I have a confession to make: I may be the only long-term staff member at APW that doesn’t use the budgeting app You Need a Budget. I’ve seen it totally change the lives of people around me, in ways that are actually sort of staggering to watch. So it’s not that I don’t use YNAB because it’s not a great system. I don’t use YNAB because I’m the person that has budgeting spreadsheets dating back to the launch of Google Drive. (I once asked Maddie, “So it’s called You Need A Budget, but everyone already has a budget right? That’s just a cute name?” And she looked at me with a mix of pity and confusion. Apparently, no, most people DO NOT have a budget.)
And now that I know that most people do, in fact, need a budget, I’ve become an extra big proponent of YNAB for all the people in my life struggling to get a grip on their spending. (Which is… mostly everyone… if we’re being honest?) So when YNAB invited us to check out an advanced copy of their new book: You Need a Budget: The Proven System for Breaking the Paycheck-to-Paycheck Cycle, Getting Out of Debt, and Living the Life You Want, I was excited. When they asked if I wanted to interview the founder of YNAB, Jesse Mecham, I was even more excited. Doesn’t everyone get excited about reading personal finance books and interviewing personal finance gurus? Given what I’ve learned about budgeting, possibly not. But this book was worth my excitement, and I feel like I’ll end up buying copies for a lot of people in my life, for a few reasons:
- YNAB does for budgets what APW does for weddings. That is to say, it takes all the things you’re worrying about, and helps you cut through the mess to take action. It helps you distill what you really want from what you’ve been told you should want—no latte shaming here. (In fact, a few pages in, I was like, “Did I write this book in my sleep? It reads like the book I’d write if I’d written a finance book.”)
- The book is super helpful whether or not you use—or ever plan to use—the YNAB budgeting app. It feels like a must read for anyone struggling to get out of the paycheck-to-paycheck cycle. (And tons of people I know are in this cycle, even if they make pretty good money). But it’s also a thoughtful read for those of us working on building savings and figuring how we want our money to work for us.
One of the reason we’re always promoting the APW books here is because it really is helpful to have all your information in one place, laid out in a way that makes sense, rather than cobbling it all together on your own. And that’s what the YNAB book aims to do for your budget. (Tip: Jesse suggests that the YNAB book would make a great wedding present, and he’s probably not wrong.)
PLUS. If, say, you’re working on budgeting these days and not spending on splurgy vacations (though the YNAB book will help you figure out how to do both, with no judgment), to celebrate the launch of the YNAB book on December 26th, the YNAB team is giving away an all-expenses-paid trip to New York City. To enter, purchase your pre-ordered copy before the 26th and then head here to fill out the entry form. (And if you order two books or more, you also get a free YNAB shirt, or with a purchase of ten books you can get an hour Skype session with Jesse himself.)
Now, here is the next best thing to that Skype session with Jesse: my interview with him.
Meg: Given that you’ve been running YNAB for thirteen years, I assume you’re as much of an expert on getting people out of the paycheck-to-paycheck cycle as I am on helping people stay sane during wedding planning. So walk me through it. As someone who’s always been something of a money nerd, I’ve had a budget since I was living on $18K a year in New York (which was frankly pretty awful). Everyone in my life tells me this is really not normal. How are most people trying to make their financial lives work when they come to YNAB?
Jesse: Honestly, most people aren’t trying to work any kind of plan financially. They’re being whipsawed back and forth from one crisis to another, stressed out even from small purchases, and feeling guilty when they buy things they actually want. They’re reactive instead of proactive, and when they come to the point where they realize they need a budget, they’re ready to make some changes.
Meg: I’ve watched people in my life—who make pretty good money but still live paycheck to paycheck—spend money, and it often feels sort of terrifying. They seem scared, and like they don’t know how to get control of their spending. Why do you think people get stuck in these patterns, and how can people break their emotional patterns with money?
Jesse: One truth I’ve seen play out again and again is that living paycheck to paycheck very, very rarely has anything to do with how much income you have. The fact of the matter is, 80 percent of people are stuck in the cycle, and a good chunk of those 80 percent make “pretty good” money. They’re scared because they think 1) that they’ll never get control and/or 2) that getting control means living on rice and beans. Both are completely false. They’ll break the pattern by turning their behavior around completely. They’ll start by just asking themselves one simple question: What should this money do—only the money I have in my bank account right now—what should this money do before I’m paid again? And then they’ll repeat that same question every time they get some more money. That’s it. It’s really that simple.
Meg: Reading your book I was shocked by how much what you were saying lined up with what my abundance mindset life coach says to me about money. I’d think that a professional budgeter and a professional dream expander would think in the opposite ways. But both you and my coach talk about figuring out what we want out of our money and setting goals (even if they seem like pie in the sky goals at first) to help us move forward. Why do you think figuring out what you really want your money to do is an important first step to setting up a budget?
Jesse: It’s the only step! If you don’t know what you want, why even budget at all? A budget is merely a tool to help you get from where you are now, to where you want to be. It’s just that “from here to there” mentality viewed through the lens of that resource we call money. The reason people skip this step is because it’s actually really hard! You start thinking, “Well wait, what should I want? Should I Google ‘proper goals for a twenty-something making $56,000 per year’ and see if there isn’t an article written about it?” Fact of the matter is, you have to get real with yourself and really dial in what you want right now. The budget is just the framework you use in making decisions to help you get there.
