More Money Podcast - 356 Why There Is No Wrong Way to Budget - Jesse Mecham, Founder of You Need A Budget

Episode Date: March 1, 2023

If you've been a long-time listener of the More Money Podcast, then it shouldn't come as a surprise that I think budgeting is an amazing tool when it comes to getting your financial life together. That's why this week I'm so excited to have Jesse Mecham, founder of You Need A Budget, on the show to discuss how he turned his budget spreadsheet into one of the most popular budgeting platforms around. Jesse Mecham is a personal finance expert, business leader, podcast host, author, and founder of You Need A Budget. He's a self-proclaimed “recovering CPA,” passionate about budgeting and his four-rule method for keeping track of spending, saving money, and building wealth. In this episode, Jesse explains what his four-rule method is and why he thinks there is no wrong way to budget. We also discuss how to approach budgeting and money in relationships and the importance of teaching your kids about personal finance from an early age. I hope this episode gives you a boost of motivation and reassurance that everyone is still figuring it out, even the experts! For full episode show notes visit: https://jessicamoorhouse.com/356 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome back to the More Money Podcast. This is your host, Jessica Morehouse, and this is episode 356 of the show. And for this episode, we're going to dive deep into the world of budgeting with pretty much like the go-to guy and platform of budgeting. I have Jesse Mecham on the show. He's the founder of probably the only budgeting software that I do recommend because so many people over the years have said, this has changed my life. This is so helpful. I'm talking about You Need a Budget or YNAB as people like to call it. And he is on the show to talk to me about how he developed this software, how he got the idea, and just some really important things that everyone, including myself, needs to know about budgeting. Now, a little bit about

Jesse. So he's a personal finance expert and business leader. And of course, like I mentioned, the founder of YNAB. He also is a podcast host himself. He hosts the You Need a Budget podcast, the Beginning Balance podcast, and is also the Wall Street Journal bestselling author of his book, guess what it's called? You Need a Budget. There's a trend going there. That's great branding. Just keep on using that term and, you know, the SEO of it all. Well done. Well done. He's also a self-proclaimed recovering CPA, and he's deeply passionate about teaching individuals, families, and business owners YNAB's four rules to help them gain control over their money. And really, and we dive into this in

the episode, but Jesse first developed YNAB and the YNAB method from a simple spreadsheet, just like me and my lovely spreadsheets. Gotta love a spreadsheet. It's something that he realized he needed for himself and his young family. And over time, it just developed into a very comprehensive software platform that has earned a lot of recognition and is very, very popular. So I'm so excited to dive into this episode and interview with Jesse and one of my favorite topics, budgeting. And I feel like I don't have a lot of episodes about budgeting lately. I have a lot of episodes on investing. So I'm very excited to dive back into the world of budgeting because it's super, super important. But before I get to that interview with Jesse,

here's just a few words I want to share about this podcast episode's sponsor. This episode of the More Money Podcast is supported by Bel Air Direct. With the current high cost of living, I'm sure just like me, you're trying to find different ways to cut your expenses down and save more money. Well, one simple way to do this is to look at your home and auto insurance. Did you know that if you bundle your home and auto insurance policies with the same insurance provider, you could save up to $750 per year. You can save even more by asking about multi-vehicle discounts if several family members in your household drive cars too. You can also save money by driving safe and maintaining a clean driving record. While your driving record impacts your premium rate,

companies like Bel Air Direct can reward your safe driving in real time through programs like AutoMerit. And lastly, you can reduce your monthly premiums by increasing your deductible, and you may be eligible for even greater discounts if you're a student or if there's a program partnership through your work. To learn more ways to save on your home and auto insurance, and to get a quote to see if you can save by switching to BelAir Direct, visit BelAirDirect.com. Once again, that's BelAirDirect.com. Welcome, Jesse, to the More Money Podcast. I'm thrilled to have you on the show. Thanks so much for having me. I'm very glad to be here. You're so welcome. I mean, I have been aware of and I feel like talking to people about

you need a budget or YNAB as it's most commonly called for years and years and years. So I'm thrilled to have you on the show to talk about it because I know a lot of listeners use it to help them with their budgeting and just creating a plan for their finances. So I kind of want to start there. I'm sure most listeners who are aware of YNAB would probably be curious about how it all got started. Do you want to kind of share what inspired you to create it? Yeah, absolutely. I'd be happy to. It really was out of necessity. And this was long before we called it anything. And we never had any commercial intention to say, oh, let's sell this. It was just my wife and I were just married.

And we were young newlyweds in school with not a lot of money-making prospects in front of us. And we needed to make sure that we really just were super intentional with our meager finances. So I ended up building a little spreadsheet and I learned about spreadsheets in a college course. And I was like, oh, this looks pretty useful. So I built a spreadsheet and we started following it. And I realized that it was working pretty well for us. We were able to save a little bit of money. We were able to not borrow some money with the help of scholarships as well while we were in school. And we lived really, really tight, but we were making forward progress. And I was just really happy to see how much this awareness of our money was helping us make

good spending decisions. So fast forward about a year, and we decided we wanted to have a baby. And my wife and I, we both wanted her to be able to step out of the workforce once this baby came. And that meant that our income would be cut in half. And I wouldn't be able to work more hours to make it up. I still had to make sure I was focused on school. So I had this idea like maybe other people would want to buy this spreadsheet that we've been using. It's been, you know, it's proven useful.

