Software +
Method = Magic

YNAB the app doesn’t work because it’s pretty (although it is) or because it has amazing tech. It works because it’s built around these Four Rules.

The Four Rules Are the Magic
The Four Rules Are the Magic

Four Simple Rules For Successful Budgeting

First things first, we need to teach you a little bit about our Four Rules. Sure, our apps are great, but the secret sauce is combining them with our four simple-but-life-changing rules. That’s where the magic happens.

Rule One

Give Every Dollar a Job

Rule One Icon

Confidently spend your money. You’re the boss. The drill Sergeant. The maestro. When you earn money, you prioritize how you’ll use it, and then simply follow your plan.

How Rule One Works

How It Works

As soon as you get money, you’ll decide what it needs to do—whatever is most important to you. Then, instead of deciding to buy something based on your mood, or the big (or small?) pile of money in your checking account, you’ll decide based on a rock-solid plan. 

Rule One In Your Budget

  1. Get some dollars.
  2. Prioritize those dollars (give ‘em jobs!).
  3. Follow your plan.
  • Life Without Rule One

    Your $500 account balance leads you to believe you’re flush with cash, so you spring for sushi. (And you go big.) But a few days later some bills come due and you don’t have the money. (Because you ate it.) You’re officially stressed.

  • Life With Rule One

    You have $500 in your account and assign every dollar a job by dividing the $500 into various categories. When a friend invites you to sushi, you consult your Eating Out category (with a $10 balance) and suggest your friend come over to your place to split a pizza instead. A few days later, some bills come due–and you just pay them.

Why It Works

You’ve already mapped out a plan, so instead of stressing over every little (guilt-inducing) spending decision, you’re just working your plan. No raise, windfall, or inheritance required. (Though all of those would still be nice.)

Rule Two

Embrace Your True Expenses

Rule Two Icon

Make your money boring. Did the car break down? No big deal. Are the holidays coming? You’ve got a Santa-sized pile of money stashed away. No credit card required. Imagine never (ever) dreading the arrival of a big bill.

How Rule Two Works

How It Works

Take those large, less-frequent expenses (that usually send you into a financial tailspin) and break them into manageable, monthly “bills.” Good-bye, Financial Crisis Roller Coaster! You just won a free ticket on the Financial Peace Express!

Rule Two In Your Budget

  1. Find a big, infrequent expense.
  2. Create a goal to fund it monthly.
  3. When that expense arrives, just pay it!
  • Life Without Rule Two

    Without Rule Two

    You have $1000 in your account. After some quick (probably faulty) math, you tally your bills. Total (in your head): $770. You’re flush with cash! $1000 minus $770 = $230 of free money! But you forgot about your insurance premium ($600), so now you’re stressed. Credit card to the rescue—and just like that you’re even deeper in debt.

  • Life With Rule Two

    With Rule Two

    You looked ahead six months ago. You’ve been budgeting $100 every month for the insurance premium. Now it’s due, and you have $600 ready to go. Where did the “extra” $100/month come from? When you follow Rule One and start giving every dollar a job, your money starts to obey. It lines itself up with your priorities. It’s not magic, though it feels that way. So, that cRaZy month, that would have sent you into complete and utter panic mode, was no big deal. Kind of boring, actually.

Why It Works

You’re looking ahead to those larger, less frequent expenses (and big dreams and goals!) and breaking them up into monthly, manageable amounts. As a result, you’re making fully informed, current spending decisions, based on immediate needs and future obligations.

Rule Three

Roll With The Punches

Rule Three Icon

In boxing, you move your body in the same direction as your opponent’s punch to lessen the blow. Same rules apply to budgeting. Be flexible and address overspending as it happens.

Rule Three

How It Works

When you overspend in a budget category, just adjust. No guilt necessary. If you plan to take the kids to the beach but it’s pouring down rain, do you still go? Of course not! Circumstances change and plans change with them. Your budget is no different. If you overspend in one category, free up money from another category and move along. Remember, you’re the boss!

Rule Three In Your Budget

  1. Choose a category with overspending.
  2. Move funds from another category to cover it.
  3. Move on with your life—no guilt!
  • Life Without Rule Three

    Without Rule Three

    When you overspend, you feel like a failure. Budgets don’t work. This whole idea of trying to “guess” what you will spend, is a complete waste of time. You don’t “need a budget,” you “need a raise.” If you only earned just a bit more money, everything would be fine! (Those last two sentences are dripping with sarcasm.)

  • Life With Rule Three

    With Rule Three

    You overspend (it happens) and your budget nudges you—in an überfriendly voice—“Whoops! You overspent on Groceries. No worries! Just move over some surplus money from your Travel category. Good to go!” You don’t feel like a failure or tempted to quit. Budgets do work. You’ve just never budgeted like this before.

Why It Works

You don’t need to be perfect! You just need to commit to the process of planning what you’ll spend (Rules One and Two), and then, following your plan. Oh, that’s right, and then adjusting the plan as needed. Rinse and repeat.

Rule Four

Age Your Money

Rule Four Icon

When you are spending money you earned last month, you will have nothing to stress about money-wise. The goal is to be spending money that is at least 30 days old. It might not happen overnight, but stick with it—it’s a game-changer!

How Rule Four Works

How It Works

With the help of the other three rules, you’ll be more purposeful about your spending, consistently spend less than you earn, and be more than prepared for the future. Eventually, you’ll be able to cover May’s rent with dollars from April. Your money will be at least 30 days old and you’ll wonder how you ever lived without the Four Rules.

Rule Four In Your Budget

  1. Be purposeful in your spending.
  2. Consistently spend less than you earn.
  3. Watch that Age of Money grow!
  • Life Without Rule Four

    Without Rule Four

    John lives paycheck to paycheck. He knows the date of his next paycheck well in advance and has a stack of bills he’s timing to go out as soon as the paycheck hits his account—a stressful juggling act. He’s habitually anxious and frantic, and can’t stop thinking about how much he needs a vacation. But who has money for that?

  • Life With Rule Four

    With Rule Four

    John has at least a month’s worth of paychecks budgeted before the month even starts. Lots of money, just sitting around, waiting to do its job. When bills arrive, he pays them—actually, he put them on autopay a couple months ago. He’s habitually happy and content, and can’t stop thinking about the money he plans to invest and next summer’s vacation.

Why It Works

You aren’t stressed, because you’re not living on the financial edge. No more wasting time and energy timing bills to a specific paycheck. When a bill comes, you just pay it. The result? Breathing room. Less focus on today and more on tomorrow means bigger thinking, better decisions, and chiseled abs (it’s possible!).

You can do this! Right now! For free.

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?

Budgeting with YNAB Makes Cents