Meg: Because I didn’t grow up with a lot of money, I’ve spent years trying to get myself out of restrictive, zero-sum thinking about money. You clearly believe that a good budget shouldn’t be all about no, and it shouldn’t trigger those of us fighting our way out of restrictive money thinking. How does that work?
Jesse: It’s not about no; it’s about tradeoffs. When you’re clear about what you want, and then you’re presented with a decision to do/buy something else, you’ll just frame it in a way that’s still very much all about what you want. “If I buy this now, it’ll delay my desire to do X by several months. Is that worth it?” You’re just balancing your own wants, and that’s the perfect thing to be doing. What we need to be cautious about is when “wants” are dictated to us by our social circle or cleverly written advertisements.
Meg: In the book, you talk about the twin questions of “Should I” and “Can I.” Now that I’m not broke, I spend a lot of time on the “Should I” question. For example, I really want to give my kitchen a makeover, and I have some cash to do it… but “Should I?” I find it really paralyzing. How do you suggest people start answering these questions for themselves?
Jesse: Should is a horrible word. We should all stop using it. 😉 As it relates to your kitchen, and then thinking about any other goals you have, do you want to renovate the kitchen? Why? Be honest with yourself. Why do you really want to do the renovation? If you can come up with some solid reasons behind why you want to do that, and you can do it because you have the cash on hand that isn’t spoken for by another higher priority, my word, go get some bids and have fun. Sometimes you just want to because you want to, and that’s good enough if it fits within your larger goals (code named: budget).
Meg: You talk in the book about getting to know your money partner (aka your spouse). I’ve been in a relationship with my husband for thirteen years, and it has taken most of that time for us to fully get on the same page and form a joint approach to money. We were always good budgeters, but we grew up in very different financial situations, so for a long time we really struggled to understand each other. How do you think couples should open the conversation to really get to know how the other person uses their money, and how they approach it on an emotional level?
Jesse: As far as how you first get started talking about money as a couple, don’t talk about numbers at all. Talk about money in the larger sense of the word. What were your parents like with money? What was the first lesson you learned as a kid? Did you get an allowance? How did you earn money? What did you like to spend it on? How did it feel to spend all of your money on baseball cards in the ’90s, and then realize only twenty-five years later that your investment is absolutely worthless? Stuff like that. You’re getting to know your spouse’s ideas about money. Then, get into habits. Do you have any quirks with money? Do you like to carry a $20 bill in your left shoe? Do you get a bit of a high from shopping? How long does the high last?
All of those questions are just meant to get to know each other as it relates to money. They’re just as fun as they are informative. The spouse should just answer, “How interesting!” with every one of them. No judgment, just sharing.
Once you’ve established each spouse’s habits and ideas around money, you can start to talk about goals. Again, still not money. Just what do we want. Those kinds of conversations are critical in a relationship, and once you get that far, then you ask, “How can we make sure our money gets us toward these awesome goals?”
Meg: Can you describe the concept of “personal fun money”? We manage ours through individual checking accounts, but it’s been the backbone of our shared financial life from the beginning. I think my husband spends his mostly on electronics, but frankly, I don’t really know and I don’t care. But many couples that I talk to seem to think it’s all or nothing—either you keep your accounts totally separate, or you clear every purchase you make with your spouse. Why do you think this concept is important, and how have you seen it play out in people’s lives?
Jesse: My wife, Julie, and I share one account and then inside YNAB (our software), we have separate categories for each of us. We’ve had a budget meeting where we’ve agreed what the budget will be for the entire month, and if we have to juggle things around throughout the month, we’ll make sure both are in the know. But when it comes to Julie’s fun money, she can do whatever she wants with it, and I certainly don’t want her to tell me about it to get some kind of permission. If it’s about some extra piece of clothing she wants to buy, I’d much rather have her do that kind of hemming and hawing debate over text with one of her friends!
We like the idea of a joined account because it makes the process simpler, but if I’m talking with someone that’s nailing the budgeting with their spouse, and their system is working and they’re hitting their goals well, I’ll be the last to dogmatically tell them they need to switch it. If it’s working, leave it alone! If it’s not working well, maybe give that a hard look.
Meg: So many of us are haunted by guilt no matter how we spend money. Why do you think that is, and what can we do to solve it?
Jesse: The guilt only comes because we aren’t really clear about what we truly want, and the spending we’re doing isn’t lining up with that truth. You’ve got to be crystal clear about your goals and then once those goals are being met at a pace you find reasonable, let the other smaller spending go. Don’t sweat it! (He said to himself.) Be clear on the big goals, like the pace you’re at, and be content. It’s a choice.
This post was sponsored by the brand new book, You Need a Budget: The Proven System for Breaking the Paycheck-to-Paycheck Cycle, Getting Out of Debt, and Living the Life You Want. I’ve watched several APW staff members use the YNAB method to finally get on top of their finances, pay down tens of thousands of dollars in debt, and stop living paycheck to paycheck. And now YNAB’s founder, Jesse Mecham, has distilled everything he’s learned in thirteen years of running YNAB into one super approachable book. You Need a Budget is out on December 26th, but if you pre-order now, you’ll be entered to win a free tip to New York City and a meeting with Jesse himself. So click here and buy copies for all the people in your life who could totally use a budget.