And that was kind of what launched it. It was, it was really, uh, we needed to make some extra side money and, and that was the solution we came up with. So it hasn't been a spreadsheet since 2006. But yeah, that is the origin story. Interesting. So tell me about the shift from it starting as a spreadsheet. And as you probably know, I mean, there's so many budget spreadsheets that you can get on Google Sheets or Excel. But I think what makes YNAB different, and honestly, when people ask me like, hey, I don't want to use a spreadsheet, what else can I do? I'm like, well, I think the only thing that really has had a lot of

like a high success rate for people is you need a budget. So tell me about the process of converting it from a spreadsheet into a fully functioning software program that really has a lot of features and functionality. Yeah, it's been iterative. So people will look and say, oh, look at this amazing thing. And I do think it's amazing, but it's been a slow step-by-step process. What's interesting, and I think where the success rate comes from with people that use YNAB is still not really the software. When I was first launching it, launching the spreadsheet back then, I realized that the spreadsheet was essentially enforcing four rules. And these rules were really meant to help me and my wife, Julie, make better spending

decisions. And once I realized that the rules were kind of the magic and the spreadsheet was just the way I happened to have implemented this decision framework, then that kind of, we were off to the races because then we've been able to steer the software, whether it's on your phone or on Alexa or on the web, we've been able to steer it and make sure

that the software's whole purpose is just to help you learn and implement the four rule method, which just leads to you making better spending decisions. And I don't mean better like you were really bad before or, oh, I can't believe you spend money on this. I mean better in the sense that it's truly a higher quality decision. You take into account finite resources.

You take into account the future. You take into account the future. You leave some flexibility in place. You leave yourself some options. That's all just good decision making. And the four rules just really promote that. And that's where people see the success. So they wouldn't have to use our software. They could take the rules, learn those, and run with it. But I think, yeah, what I hear often from people is people are

looking for that template or that starting place. Because when you say, oh, just start a budget, I mean, that's actually a very overwhelming thought, especially if you've never done it before. And what I often see too, and I think this, you know, YNAB kind of solves this, is that when, if you were just to download any kind of budget spreadsheet you find, there's all shapes and sizes. A lot of them are just the budget portion where it's like, okay, how much are you bringing in and what's going out? But that's it. It just shows you what you would like to happen with your money. But the kind of only ways to implement that ideal situation is to track what's really happening.

And I think most people don't do that. They don't know what their net worth is. They don't know what their spending is, because no one actually want to look, look at those numbers, because it's very, you know, it's, it's hard, it's very hard to confront those numbers. So do you want to kind of share, you know, how does YNAB work? Because I know that is part of the process. It's not just about setting up, setting up a budget and forgetting it. It's really about being active with it. Yeah, absolutely. I mean, a budget is just a plan for your money. So if you don't have a calendar, if you don't have something that tells you what you're going to do that day, then someone might say, well, you're probably not managing your time very well. And with money,

it's very much the same. But we start people off when people say like, I want to start a budget and they're kind of, maybe they're feeling really gung ho about it. We, we kind of sometimes take the wind out of their sails because we start really small and really simple. And we ask them, what, you know, what money do you have in your checking account? And they might say three, $300, $3,000. It's always the same exercise on our side and then we just ask one question then that question will get very informative as people work it but it's just what should this money that you have on hand right now what should that money do before you are paid again so we don't forecast we don't look ahead we don't say oh i will earn this or i'm paid much, and I'm paid every other week, and this is a three paycheck month. We don't do any of that.

It's just, what money do you have? Okay, that is the resource that you've been given and you must allocate. And then we just follow the first rule where we say we want to give every dollar a job. And when you do that, that's the first step toward better decision-making because you are now dealing with finite resources instead of fictional. Sometimes through rose-colored glasses, we just like to think that more money that will come later will always solve a current problem. And we don't really want to do that. We want to feel the finiteness of our resources because in that feeling, it can promote better decision-making. And that's the end objective.

So when you follow that first rule, whether you've just got 300 bucks and you're like, well, gas, groceries, and I have this one random bill I need to pay. Okay. That's what we're going to do. And then the next time you're paid, you just repeat the process. What should this money do before I'm paid again? So with the, you know, kind of rule number one, give every dollar a job, I guess the other kind of question would be, how do you know what job to give every dollar? You know, everyone loves to know, am I doing this right? Is there the most efficient way possible? How can I make sure that, you know, all my money isn't going towards expenses that I am, you know, doing something good now that I'll be thankful for in the future. So how do you determine what kind of jobs to give

your money? Do you kind of use some rules of thumb or do you have some kind of guides to follow? Yeah, it's funny because, well, I get attacked this a few different ways. One is we love to kind of like in a, in a kind of a jonesing way, we love to kind of know like, well, how am I doing compared to other people? You know? So that's one thing. And that, that is reasonably informative at times. Um, it can be used to like get people to spend less on energy. If you know that, you know, you're the one that uses the most energy on your name in your neighborhood street or something. So there's, there's that side of it. There's another side where we were just starting on this journey of really becoming aware of our spending. And suddenly we're just demanding that we know that we do it the best,

that we're the, we do it the most efficient and that we, you, you said the phrase that we do it right. And I would really push back on people with that. I would say, well, how about we just settle for doing it first? Let's worry about right. Um, never really, but like, let's just pretend we'll worry about it later so that you can be appeased, but we really just want to worry about doing it. And then the other side of it is when you're dealing with just finite resources and you're looking ahead, what does this money need to do before we're paid again? You don't need to worry necessarily about what the money should be doing because you know what the money must do given this tight timeframe that we're talking about. What we then do is we step people into

