DR 012: The Four Rules of Budgeting [with Jesse Mecham of YNAB]

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This is the fifth day in our 31-Day Money Challenge. Over 31 days we’ll publish 31 podcasts, each designed to help you move closer to financial freedom. Yesterday we covered 7 tips for effective and stress-free budgeting. In today’s podcast, we Jesse Mecham, founder of You Need a Budget (YNAB).

Sponsors: The 31-Day Money Podcast is sponsored by Betterment and Personal Capital. Betterment and Personal Capital are two tools I use to make investing easier, less expensive, and more effective.

Topics Covered

The 4 Rules of Budgeting

YNAB 4 Budget Rules

In this episode, Jesse walks us through his 4 rules of budgeting. He also discusses some myths some believe and common mistakes many make with their budgets.

  1. Every Dollar has a Job: Every dollar that comes into your life should have a job. That’s really what a budget is all about. To that I would add that you should put every dollar to work as soon as you can. We discussed that “pay yourself first” concept in yesterday’s podcast.
  2. Save for a Rainy Day: An emergency fund is a critical component of any financial plan. While the size of a rainy day fund may vary based on your specific circumstances, we all need resources available when the unexpected happens.
  3. Roll with the Punches: One of the key mistakes Jesse sees people making is a lack of flexibility. Not everything goes according to plan. You may have a well thought out budget, but something may come along that changes your priorities. That’s ok. Roll with the punches.
  4. Stop Living Paycheck-to-Paycheck: This really is the key step toward financial freedom. And it’s a great feeling to know that you can survive for even one month without a paycheck. YNAB is designed to help you accomplish this goal.

Resources Mentioned

Day 6: The One-N-Date Formula for Cutting Expenses

Published or Updated: January 7, 2014
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Olivia Fox says:

    I’ve been loosely following these podcasts and was chewing on your first speaker’s comment about $75,000 being a threshold for “financial independence”. As the average US household income is about $50,000, how can the rest of us even manage to retire at 70, let alone experience some measure of flexibility?

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