You Need a Budget: The Proven System for Breaking the Paycheck to Paycheck Cycle, Getting Out of Debt, and Living the Life You Want by Jesse Mecham

CHAPTER 1:
A New Way to Look at Your Money
If you care enough about money to be reading this book, there’s a
chance you’ve tried to budget before. For most of us, that exercise has
gone something like this:
We open an Excel spreadsheet and create rows for our spending
categories—I mean, that’s what I did. We start listing things we spend
money on, but there isn’t a lot of order to it. We get the nonnegotiables
like rent, loans, car, utilities. We mix in other expenses, small and large
alike, and because someone told us this is what it means to be
responsible adults, we add something about savings and even a vacation
fund.
Once we have our beautiful list of expenses, we fill every line item
with dollar amounts based on what we think we will—or should—spend
in any given month. Many nonnegotiables are easy since they’re the
same recurring amount, and we can ballpark a pretty accurate number for
things like utilities. For the rest, we plug in what we feel are generous
but not-too-crazy numbers because this is a budget, not a free-for-all.
When we’re done, we admire our handiwork. Even though it has
holes in it, it’s more than we’ve done before, and so we lay out a plan to
follow it every month. It feels so good to know exactly where our future
paychecks need to go.
But what happened after you made that gorgeous spreadsheet? My
guess is that you abandoned it pretty quickly. My friends Nikki and
Aaron were excited about theirs, but they gave up within a month when
they discovered their actual spending looked nothing like the numbers in
those Excel boxes. They were overwhelmed by the disparity and decided
to revisit budgeting when life got a little calmer (spoiler alert: that never
happens). My neighbor Summer told me she ditched her budget because
she never had enough cash to fund every line item she’d so optimistically
planned. That reality made her want to avoid her spreadsheet like it was
her ex-mother-in-law (both uncannily made her feel like she was never
“enough”). She gave up, figuring that either budgeting didn’t work or
she just wasn’t good with money.
If this scenario sounds painfully familiar, don’t worry. It’s not you.
It’s a flawed system.
That kind of budgeting doesn’t work for a few reasons. First, there is
no room for prioritizing. Every line item competes for your dollars and
there’s no structure to decide what should get funded first. There’s also
no structure to make sure important things aren’t left out. You probably
(hopefully) give bills and life essentials top priority. But how will you
decide what gets cash next, especially if you don’t have enough for
everything? Put more toward your student loan balance, or save for
vacation? Dump money into your daughter’s 529 or save up for her
summer camp? Cue the running and screaming.
It also offers zero flexibility. You automatically fail the moment real
life doesn’t align with your predictions. Who wants that kind of stress?
Another big problem is that this is not actually budgeting, it’s
forecasting. Forecasting is when you look into the future and guess at
your upcoming income and spending. This can be fun because we’re
painting a picture of the life we want to live, or the person we want to be,
without having to worry just yet about making those numbers work. It’s
easy to throw $300 into your vacation fund and $500 into your grocery
allowance when you’re talking about future money. The reverse
approach is also a problem: You can swear you’ll only spend $50 a
month on groceries, but that never happens in real life and you end up
feeling bad just for buying your family’s essentials.
The difference between forecasting and budgeting is a lot like the
difference between dreaming and doing. It’s fun to forecast and dream of
the life you want if you can someday get those numbers to work. 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. Now you’re not
just guessing and hoping—you’re being intentional with your dollars.
You’re letting your priorities drive how you spend the money you have
on hand. And you’re forgetting about any promise of future money.
Hear me out: I’m not saying you shouldn’t think about the future.
Your budget is all about thinking ahead. Just make sure you don’t
forecast future money. That cash will be great when it hits your account,

You Need a Budget: The Proven System for Breaking the Paycheck to Paycheck Cycle, Getting Out of Debt, and Living the Life You Want by Jesse Mecham