the second rule where we call it embracing your true expenses. And that is where you start to look ahead and you think about larger, less frequent expenses and you break those up into more manageable monthly amounts. So we might say, okay, I look ahead and I see a vacation coming. Okay, well, how much will that vacation cost? How many months away is that? We've taken a $6,000 vacation that's six months away. We've now made that a $1,000 bill that you use to save for. And so there's that, or there's the sad ones, like property taxes or life insurance premiums or repairs for your car or your house, all of those eventualities, not probabilities, but all of those eventualities also come into play. But the easiest way to do that is to look back through your last, I don't know, year of bank transactions, literally just

kind of blur your eyes and scroll down and wait for larger numbers to kind of just pop out as you scroll and be like, oh, what was that? Oh, oh, that's right. The vet bill. Oh yeah. So this vet thing would, will be an eventuality or what, what was this huge expense? Oh yeah. I remember we went out to eat at that fancy restaurant for our anniversary. Oh, anniversaries that's in four months. Maybe we should think about that. So you're thinking now about future Jessica, instead of just the current Jessica. And suddenly where with rule one, we've been giving every dollar a job and feeling those finite resources strained across different current priorities. Now we're filling those resources strain across future and current priorities. And that's where

the decision-making gets five X, 10 X, because now you're not just thinking, should I buy these, I don't know, should I buy these boots or something? You're thinking, should I buy these boots in comparison with the fact that I also want to be able to buy new car tires? And no one makes those kinds of trades, but they do happen all the time. We just make the poor trade every time. And then when the car tires wear out, we're like, ah, this is an emergency. It's not an emergency. It's just, we weren't ready for it. And what I find with people who are trying to budget for the first time, they often forget about those kind of surprises. So, you know, that's why, like you said, it is so important to look at your last years or even if you want two years of expenses

to see what happened, because sometimes things are not in your perfect world. You'll create that budget. You're like, this is the ideal situation. Or I see a lot of people, like you said, they want to, you know, just, you know, kind of just go off to the races, do as, you know, a harsh of a budget as they can to make up for lost time. Like, no, I'm gonna live really frugally and cut back and live on less, etc, etc. And then still, you know, life happens, like your utilities bill, you know, just went up because inflation, you know, and so you need to make room for those. Like you said, I like that eventualities. These things are going to happen. They may not happen consistently.

You may not know when, but you know they are going to happen at some point. So you need to, you know, for me, I just, I mean, it's probably the exact same concept. I just use different terminology. It's like I have savings accounts. So I put that money in advance for my property taxes because that's a once a year eventuality. But I like the way of thinking where it's like, it is a bill. It is going to be a bill. It's not, I'm not really, you know, it's a savings goal sort of because I'm saying money, but then eventually I'm going to pay this bill. So treat it like it's a bill,

but yeah, it's not a monthly bill. You need to kind of really plan for those things that will pop up because they always happen. They always pop up for sure. And the beauty is that you get to make those decisions against current decisions. And what happens with most people is they're making, you know, good money, whatever that means to them. And they're like, why aren't I getting ahead? And it's because they're, they're deciding to spend money now that really needs to be for the future. And they would use it for the future. If they knew they're not, it's not like they're saying, ah, just whatever. They're really trying to be conscientious. And we just need to make sure that we're presenting the information in such a way that the decision-making happens. I've never seen someone, honestly, ever, and I've seen this hundreds of thousands of times, I've never seen someone make a poor financial decision when they're given good information in context. Yeah. It just doesn't happen.

Yeah. I mean, yeah. Mistakes typically happen when you're kind of guessing, you know, when people make a budget and they don't actually take a look at what their spending patterns were to see what they're at or tracking their spending throughout the year after they've created that budget just to compare, to see, well, this is what we want to happen. Is it actually happening? Are you implementing it? Or I think the other kind of missed, you know, element is not creating what I like to call like a cash flow framework or cash flow design where creating a system so you know, okay, on payday, this amount goes into this account, this amount goes into this account, you know, having a system in place that, you know, you're going to have to set up either through auto system in place that you're going to have to set up either through auto transfers or sometimes you're going to have to manually move money on

payday. And most people probably wouldn't even think about doing that, but that's the thing that'll help you put that money in savings if you can set up a little automation or something like that. Absolutely. And what we do, we don't normally have people set up different savings accounts, although we understand exactly the objective there. What we do is we lean on the software to eventually separate all that one pile of money that's in a checking account. We break it up into tiny little piles of job, where we say property taxes or vacation or Christmas, or going out to eat tomorrow. But they're all in one view where you can see essentially all your quote unquote accounts. But we keep it all in one account for ease of administration.

But then for decision making, you get the same result that you would from those many savings accounts where you have the money clearly with specific jobs. And that's the real magic. And I know the other kind of thing that people struggle with is when something, you know, you can do all the planning in the world and still something will happen. So how I know rule number three is roll with the punches. How do you roll with the punches? Does the software help you to make adjustments and tweaks when they are necessary? Yes. I mean, part of it, when we say, I don't even like telling someone they overspent really, because it somehow has

like, oh, you shouldn't have. Yeah. It's like, that's your fault. You did something bad. It's just a reallocation of resources. You're just allocating or you're reallocating or you're allocating on the fly, whatever you want to say. But we're just deciding that we would like to use these resources here instead of there. And it's important because we're dealing with finite resources that you account for that. So if I spend a hundred more on A than I originally intended, I need to pull the money from B or maybe a little bit from B, C, and D and put it in A so that I'm all balanced. But we've built the software in such a way to where we really promote the idea of flexibility. And when you're making decisions,

