Wednesday, February 28, 2018

Healthy 2018, Part 1: The Budget

New Year's Resolutions have never been my thing. Part of it is that I get annoyed with the surge in people at the gym. And the other part... do people actually stick to them? I'm generally not a fan of certain failure.

When 2018 rolled around, though, I had a desire to make some tweaks in my life. So I borrowed a key agile principle - no multitasking - and figured I'd use that to start to make some changes. The idea was to just pick one change at a time and focus on it until I felt like it was ingrained as a habit before moving on to something else.

Habit #1 - budgeting - started a few days before actually toasting in 2018. My sister spent a few days raving about her new budgeting tool (YNAB - pronounced "why nab" - which stands for "you need a budget") and I finally got so intrigued that I signed up for a free trial.

Let's talk about budgeting.

Before YNAB, I actually felt pretty confident with my budget and with finances. I used Mint to track my expenses, spent less than 50% on essential expenses, put away more than 15% of my salary for retirement (including employer match) could come up with $2,000 in an emergency and my only debt was one outstanding student loan with interest under 5%. (All of which are general benchmarks for budgeting and not just random facts about my situation.)

But here's the thing... even with Mint, my money just kind of leaked out. Mint doesn't force you to be hands on with your budget, so if you're not on top of categorizing everything, you don't get the information you need from your budget. And so after a few months, while I kind of had a budget, it wasn't really providing me with the information I needed and definitely didn't bring any accountability. So yeah, everything was fine and I didn't have credit card debt, but was my money really doing what I wanted it to do?

Enter YNAB.

YNAB uses a unique approach that I found absolutely revolutionary. They have four rules, and the idea is that you only budget the money you actually have. You start to put this money away for the expenses that don't come up all the time. When you go over budget, you're not just punished with a budget bar turning red, you have to find the money to cover that overspending from another category. And over time, you're supposed to get to a point where you're a month ahead of your spending.

I could probably rave and educate about YNAB for blog post upon blog post, but they've got tons of educational materials and stories and even free classes on their website, so I'll stop.

What I've learned about budgeting, money, financial health and health in general in the first two months of 2018:

  • There are certain truths that apply whether we like them or not. If I spend more money than I earn, I go into debt or deplete my savings. If I consume more calories than I burn, my weight goes up. We may dislike the feel that we're restricting ourselves, but there's just no way around those basic truths.
  • Intentionality is important. Before I had to sit down and actually say what every dollar in my bank accounts was going to do, I had assigned 3-5 jobs for every dollar. Actually creating a budget, I had to prioritize and decide what was most important. Some things just had to go away... a clothing subscription service didn't make the cut. Travel did. Extra debt payments did. Eating out with friends on occasion stayed, BUT ordering in went way down. Suddenly the motivation to meal plan and grocery shop went up when I had to make my dining out money last a few more days... and if I didn't, it had to come from somewhere else.
Now that I'm feeling like the budgeting habit is ingrained, I'm going to take a quick break on new habits in March to start a new job and do some travel. But coming in April... Whole 30 for a diet reset.

Quick note: this is definitely not a paid advertisement or review for YNAB; however, I do have a referral code that will get us both a month of YNAB for free if you sign up after the free 34-day trial. Click here.