4 Steps to Keeping a Budget

You Need a Budget

I never learned how to keep a budget. As a child, I was taught to save money – to have a permanent rainy day fund, so to speak. So I would save every penny I could, albeit a bit aimlessly. And since I saved so much of my income, I felt safe splurging sometimes (not regularly, and not a lot, since a perpetual fear of becoming homeless was ingrained in me early on).

But I never knew exactly how much money I had. I didn’t check my bank accounts regularly; I only glanced at my credit card bills once a month. I wasn’t a big spender, so I never had reason to worry about money. Not in the way other people worry about money. My mother instilling the fear of God and homelessness in us doesn’t count, that’s not a legit reason.

Then I lost my job. And was suddenly looking at $0 income and thousands of dollars of grad school tuition to be paid in the next three years.

I spent the first year DOING NOTHING about it. I continued to live life the same way, just with much less spending. A majority of my expenses actually came from buying lunch at work; since I no longer had a job to buy lunch at, I haven’t become too deep in the hole during my first year of unemployment.

But as I approach the end of my liquid cash, I’m feeling the squeeze. I need to find a way to stretch out the savings I have left without cashing my retirement funds and other investments. It’s time for drastic measures.

Jesse Mecham’s You Need A Budget is a different approach to keeping a budget. It starts with changing the way we think about what a budget is and what a budget does. YNAB is an online budgeting software, and a blog that has a lot of information to help us understand money and stick to our budgets. The first thing we need to do is change how we look at money.

What do I want my money to do for me?

This is the central question to ask, and to return to. Money in and of itself is not valuable; the value of money lies in what we can do with it. Asking ourselves what we want our money to do for us helps us figure out where our values lie. If we value having the latest iPhone, we can make sure to budget for that. If we value the convenience of not having to clean up after dinner, we can set aside money for eating out regularly. If we value taking vacations twice a year, we can build a cushy vacation fund. In choosing to fund our actual priorities, and not what we think should be our priorities, we are more likely to stick to this budget.

Another important mind shift is, only take the money we have today into consideration. Don’t budget with next month’s paycheck. We don’t have next month’s paycheck yet, and if what happened to me happens to you, we won’t have next month’s paycheck period. This is the key to stop living paycheck to paycheck – an application of not counting our chickens before they hatch.

So, YNAB gives us four rules to follow in order to create this customized-to-us budget that we will be more likely to keep. Each rule works with the other; it’s not a step-by-step processes, but following the rules in order when first setting up your budget is helpful.

Rule 1 – Give Every Dollar a Job

Start by listing your obligations (bills you need to pay, other expenses you need to live). Dig a little deeper to figure out if it is really an obligation, or a habit. The example in the book is having a car. Do you absolutely need a car to get around? Is it possible to take public transportation or even bike to work? Do you need to drive the kids to school, or is the school close enough to walk? This is habit masquerading as an obligation. You might not actually need a car, so it might make sense to sell the car and call an Uber sometimes. Especially if you have more pressing issues like paying off student loans or meeting your mortgage payments. There are also “true expenses,” to be further explained in Rule 2.

Once your obligations are met and you’ve weeded out the habits, move on to what the book calls “quality-of-life goals.” These are things that make you happy, any goals and dreams you have for the future, things that will make your life better. Separate them into categories of higher priority and “would be nice to have.” Don’t forget to set aside some fun money to treat yourself (only a little bit!) when you need a pick-me-up.

Reevaluate your expenses every year. Are these priorities still making you happy? If not, make adjustments. A budget is ultimately about achieving the life we want to live, and if we no longer have the same goals and dreams we did when we first set up the budget, we need to change the budget to meet our dreams.

Rule 2 – Embrace Your True Expenses

These are infrequent or irregular expenses that sneak up on us. New tires, new refrigerator, surprise surgery. True expenses fall into two categories:

1. Predictable

These are expenses like car insurance or holiday spending. You know they roll around the same time every year, but you might’ve put it out of your mind until the insurance bill shows up, or you might not know exactly how much you need to spend (someone had a baby and now you have another person to buy gifts for).

2. Unpredictable but Inevitable

You don’t know how much, or when, but these expenses will pop up out of nowhere. A pet gets sick and needs a round of medication. An accident happens and you have to pay the deductible on both car and health insurance.

Budgeting for these expenses will negate the need for a blanket emergency fund; you’ve already begun to plan for emergencies.

Rule 3 – Roll with the Punches

Life doesn’t stick to a plan. The more detailed a plan, the more chances for things to go wrong. Sometimes you need to make adjustments to your life, and therefore to your budget, because a budget should reflect our lives. Needing to change our budget is not failing; it’s adapting to the things life throws at us.

This also forces us to be honest with ourselves. If we regularly spend more than we budgeted on certain things, we must reevaluate our budget. Maybe this category is more important to us than we first thought.

Rule 4 – Age Your Money

The idea of aging our money is to increase the time between when we earned the money and when we spend it. The way Mecham explains how to achieve that time gap confuses me very much, but essentially you want to create a savings buffer so that you’re not spending every paycheck as soon as you get it. It’s more of a mental accounting than anything else. He gives a few tips on how to build that buffer more quickly:

  • Do a short no-spend challenge for a month.
  • Pick up some freelance work.
  • Sell stuff you don’t need.

Of course, this means you put that extra money in savings, not spend it on something else. You can also use any windfalls (tax refund, small lottery winnings, bonuses at work) to quickly fund the buffer.

Keeping on Keeping a Budget

If you end up quitting, it’s ok to give up and start again. This budget is ultimately about your life, so you need to be doing it for yourself. When you feel like quitting, you can get rid of all the categories on your budget and start fresh, choosing your priorities again. Your priorities might’ve changed a lot since you first started.

“[W]hen we’re stressed about our finances, it’s because we’re not sure our money decisions are aligned with the life we want to be living.”


I have completely failed at my financial resolutions. I haven’t even looked at them again. They were too broad, and when life got in the way, it was easy to forget about them. Those were life goals for some day. What I’m most interested in is that this is a customized plan, created completely for me, by me. All the accountability lies in myself and how strongly I feel about my values. I also have a lot of trouble sticking to a plan (my bullet journal shows many, many changes), so I like that this is flexible.

I wasn’t sure where to start, but I found this example from the YNAB website to use as a template for my budget.

You Need A Budget Screenshot


Get your copy here:


Have you heard about or do you use YNAB? How is it working for you? If you haven’t, is this something that might help you with your budget?

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Comments (8)

  • Laura 2 years ago Reply

    Excellent tips (and so important!). Thank you for sharing!

    Lily 2 years ago Reply

    Thank you for visiting!

  • Great tips – especially #3 Roll with the Punches. Being adaptable and flexible is so important in so many areas of life. Thanks for sharing.

    Lily 2 years ago Reply

    I agree! It’s still something I have to work on, but I’m getting there! Thank you for stopping by 🙂

  • Tiffany 2 years ago Reply

    These are great tips! I can’t wait to put them into practice and start saving some money!

    Lily 2 years ago Reply

    Thank you! Let me know how it works for you, and if you discover any new tips!

  • Margaret Cervantes 2 years ago Reply

    Great idea’s! But I’m not sure if I’m disciplined enough for this. Those impulse buys get me everytime😩

    Lily 2 years ago Reply

    The good thing is we can work on controlling our impulses!

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