a good coach is going to have a really good game plan. And then immediately when the game starts, she will be adjusting her plan based on how the opponent is responding. And that's what we want to do with our own plan, with this budget. Normally people set a budget and they're just like, okay, these are my shackles and I'm just going to like white knuckle this. It never, ever, ever works for longer than like three hours. So we want to have a way where you say, this is my plan. And part of this process is continuous planning. And I do mean continuous in that it's, yes, you may look at it weekly in part of your routine, but there's a day-to-day kind of like, am I still on plan? Am I still on plan? You just pull out the phone, you look, you're like, oh, we don't have quite enough money to go to Chick-fil-A or whatever. So you move some

money from your clothing category and you think, I can go for a month without buying whatever I thought I might buy. There are all kinds of places where you can grab money from and say, let's use it here instead. But the flexibility is the key. That's actually the secret sauce with our whole method for getting people to stay with it is that you can be flexible. Rigid budgets break. And we don't want that at all. Yeah. I mean, that's why I see so many people stop budgeting or say budgeting just doesn't work, I'm not good at it, or budgets in general don't work is because they were trying to stick with something that was so rigid. And then when something in their life, you know, kind of threw a wrench into their, you know, perfect plans, they blame themselves, they think they're a failure, or they're just

like, well, then this doesn't work, because every, you know, they just kind of feel like, well, you know, I'm just going to give up. This just isn't working, but you need to be flexible. You need to like, you know, I always create a budget, but then, you know, I just went through the process of, I still use the spreadsheet, but I, you know, was looking at all my spending and my net worth and comparing it to the, you know, original budget. Yeah. They don't look identical, but I still, you know, it's because so many things happened that I couldn't really, you know, expect or predict. And so I had to make so many adjustments throughout the year. But I think ultimately, even if, you know, things look different compared to

where you started, the ideal situation is for you to still have, you know, paid your expenses, had stuff left over to reach some of your financial goals. And like you said, the most important part is to not give up and not quit. Yeah, absolutely. Absolutely. I'm curious, though. One thing I hear often is budgeting is one thing when you're an individual, when you do have a partner, it is kind of a whole other kettle of fish, especially if you're having trouble kind of onboarding your partner. Like even for me, I've been doing this for a long time and my husband still hates it. He's getting better at it, but he, I think it's just a lot of emotions that are wrapped into it. I'm curious, I know you and

your wife started the kind of budget together. What were some strategies that you used or what are some techniques that worked for you to make sure you attacked it kind of as a team? And if there's one party who's a little bit more interested in the other that you can still do it as a, you know, a unit. Yes. Yeah. I mean, there may be one that's just more into like the taking and tying and the numbers and that's me. And so I, I happily do that lifting. And Julie is essentially a consultant where she'll come in and say, well, what about this? She'll have a different perspective. That's valuable. Um, because obviously she will, but what I I'll take that, you know, we'll take that and kind of merge our own, you know, our views, our separate views. You got to

merge them into one plan. And, uh, you got to do that in everything when you're, you everything when you're in a relationship. You've got to merge how you're going to raise kids, where you're going to live, what jobs are going to happen. I mean, how chores happen, everything. Everything is a merging. And in that sense, you just have to recognize that there are different strengths that each partner brings, and you want to kind of capitalize on those. So Julie's strength is not in the numbers per se, like the little details, but her strength is in her foresight. She can look ahead and be like, well, what about this? And she'll just think of things that I would not have thought of. So she's mainly a consultant. And then I do ask her and encourage her and cheer her on when she does record a transaction in the moment like,

oh, you just spent money here. Did you put it in YNAB? And when she does, I'm always very happy because that is still after years, still a work in progress. She's busy. She's got a lot on her mind. And so I take what I can get there. What's really interesting about money and relationships is if you can set aside the money part for a moment and just talk about the goals and aspirations, it actually can be a really enjoyable, informative, introspective conversation with your partner. I mean, you really can figure out what makes the person tick and why do they want what they want, which is a very fascinating conversation to share with someone you're sharing everything

else with. So I would encourage people to not talk about money for a little while and just talk about what you aspire to and then see where that goes. Eventually, money can be used as a way to achieve those aspirations. But first, we have to be clear on the aspirations. And I've seen it derail where they talk about money first, and it just gets in the way of just the aspirational stuff. Yeah. No, that's actually something that I eventually figured out with my husband is if you actually don't focus on the money, but you focus on things that are more exciting and can

entice them to want to have that eventual conversation about dollars and cents, talking about your goals and what you want out of life and having those big kind of, you know, dreamy conversations. And then be like, this is awesome. I think we can do it. Let's now figure out how we can realize those dreams, because then that will just give you that actual motivation and then you can also outline your action steps on how to achieve that because I think too often if you do just focus on the numbers then immediately you think well we'll never be able to go on a trip with this income and inflation and etc etc and that's not going to motivate you to try to find any different solutions or different ways of looking at things. So you could potentially maybe just adjust the

timeline, but still reach those goals. Yeah. Another trick, like this is more of a hack, that is just to make sure that each person in the partnership has their own, we call it fun money here for me and Julie, but you got to make sure you have your own money. That's just totally yours. You don't, you don't have to. And it's not that you feel like, Oh, I don't want to say, I don't want my partner to find out what I spent my money. That would, that's a disaster. There should be no secret like that. But just the idea of like, I don't even have to like worry about the administration of this. That's, that's the part that's really enjoyable. So some people will actually take out cash, like literal cash. A few people will do it on gift cards to where they don't have to worry about it. Let's say you get a hundred bucks each month or whatever, it doesn't

