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Kindle Notes & Highlights
by
Jesse Mecham
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January 26 - June 18, 2019
On top of that, we were planning for our first child and there was no way we could afford to live our dream of having Julie become a stay-at-home mom.
You’re the only person who can know what your money needs to do for you, because your priorities are yours.
Every time money hits your bank account you’ll set a plan for those dollars.
Every purchase you make will be backed by the decision that this is actually how you want to spend those dollars.
But how about looking at the money you have right now and creating a spending plan based on what’s most important to you? That’s what YNAB is all about.
When you view your money through this lens—prioritizing the money you have right now—the whole picture changes.
you’re only concerned with making sure the money you have today gets you closer to your goals.
Yikes, money suddenly feels kind of scarce. Don’t worry, and don’t quit budgeting—this feeling of scarcity is a good thing. It means you’re seeing your money for what it truly is: a finite resource—and this is a huge part of that mindset shift I talked about.
Scarcity pushes us to be very concrete about our priorities, and those that matter to us the most make themselves known in these moments.
not realizing that the money you burned on a cab to your brother’s party really needed to fund your lunch for the next two weeks. You also wouldn’t have known—until it was too late—that the aged steaks you bought to impress Evelyn ultimately kept you from your debt-paydown goal.
If you don’t have enough to budget out the rest of the month, then budget for things based on 1) their importance and 2) their sequence.
If guilt haunts you it’s usually because: 1. You know in your gut that a bigger priority needs more of your attention; or 2. You’re letting other people’s expectations of how you should live your life color your choices.
Once your goals are in place, they back up every one of your spending moves.
By breaking large, infrequent expenses into smaller, frequent milestones, you’re getting rid of “surprise” bills that tend to blindside us. Suddenly, they aren’t surprises.
With budgeting, on the other hand, you’re mapping out your spending decisions before they happen.
Imagine paying your bills the moment they land because the money is just there, actually waiting for the bill.
The rest of your priorities take over after your obligations are funded.
Before you can set aside money for other priorities, it’s important to freeze some funds for longer-term obligations.
Rule Two prompts you to break those bigger expenses into monthly installments so you’re prepared to pay them when they hit.
What do I want my money to do for me? Only now you’re out of survival mode and setting goals to design the life you want to live.
But it’s worth paying attention to your emotional reactions to money.
They can be a big indicator of your priorities.
A lot of people ask me to tell them what to do. Who can blame them? Life would be much easier with an instruction manual, it’s true, but I can’t do it. There are parts of this that you just have to figure out on your own.
Family is also a top priority to Lia and she relies on those visits to build her relationships with her in-laws.
And Lia’s peace of mind is linked to having enough money on hand to cover their expenses for six months if they were to lose their jobs.
Adam is not as worried, but he knows Lia will be stressed without those savings.
Life isn’t on total lockdown.
Sure, it helps with expenses, but remember that budgeting is really about designing the life you want. Rule Two is your secret weapon for getting closer to that dream life.
What is important is that you have enough on hand so you won’t be in trouble if your next paycheck doesn’t arrive.
Rule Four: Age Your Money gets you to that point where you don’t need your next paycheck.
The bulk of this stress is tied to living paycheck to paycheck, which is exactly what Rule Four helps you overcome.
recalls. He began reading more about budgeting and finance, and that’s when he
Every dollar tends to already be claimed before it even hits your account. But really anyone can do this, no matter what your money situation.
Whatever your approach, achieving your Rule Four goal boils down to consistently spending less than you earn. You’ve heard this before, I know. It’s like being told that diet and exercise will help you lose weight. But both are true. Just like getting healthier, it helps to have a structure in place to get you there. In this case that structure is YNAB’s rules.
Rule One makes you more aware of what your money is doing and helps you to stop spending on things that aren’t important to you. This gets you on the fast track to spending less than you earn.
Rule Two has a huge influence on the age of your money because it gets you saving for longer-term expenses. Since that money doesn’t get spent right away, it sits there and grows old. Rule Two also helps you see that some future obligations are more important than current “wants.” Setting money aside for next month’s rent instead of eating out for lunch at work this week is deferring the use of your money. Those tiny decisions help keep your money in-hand, where it can sit and age.
The sprint is a short period of time during which you go to extreme measures to accumulate extra cash. Once you’ve brought in enough to fund a month of expenses, you’ll officially be out of the paycheck-to-paycheck cycle.
You can do anything for a short period, right? Yes. Yes, you can.
Abolish nearly everything during your sprint.
Don’t just cut back on eating out—eliminate eating out.
Have fun for free: hike, bike ride, have a picnic with the treasures in your pantry.
If your sprint feels intolerable after a couple of weeks, you’re probably moving at just the right pace. Keep going. You have a goal and you can do this. You’ll go back to normal life soon. This will be worth it.
That meant the occasional overdrafting for years before they started YNAB. They were eager for a break. Enter their savior: the three-paycheck month.
It’s too easy to assume that your priorities are the same as mine. Or that our priorities are always more important than mine.
So they leave those decisions to each other and focus their shared efforts on other goals.
The two big priorities Julie and I share are family vacations and weekly date nights.
You’re guaranteed to learn new things about each other once you start to embrace yours, mine, and ours priorities.
simplicity. It’s just easier to manage your money when there are fewer moving parts.
Remember the three sets of priorities (yours, mine, ours) and explore how unspoken assumptions might be causing friction.
What do I want my money to do for me? What do I want my life to look like?
