YNAB – Online Course – Day 5
There are four rules of cash flow that YNAB is based on. We covered Rule #1 which states that you should live this month on last months income. If you are wondering if all the rules are going to be this tough, the answer is no. After Rule #1, things get a lot easier. So let talk about Rule #2.
Once you have saved enough money to equal last months income, you are ready to start spending that money. The most common cause of overspending from month to month, is not having a plan on where your money is going. We have already talked about how the budget is the foundation of your financial plan. The question is, ‘how do you set up a budget?’ Actually, the answer to that question is very easy, and it is the basis for the next rule.
YNAB Rule #2 says that you should Give Every Dollar a Job. That means that when you look at last months income, you are going to spend each and every dollar before the month begins. Assigning your money a job is the same as you going to work each day. With your assignment in hand, you are more likely to be successful. With no plan, you are preparing to fail. The Bible speaks of this principle in the Book of Proverbs.
Go to the ant, you sluggard! Consider her ways and be wise, 7 Which, having no captain, Overseer or ruler, 8 Provides her supplies in the summer, And gathers her food in the harvest. Proverbs 6:6-8
We are reminded to observe the ant and model her desire to work towards a goal. Each month the goal is to allocate your money in a way that will provide the best use of your income. Start with the important things like giving, food, housing, transportation, etc. Once you have determined that all of your monthly expenses are covered move on to other aspects of your budget like paying off debt and savings.
The most important aspect of Rule #2 is not leaving any money without a job. If you do, it is a pretty good bet that you will simply waste that money. If you are married, hopefully both you and your spouse are working on this new plan and you are agreeing on where your money is going.
There are a lot of ways to manage your budget, and obviously we recommend using whatever method works for you. However, if you are looking for a tool guaranteed to make budgeting simpler then we recommend YNAB. If you are still not sure but would like to learn more about what YNAB can do, then sign up for the YNAB online course, and get to work.
Related Websites - How to Create a Monthly Budget with Nothing but Envelopes
- How to Avoid Nickel and Diming Your Way to the Poorhouse
- How to Live On One Income
- Defining Your Budget and Crafting Your Financial Future
- Saving Money The Right Way
StumbleUpon
No comments yet.