Jesse Mecham, the visionary founder of budgeting software You Need A Budget, shares invaluable insights on mastering your finances. He transforms budgeting from a chore into a fun and motivating endeavor by emphasizing the importance of setting clear financial goals. Jesse discusses navigating financial changes, especially during major life events like having a child. He introduces the effective 50-30-20 budgeting rule and encourages personal experimentation to discover the best budgeting techniques for individual needs.
Choose a specific and meaningful goal to stay motivated and say no to unnecessary expenses.
Use major life events or financial stress as a catalyst to take control of your finances.
Allocate 50% to essentials, 30% to discretionary expenses, and 20% to savings and debt repayment using the 50-30-20 budgeting method.
Deep dives
Tip 1: Set a Specific and Meaningful Goal
When it comes to budgeting, having a vague goal like 'becoming an adult' won't serve you well. Instead, choose a specific and meaningful goal that you truly want to achieve, such as paying off student loan debt or saving for a trip to South America. With a clear goal in mind, you'll have a reason to say no to unnecessary expenses and stay motivated to stick to your budget.
Tip 2: Harness the Power of Anxieties and Life Transitions
Sometimes, a major life event or financial stress can serve as a powerful motivator for budgeting. Use these moments of anxiety to kickstart your budgeting journey. By recognizing the urgency and potential impact of your financial decisions during these times, you can channel that energy into taking control of your finances.
Tip 3: Implement the 50-30-20 Budgeting Method
The 50-30-20 budgeting method can provide a helpful framework for allocating your income. Dedicate 50% of your take-home income to essential living expenses, 30% to discretionary expenses, and 20% to savings and debt repayment. This division allows you to prioritize your spending and ensure you're saving for the future.
Tip 4: Embrace the Power of Scarcity
Scarcity can be a positive force in budgeting. Instead of viewing it as a restriction, think of scarcity as an opportunity to prioritize what truly matters to you. Embrace the limits set by your budget to make conscious spending choices and align your expenses with your values.
Tip 5: Focus on the Big Wins
While cutting back on small, impulsive purchases can help, tackling the big expenses such as housing and transportation can have a much more significant impact on your budget. Look for ways to reduce these major costs, whether by downsizing your living arrangement or sharing expenses with a roommate.
Tip 6: Find a Budgeting System that Works for You
Experiment with different approaches to budgeting and find the system that suits your preferences and lifestyle. Whether it's using spreadsheets, apps, or simpler methods like allocating a weekly cash allowance, discover the budgeting technique that resonates with you and helps you achieve your financial goals.
To many, it's a dreaded task: making a budget to keep track of money. Guess what? You can do it, and we show you some tools that can help — maybe even make it fun. The founder of the popular budgeting software You Need A Budget tells us how to track your spending.
Here's what to remember: - Don't budget just because you should: Set a goal. - Leverage anxiety from a life change and turn it into motivation. - Follow the 50-30-20 method. - Use the power of scarcity. - A roommate is worth 1,000 coffees. - Find the budgeting technique that works for you. Here's a worksheet to get you started: https://bit.ly/2umlqex.