifts you a beautiful tea kettle, when you’ve already been growing one in the wish farm for the past couple months—or even if you just change your mind—no problem! You can turn that kettle into a different small wish from your wish list. Perhaps blackout blinds.
As you review financial reports, it won’t be all that helpful to have a pie chart that shows a million slivers representing various wishes, like “hardwood flooring” or “trip to Thailand” or “binoculars”.
To avoid this, when it’s time to make your wish come true, move the money into the appropriate category of your budget, and pay for it there. Then delete the wish line item in your wish farm. For example, you would record the spending for new blackout blinds in the ‘Home Improvement’ category, like this:
So, what have you been wishing for? Maybe a wish farm will add a little extra incentive for you to finally treat yourself. Or, if you’re like me, to more strategically treat yourself. (I don’t see myself planting chips and guac in my farm, delicious as that might be.)
And check out the comments over here to see what other YNABers are growing.
Remember, budgeting is not restrictive. You won’t be spending less, you’ll be spending right. You can do this! Today. Right now. What do you have to lose? Except all that debt and stress. (Ok, so kind of a lot.)
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