Tricks to Rethink Your Budget w YNAB's Jesse Mecham (SB1464)
Jan 15, 2024
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Jesse Mecham, founder of budgeting tool YNAB, shares tricks to rethink your budget. They discuss giving every dollar a job, 'aging' money, app-builder struggles, and more. They also talk about bonds being overheated, pricing schemes at Costco and Sam's Club, and a new call-in segment for the show.
The four habits for successful budgeting: giving every dollar a job, embracing true expenses, rolling with the punches, and aging your money.
Changing the perception of budgeting from restriction to empowerment, focusing on intentional spending aligned with personal values.
The valuable insights and community contributions that have shaped the development of budgeting tools like multiple accounts and bank connectivity.
Deep dives
The Four Habits of Successful Budgeting
The podcast episode discusses the four key habits for successful budgeting. The first habit is giving every dollar a job, which involves allocating money towards specific purposes to align spending with priorities. The second habit is embracing true expenses, which entails planning and preparing for larger, less frequent expenses in advance. The third habit is rolling with the punches, which emphasizes the importance of adjusting the spending plan when unexpected events or changes occur. The fourth habit is aging your money, which involves creating buffer time by allowing money to sit before spending it, leading to better decision-making and reduced financial stress.
Changing the Perception of Budgeting
The podcast highlights the efforts to change the perception of budgeting, acknowledging that the term has negative connotations for many people. Instead, the focus is on encouraging people to be more intentional with their money and view it as a tool for expressing their personal values and priorities. The goal is to shift the mindset from restriction to empowerment, where individuals can make conscious spending decisions that align with their desired outcomes and enjoy the process of deploying their money.
Lessons from the YNAB Community
The podcast acknowledges the valuable insights and lessons learned from the YNAB (You Need a Budget) community. The community has contributed ideas and perspectives that have influenced the development of the budgeting approach over the years. The discussion highlights how the community has helped shape features like multiple accounts, bank account connectivity, and the importance of engagement and simplicity in budgeting tools.
The Benefits of Ageing Your Money
The podcast emphasizes the benefits of ageing your money, which involves letting money sit for a period of time before spending it. By allowing money to age, individuals gain a sense of control and reduce financial stress. Having money available for longer periods allows for better decision-making, proactive planning, and avoiding impulse spending. Ageing money empowers individuals to prioritize and make intentional choices aligned with their goals and values.
Investment Strategy for Buying a House
When considering the timeframe for purchasing a house, it is recommended to move money from an investment account into a high yield savings account. This allows for easier access to funds in case a dream house becomes available sooner than expected. Using a CD may result in penalties if the money is needed before the CD matures. It is important to match the time horizon of the goal with the appropriate investment strategy.
The Conservative Nature of Long-Term Investments
Long-term investments should be viewed as conservative due to the historical success of investing in companies over time. Investing in conservative options like savings accounts or CDs could limit the potential for compounding and may not generate enough returns to meet long-term financial goals. The aggressive approach would be to have a long-term investment strategy aligned with the goal and timeframe, taking advantage of the compounding power of the stock market.
The founder of one of the nation's most loved budgeting tools says he dislikes the term "budget." Why? Because most of us see a budget as restrictive and limiting. The good news? Jesse Mecham from budgeting program YNAB to dive into how to make your money go further and align with your goals. We'll share thoughts about giving every dollar a job before you earn it, "aging" your money like a fine wine, the struggle every app builder has with interfacing with banks, and much more. If you either have a budget, a "kinda" budget, or are looking for a budget that works, this show is for you!
But before that, in our headline, long time bond manager Bill Gross says that bonds may be overheated in this current market. What does that mean? What does it mean for your long term money? We take some time to talk through the not-so-simple idea of tying your funds to the timeline you've built to spend that dollar. If you need a long term investment strategy, you'll especially want to listen in to our headline.
In today's TikTok minute, consumer finance guru Clark Howard discusses pricing schemes at both Costco and Sam's Club. Is that deal your scoring really a deal? Is it as budget friendly as they make it seem? Some deals are great and others aren't, and both of these retailers hide their strategy in plain site.
Think that's all? Oh, of course we have more! This week we debut a NEW call in segment for the show. No more life line...today we'll share how we are going to handle YOUR call when you need some help with your money? Have a question? Head to stackingbenjamins.com/voicemail and you may hear yourself on the show!
