I have been reading a lot of fiction this year, but I also want to read some non-fiction that will help me grow and improve.
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Recently I read You Need a Budget by Jesse Mecham. I’ve been a big fan of the YNAB budgeting software for over a year now, so I thought this book would help me learn more about the YNAB philosophy. I wasn’t wrong.
You may think if you’ve read one personal finance book, you’ve read them all, but that’s not the case with this book. Mecham has a refreshing view on budgeting. He outlines four steps:
Give Every Dollar a Job
Mecham first asks people to decide what their priorities are. What is most important to them? What do they want to use their money for? Then, take the money that you have now (not money that you’ll get a week or two from now), and budget every dollar. When money comes in later in the month, budget that money not now, but when you get it.
By the way, this is one of the hardest parts of his program, in my mind. I much prefer budgeting for the entire month. To get around this, Mecham suggests building a one month buffer, so you can budget for this month with last month’s money. My husband and I had a one month buffer, and budgeting was so easy, but then we had a major car repair and orthodontic work for me, so bye bye buffer. We’re in the process of building it up again.
Embrace Your True Expenses
It’s fairly easy to budget for your recurrent monthly payments, but what about the bills you only have once or twice a year or the irregular expenses like car repairs and home repairs? Mecham calls all of these expenses your true expenses and recommends making a plan for them so you don’t find yourself running short on the month that your car insurance is due, for instance.
Roll with the Punches
LIFE happens and can ruin the best of budgets, but Mecham says it doesn’t have to. Roll with the punches and change your budget as you need. This month, my husband had a $583 dental crown replacement that we hadn’t anticipated. It didn’t ruin our budget; we just changed allocation of some funds to cover the expense.
Age Your Money
The longer the amount of time you have your money in your hands before you pay your bills, the better. If your money is 30 days old, for instance, that means you have the money for 30 days before you use it, and you’ve officially broken the paycheck-to-paycheck cycle.
I also appreciated his view on debt. Obviously, he doesn’t want people to have debt, but if you are in debt, he doesn’t recommend throwing every extra cent at the debt. Instead, he recommends building up an emergency fund, so if a large bill comes up, you can pay it out of money that you already have rather than going in debt (again!) because you have no reserve.
I found the book, You Need a Budget, to be the perfect complement to Mecham’s You Need a Budget budgeting software. If you’re looking to gain control of your finances and change your spending habits long-term, I highly recommend this book.
I give this book 5 out of 5 stars on the Mom’s Plans’ scale.