matter. You load the gift card and then that money is out of the budget, never to be seen again. And the person just knows like, okay, cool. I've got my quote unquote allowance. I do not like calling it an allowance. To me, it feels like you're talking to a kid. Yeah. Yeah. Yeah. So, but this idea of fun money, it's just, it's very liberating when Julie and I first started ours were each $5 per month. And literally that was enough money for me to feel like, oh, okay. There's, there's some breathing room here, you know? Um, and I'm the spender in the relationship. So I needed that more than she did. Yeah. Yeah. That's what me and my husband actually do too and i found because i remember especially too when we first got uh married and before that we just okay all of our finances separate and then

once we got married we're like oh should we adjust things and then we eventually figured out a good kind of combination where it's like some of our money is combined some of it's separate also we're both self-employed it's a bit of a mess um combined, some of it's separate. Also, we're both self-employed. It's a bit of a mess. But it was interesting hearing comments and just the perspective of some people thinking there's only one way to budget if you're a couple. You got to put everything together in one pot. And that doesn't really leave you the room of having any kind of financial independence from your partner in that giving yourself a few dollars or a few hundred bucks to do whatever you want. And for us, you know, I don't really like the idea of like, oh, when you're married, you are one person. I'm like, no, we're not. We're two separate people. And sometimes I like to buy stuff at this store and, you know, he likes to buy stuff at this store and

it gives us some joy and something fun to do. Right. And so having that, you know, little extra fun money and also to, yeah, we don't, I don't even really look at that you know a little extra fun money and also too yeah we don't i don't even really look at you know what he's you know spends in that account or what i'm like i don't care it's not my business it's your money but then it's also nice because on the other side of it you can't you know give me his two cents or judgment on you know what i spent some of my money on i think that's important you get to just do whatever you want with it every once in a while it's fun to spend your fun money on the other person and kind of surprise them. But yeah, that's everyone's own thing. It's important we recognize that it's going to be a

different setup for couples. Julie and I are all merged. We did it from the very, very beginning when we were just crazy, crazy poor. And so I think that paved the way for us to do a merged thing. We didn't have other inhibitions that you might have. I mean, there are people that extricated themselves from a horrible situation of financial abuse. And I would never dare tell someone, oh no, just, you know, like they're dealing with some,

they've learned something that they just can't say, oh, okay, I'll just unlearn that. And it's real. So you just respect it and you got to get it set up the way that it'll work for them where they feel totally comfortable and bought in and counterintuitively really bought into the relationship. Maybe that's what it will take. The other side of it is you can be of one mind and you can be one as far as goals go as a couple. And I'm not talking about losing your identity or anything at all. It's just, but you can have, you can be totally aligned in your goals and have your accounts be all set up however you want. As long as the goals are being achieved, like let's, let's not change a thing. Yeah. As long as you have like and that's yeah i feel like something i've been harping on this podcast for a while it's

when it comes to yeah budgeting as a couple there is no right or wrong and there's no this is the way you're supposed to do it it's like every couple is different and like you said you may have some trauma in the background there that's something that it would work for some couples you're like i did it once and it really, really affected me negatively. I can't do that. So I'm not comfortable. You're like, cool, let's set up something different to address that. So you are comfortable, but we are still actively working towards our goals.

So it's really about figuring out. And that really comes down to having those regular conversations and always having that open dialogue to figuring out, you know, what, what does your partner need? What do you need? And how can you create a system that works for, for everybody? And so you can still work towards that. And I would add one thing there, um, make it this, make the system as simple as you can. Yes. Yeah. With the goals you have in mind, keep it simple. People really start to jump through hoops, forced hoops a lot of the time, and they don't need to do that. So if there's one thing

that a good system will do is it will kind of get out of the way and you'll kind of be left with the essence of what the objective is. And that's what we want. So if there's a lot of back and forth transfers and this and that and splitting bills, you can start to be like, okay, this may be as quote unquote working, but is it, is it working well? Yeah. If it's too hard to follow, or if I always kind of think that if I were to die and Josh still had to pay the bills and all the, everything, would he be able to figure it out on his own? If the answer is no, it's too complicated, but, uh, but yeah, that's, that's something to always keep in mind. And what I found too, is sometimes, I mean, actually, that's the number one thing I think I've learned on all these, you know, the past decade of working personal finances. Money should be simple. Once it gets too complicated, that's when mistakes start to happen, because human behavior gets in the way, because we like things that are simple. That's simple that's it you know otherwise you're just not going to do it um i i know another thing that um i wanted to chat about so we talked about couples and another i think big point of discussion for couples is starting a family having kids and one thing that i've been noticing and really loving

is that um you know new parents especially want to not repeat kind of the cycle of, you know, not talking about money. Money is taboo because, you know, that's why people listen to the podcast is like, I didn't learn this and I really should know this. And they want to be able to bring their children more into the conversation so they don't have to feel like a fraud or don't know what they're doing when they're in their 30s. So I'm curious, you know, especially since you have children, do you talk to your kids about money? What's the right way to get them comfortable with the act of budgeting or like the family budget and understanding that so they can be more prepared as young adults? I mean, one thing that we do is money is not taboo,

my word, you know, it's not taboo at all. That'd be like, I mean, sex is also taboo, right? So I guess you should never talk to your kids at all about how that all works. Yeah. That always works out when you don't talk about it. I don't think so. I think that's a good idea. Uh, yeah, it's not taboo. It's totally fair game. Um, dad, how much did the car cost? You know, I tell him, oh my gosh, how do people buy cars? That was my daughter's response. Um, and I said, well, this is how they normally do. This is how you can, you know, you save up for it. But yeah, you just, you're kind of an open book.

