The podcast explores the habits behind YNAB's Four Rules, focusing on giving every dollar a job, adjusting budgeting amounts after life changes, embracing true expenses, developing good financial habits, aging money, and reframing budget rules as positive habits.
Budgeting well is about consistently following certain habits, like giving every dollar a job and embracing true expenses.
Rolling with the punches is a habit of adjusting your financial plan when unexpected changes occur, allowing you to maintain control over your finances and make intentional choices.
Deep dives
Habit One: Give every dollar a job
Giving every dollar a job is a habit that involves deciding what each dollar needs to do before spending it. It is about consistently allocating money and setting priorities based on your financial goals. By making it a habit, you create clarity, become more aware of your spending limits, and embrace the concept of scarcity, which helps in making intentional financial decisions.
Habit Two: Embrace your true expenses
Embracing your true expenses is a habit of setting aside money for non-monthly expenses and future needs. It involves actively planning for known and anticipated expenses, making conscious trade-offs, and avoiding the temptation to spend money on immediate gratification. This habit provides clarity, helps in recognizing future priorities, and reduces financial stress by being prepared for upcoming expenses.
Habit Three: Roll with the punches
Rolling with the punches is a habit of adjusting your financial plan when unexpected changes or overspending occur. It is about being honest and flexible, making trade-offs, and reassessing your budget to accommodate new circumstances. This habit enables you to maintain control over your finances, adapt to changes, and make intentional choices to align your spending with your priorities.
Habit Four: Age your money
Aging your money is a habit of consistently setting aside money for future use, specifically for the following month or beyond. It involves committing to save and prioritize your future self, ensuring financial stability and reducing reliance on each paycheck. This habit provides a buffer, allows for more control over your money, and builds a sense of security and financial well-being.
Behind every rule, there's a habit. In today's episode, Ben and Ernie explore YNAB's Four Rules, but in the context of the habits they build. After all, budgeting well is not so much about following (or breaking) hard rules, but rather consistently following certain habits, to help you plan and make better tradeoffs with your money.