Wednesday, December 9, 2015

Never Blow Your Budget Again

I was talking to someone recently about budgeting programs, and why I'm a huge fan of YNAB, but not so much Mint or some of the others.

The problem with Mint (et al) is that it only tells you when you screw up. It makes you feel bad about going over-budget. You find yourself on the defensive, talking back to the spreadsheet or screen shot or whatever, exclaiming, "but I didn't know ___ was going to happen!" From having to attend a funeral to saying yes to a spontaneous get-together with a friend in town unexpectedly to simply not knowing you were going to have to buy your kid new shoes this month, there are many ways where your best-laid plans can go awry. Instead of red numbers or emails telling you, "you screwed up!" (okay, maybe not so harshly, but that's how it can feel), I like YNAB's Rule 3 philosophy to roll with the punches.

And you don't have to use the software to implement the strategy. Just change your numbers.

I know! Who knew it could be so easy? But that's really all you have to do. Sure, you might freak out for a moment, going, I don't have enough money to cover this! My experience, however, has shown me that there is always a way.

Earlier in my journey, when I still didn't quite have a handle on my non-monthly expenses, it was Sylvia's dance recital fees. I remember stressing in the car on the way home, thinking that the only way I could cover this was to add debt to the credit card. But when I got home and looked at my budget screen, I saw that I could instead pay less towards my outstanding debt and still not incur new debt. (I still could pay the minimum plus, just not as much as I wanted.)

Every month, I put $25 in my Mayhem category (for stuff I forgot, unexpected, etc.). In the beginning, I was using that much more often, but now, I've got close to $200. If you leave excess unbudgeted, you will be more inclined to buy yourself something fun (or at least, I would). By having a category for it, it's there for you when you need it.

Your budget should not feel like a straight-jacket. Most budgeting software does. If you don't want to pay for YNAB, use pen and paper or a spreadsheet so that you can feel in control of your budget and change as necessary. (Of course, much more detail available in my eBook :)

Change your budget as necessary so that instead of feeling like a failure, you feel empowered.

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