In honor of the Four Rules Deep Dive happening on our podcast over the next few weeks, we’re reposting some of our favorite Rules blog posts. This one was originally published in December 2016. The video, however, is new!
At YNAB, we have four simple rules. We could (and do?) talk about budgeting until we’re blue in the face, but ultimately, all roads lead back to the Four Rules.
On the cusp of a new year, I always find myself, going back to the fundamentals. Whether you are just beginning to explore this whole budgeting thing, or you’re an old-timer like me, you’ll benefit from a refresher.
I recently discussed Rule One, where you give every dollar a job, and Rule Two, where you consider your true expenses and put money away for jobs that are a little further down the road. Today, I want to talk about Rule Three, arguably the most popular rule: Roll With The Punches.
It’s A Boxing Metaphor
In boxing, when your opponent throws a punch, you move your body (or face, whatever) in the same direction as the punch, so that it lessens the impact. It works the same way with your budget. Life throws you a punch you weren’t expecting? Lean into it, move money around, adjust your budget. Easy.
Because Life Happens
No matter how well you plan. Things happen, circumstances change, priorities shift. You shouldn’t feel bad about it. It isn’t a failure of any kind.
A budget is not some rigid, arbitrary set of numbers that you impose on yourself so that you can feel really guilty and terrible when you realize you didn’t guess correctly.
Change Is The Only Constant
We all know this on some level, right? Think about halftime—the coach started with a plan, but by halftime the factors have changed. The coach and his players have to adjust the plan to execute a better strategy based on what happened in the first half. Those half-time adjustments are just what we’re talking about.
As your priorities and circumstances change, change your budget. The budget is a living, breathing set of numbers that you move around to fit your ever changing circumstances.
If the car tire blows out then you’re going to need a new tire more quickly than you might need to do that thing that was a little more fun, a little more entertainment-oriented. You’ll shift things around and defer the entertainment for a little bit longer. You’re going to be making these adjustments all the time. This is how you stay on track.
Change Is Freedom
Budgeting is not about a rigid set of numbers to impose guilt, it is dynamic. Think about budgeting like air traffic control. There are all these planes that need to go to wherever they need to go. As circumstances change and your needs and wants shift, you have to get the money where it needs to go.
Your budget changing doesn’t mean that you made a mistake, it means that you are #winning. You are sticking with it. You are in this for the long-haul.
So, follow Rule Three. As you’re giving every dollar a job and looking to your larger, less frequent expenses, embracing your true expenses, and weighing your priorities, please change your budget as needed. Recognize that that is just as important as the first and the second rule.
I officially grant you permission here now and forevermore to change your budget whenever you want. With great power comes great responsibility—use it wisely.
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?