There are a few things as they're, when they're little, that you kind of want to make sure you're aware of family privacy is what I would call it. You don't want them necessarily telling their friends who are also nine, you know, these things like there's some context that's missing and stuff like that. Um, so you gotta use some judgment there, but the fun thing to do really fun is you get your kids set up on their own budget. Um, at YNAB it's, it's part of our, what we call the YNAB together plan. So you, you know,

you're a subscriber, but you can, you can add, I think up to five other people on your plan for free. So you can have your kids on there and And it's fun to see them do so well what adults struggle with, where you're like, hey, here's all your money. And they're not like, oh, I want more. How come I don't have more? They're just like, OK, what do I do? And then you're like, well, what do you want? And then they start to come up with these ideas. And you really prime the pump. Like, well, didn't you say one time you wanted this? And didn't you say this? And remember that time we were in the Lego store? And so you get them to just start brainstorming like crazy. And they have this really long list. And then you say, okay, remember now we have $119 and 7 cents. So then they're like, oh, well, I want that. They prioritize so quickly. And I've noticed most

kids, at least mine and a few that I've seen or friends of mine, they will tend to go all in on one thing they want and get it sooner rather than spread the money out and work on lots of things over time. Whereas an adult, you probably have to kind of do that. But kids like to just be like, I'm excited about it. I'm going to get it. They don't mind leaving all these other priorities to the side for a while and letting them sit. And they're so good at knowing when they've run out of money. Adults are so bad at recognizing that we're out. Like, oh, we're done. It's zero. We can't. We're just like, oh, what about our card? Well, no, you're actually out of money. We've just, you know,

the whole system's made to make you feel like you've, you've never run out of money. Um, you know, just six easy payments. But, um, in that way, kids have something to teach us as far as how comfortable they are with the number zero and, um, just being content with that. But I, I start them when they're eight with their own separate budget. And then the first Sunday of every month to get really tactical for a moment, the first Sunday of every month, because it works for us, I sit down with them and we go through it and like, okay, here's how you reconcile to what the bank says. And they're like, what's reconcile? And I'm like, it's a word no one uses, but it means this. And so we can move along. And then as they get older, I don't, I mean, I've got a 16 year old, a 14 year old, I don't check in on their

budgets. They, by that time they've, they've got six years of reps under their belt and they're little savers and they buy things and they don't feel guilty about it. And it's wonderful. I know if we can avoid some of these like really negative things about money, like guilt and shame and just all that kind of stuff. But also just think of like how well set up they'll be once they're, you know, maybe they go to college or if they start, you know, working, they'll already have the skills to set aside money for like tuition and books and then, you know, housing and food and going out. Because most people don't do that. And that's when you hear the stories of, I just got a credit card and got a free mug. And then I have $10,000 in debt because no one told me. Not to mention the student loans and everything.

Yeah. Yeah. I mean, to be able to recognize that you're out of money and to kind of know what you want your money to budget did it also i i'm curious like were they like well i ran out of money how can i make more like was it also like a way to kind of motivate them to you know maybe be entrepreneurial or try to find work totally we my son uh made a poor decision and wrecked the his the family van that we passed down to be like a teenager car because it was so old and beat up so we're like that's the car for the teenagers and we'll cover insurance and then he uh you know he made a poor choice and ran into a parking lot pole yeah oh no and uh yeah so that wasn't exactly fun but it's fine like no one was hurt obviously obviously. So you're, you're happy about that. But he has suddenly found more motivation to work because he knows once we get into the, you know, body shop

to get this thing repaired, that it's going to be a bill and I'm going to send him that bill. Like that was you. Um, so he, yeah, he is, he's like, I don't want to not have money for other things. And so he is motivated to earn more. It's amazing what that will do. It's a little dose of reality, but he's responding exactly as I didn't want him to have done that. That's fine though. I also did dumb things, but I've loved seeing his response of, okay, I'll pay the consequences. Yeah. Yeah. I mean, I think that is, yeah, so, so important. I think the other thing too, and this is something that I experienced as well, you know, I think I started working at 15 or something like that.

And the, just the, the idea or the experience of, of having your, finally as a teenager, your own financial independence separate from your parents, you don't have to wait for like Christmas or birthdays to get some checks from grandma and you don't have to ask your you know i never got an allowance so i really had to figure out i started working as soon as i could but it just makes you feel like it gives you a sense of pride and i think it helps build confidence like there's so many great things that i feel like introducing this is how to manage money and then that will just naturally motivate you to like here's you know why it's great to actually make money there's so many great things that you can do that maybe your friends may not have the same freedom to do and then it'll just like snowball into adulthood and i can't see

anything you know bad with that i can only see like all the potential yeah i don't see a downside there no i can't um i feel like we went through all the rules but there was a rule number four i'm not sure if we touched on called age money. Did we discuss that or what does that mean? We haven't yet, but it's a quick, well, I'm long-winded on every rule, but this is probably the quickest one. The idea is that we want there to be a time that elapses from when you earn money to when you spend it. So that's the age of your money getting older. If you spend a dollar that you earn today, it would be a day old, not very old at all. If you spend a dollar that you earned 30 days ago, then that's the age of that dollar. And what we're trying to do to go back to good decision-making, if rule one was

about finiteness and feeling trade-offs come into play and proving your decisioning, and then rule two is about considering the future when you're making decisioning. And then rule two is about considering the future when you're making a decision. And then rule three is about being flexible when you're making decisions. Rule four is about having options. And when you have more options, when you have more time to make a decision, the decision quality improves. And so aging your money means we want you to get to a point, and the software calculates it all, so it's not really something that a user does, but we just want to get you to a point where you are spending money today that you earned 30, 40, 60 days ago.

And because you're operating with that buffer between you and any kind of urgency, it does completely and totally improve the quality of your decisions because you have time. It also improves your sleep. It improves the quality of your conversations with your significant other because they aren't so emotionally charged because you're walking. Like if you and I were hiking on some narrow ledge,

our conversations would be totally of a different tenor than if we're just walking out in a field, right? Like, and, and we don't want to have that exhausting, stressful conversational tenor when we're just talking about the mundane things of money. It's just, it's unnecessary to have all of that emotional charge there with it. So I can say, oh, Jessica, you went to the store today. And you can be like, how dare you question my... It's like, oh, sorry, I thought I was making small talk. But because we're living right on the financial edge, nothing sounds like small talk. It all sounds accusatory. It sounds like there's some shame in there. And we don't want these conversations to be accusatory. We want it to be aspirational. We really want the couple

who loves each other, we want the couple to love how they spend their money as a couple and to love how their spouse spends their money. Yeah. Ultimately, you want people to feel good about money and provide them with options and freedom, which is, I think, everything a budget actually is. But most people don't actually, I think, connect those things to budgeting. Yeah. Most people still think it's like you kind of mentioned the shackles of budgeting. It's like, no, it doesn't have to feel like that. It can actually feel really good.

Yeah. It's your plan. You get to do it however you'd like. Absolutely. So I know before I let you go, you you have a few things on the go. Like you have the you need a budget podcast, the beginning balance podcast, but also and I think this is a great thing for people to check out. You have a book called you need a budget. I feel like that's a great entry point if you're like, Oh, gosh, this is still a lot. I don't know what to do. What do you kind of just I mean,

I'm assuming you discuss a lot of what we kind of touched on today, but what can people expect if they wanted to grab a copy of that book? Yeah. The podcast is like seven minutes per episode. I just, I go on about something. It's like a date, not it's not daily, it's weekly, but just a little dose for people if they want that. The book is a great start. If you, if you haven't gotten enough of this sultry voice, you can get the book and listen. The book lays the foundation for the whole method. And I think it's a great entry point. And it's available at libraries. You can borrow it. So there's no need to necessarily fork over any money for it. And then also we run classes all the time, online live classes people can take. Again, no purchase.

You don't have to buy anything. If you do try the software, we don't ask for your card up front. The last thing we want to do is somehow be sneaky about your spending with us. No way. That's counter to everything. So yeah, give it a spin.

Go to windup.com and there's all kinds of resources people can look at. But we teach for free. And then if you like what we teach and you think it could help, then the subscription is how we keep the lights on. And you've got – so people can test out. You need a budget for a little bit. Like there's like a free trial to see if this is a good fit for them. Yeah, it's a 34-day free trial.

Nice. 34 days. Why 34 days? Not 30 days. So you'll appreciate this, Jessica, because you're in personal finance. It lets them see how the month rolls over and see how the money kind of accumulates. So there's a lot of interplay from month to month that we want to make sure is not lost on someone kicking the tires. Okay, that makes sense.

Well, thank you so much, Jesse, for joining me on the show. And I'm so excited for people to listen to this episode and hopefully get a little bit more excited about budgeting because sometimes I know it's just like the last thing people want to hear about. But like we've kind of discussed, I mean, budgeting changed my life. It clearly changed the trajectory of your life. You changed a lot of lives as well who used You Need a Budget. So I appreciate you taking the time to come and speak on the show. Thanks so much for having me. I'm grateful. And that was episode 356 of the More Money Podcast with Jesse Mecham, the founder of

You Need a Budget. And to find more information about some of the things that we talked about or some links so you can dive into the world of YNAB, make sure to go to the website first and foremost. It's very easy to find. It is youneedabudget.com. There's also the You Need a Budget podcast you can find on wherever you're listening to this podcast. You can listen to that one as well. You can also follow them on Instagram at youneedabudget and of course can be found on Facebook, YouTube and Twitter as well. I will link to everything in the show notes for this episode. JessicaMurhouse.com slash 356 is where you can find that. And in case you did want to try YNAB for yourself, they offer a 34 days, no credit card required free trial. So you can try it out yourself. Just go to youneedabudget.com

and you can give it a test run and see if it's a good fit for you and your kind of budgeting style. All right, I've got a few things to share with you, so do not go away. Here's just a few words I first want to share about this podcast episode's sponsor. This episode of the More Money Podcast is supported by Bel Air Direct. With the current high cost of living, I'm sure just like me, you're trying to find different ways to cut your expenses down and save more money. Well, one simple way to do this is to look at your home and auto insurance. Did you know that if you bundle your home and auto insurance policies with the same insurance provider, you could save up to $750 per year? You can save even more by asking about multi-vehicle discounts if several family members in your household drive cars, too.

You can also save money by driving safe and maintaining a clean driving record. While your driving record impacts your premium rate, companies like Bel Air Direct can reward your safe driving in real time through programs like AutoMerit. And lastly, you can reduce your monthly premiums by increasing your deductible, and you may be eligible for even greater discounts if you're a student or if there's a program partnership through your work. To learn more ways to save on your home and auto insurance, and to get a quote to see if you can save by switching to Bel Air Direct, visit BelAirDirect.. Once again, that's belairdirect.com. Okay, first and foremost, reminder from the last two episodes, I am giving away a few books. I'm giving away Jason V. Tugg's book, Happy Money, Happy Life. And I'm also giving away a copy of The Myth of

the Silver Spoon by Kristen Keffler, who I had on the show last week. So you can go to, I mean, the show notes for this episode, there will be a link or just go to jessicamorehouse.com slash contest. And you can enter to win either. And I will be having more guests on the show who are authors who have books, including next week, actually, and many, many more weeks. So look out for that. But currently that's that's what I'm giving away. So JessicaMorehouse.com slash contest is where you can find that information. Also, make sure to check me out on YouTube in case you don't know I live there too. I do live there. And I feel like in the next month or so, I'm going to hit 20k. And I'm very excited about that because I started my channel years ago,

pretty much left it dormant or once in a blue moon would put a cringe, like honestly, a lot of those videos I took down, they were cringe. I mean, they had my whack teeth before I had braces or, you know, Invisalign. I had a bob haircut for way too long. Why? Why did I do that? I look at those photos like, why was I trying to look like a news anchor? Things that I learned post COVID when I had to grow out my hair. I'm like, yeah, I should have. I should have grown out my hair for a long time. Anyways, my new videos are much nicer, figure out how to curl my hair. And in general, I'm just better at YouTube. So check me out on YouTube, JessicaMorehouse.com slash YouTube or just go into YouTube and find me at Jessica Morehouse. You'll find me right there and easy peasy. But excited to continue to make more videos on that

platform and hopefully reach 20k soon. A little kind of personal update. I mean, there's lots of things I'd like to share, but not quite yet not ready. But one thing I recently did, in case you've been listening to the show for a while, so really since, I guess, mid-2020, when it was like the worst of times and we were all locked in our houses, I decided to take the Canadian Securities course because I signed up for it for like a year or a year and a half before that, never took it. And then it's like, it's going to expire, so you have to take it. I'm like, oh gosh, I should take it. And I really just wanted to take it just because I know lots of other money experts are like, oh, yeah, we've all done the the CSC. So I'm like, well, I want to take it if

they've taken it. And I took it. And then I'm like, Ooh, I mean, it was hard as hell. But I loved learning. I just loved it. And so I'm like, you know what, I think I'm gonna, you know, go on the path to become either a QAFP, which is the Qualified Associate Financial Planner designation, which is really one step below the CFP, the Certified Financial Planner designation. So I'm, I don't know which one I say I'm working for the CFP, we'll see what's happening. I just try to take it one step at a time. But since September 2020, or October 2020, whenever I pass both of those CSC exams, then every year I've been trying to knock out more courses. There's quite a few prerequisites to the CFP program or the QAFP program. And so

in 2021, I took financial planning one through the CSI, the Canadian Securities Institute. In 2022, last year, like honestly, recently Securities Institute in 2022. Last year, like honestly, recently, actually back in what was it October, or November, I took financial planning two, that was a very hard exam, because I had to do it twice, because I took it once in I think, summer of 2021 and failed past that. And then I then there's two other courses, like I could take one other course. It's called the Lending Retirement Insurance Supplement, LRIS, or something like that. I signed up for that right after I passed FB2 and knocked it out last week. It was a bit of a weird, slow week. And I'm like, you know what? I think it's a bit quiet. I think I can actually take the time to

study and pass this. It wasn't a very huge amount of content to consume and it was also kind of an open bookish exam because just do it on your computer which is great and was able to pass it and then quickly after that there's this other course called introduction to professional ethics through fp canada that you it's a requirement in order to move forward with either the qafp or cfp oh it was was just like a two hour kind of easy peasy 15 minute quite, you know, 15 question exam after that. So knock that out. And then there's one other supplement course that I signed up for. I've got all the, you know, reading and resources to study is even shorter than the other supplement course. So I'm going to try to find

a quiet moment to do that, knock that out. And then once that's done, I've done all my prereqs, and I can technically, you know, sign up and take the QAFP exam, or I can, you know, start to take the CFP program, and then the eventual exam. I don't know what I'm going to do yet. I haven't really thought that far ahead, quite honestly, because this has taken me years to get to this program, and then the eventual exam. I don't know what I'm going to do yet. I haven't really thought that far ahead, quite honestly, because this has taken me years to get to this point. But I just want to kind of share what's been going on. I feel like I've been very quiet on Instagram, and that's probably why I've just been like, just doing stuff, just working and studying and, you know, other things that hopefully I can share with you soon um so yeah so that's

what I've been doing studying pass some exams man I feel like I'm never not going to be studying or taking exams and quite honestly I am terrified to take that CFP exam whenever that does happen like it is not pretty it has a very high fail rate and it's like a six hour or yeah, I think it's a six hour exam. Yeah, I don't want to but I feel like it's one of those things that I have to I have to do to prove to myself that I can do and also if my, you know, my kind of purpose or what I'm doing with my career is to to be a professional in this field, you know, having a CFP designation does not hurt, does it? So that's what I've been working on. And that's pretty much all I have to share. That's really all I did. But you're going to like next week's episode. Actually,

Michelle Hung, she's my guest for next week. She's an author and a money expert. And she has a great Instagram and TikTok as well. Also based out of Toronto, which is great. She's an author and a money expert. And she has a great Instagram and TikTok as well. Also based out of Toronto, which is great. She's also I feel like she's she's done everything, including the CFP program. She just has to take the exam. So we're chatting about that. And yeah, so yeah, you're gonna like next week, we're gonna be talking about how to manage money for youth and teenagers, which is, again, a topic I don't think I've ever explored on this show. So I'm very excited about it. So that is it for me. Shout out to my podcast editor, Matt Rideout. Thanks so much for listening. And I will see you back here next Wednesday with that episode with Michelle. Have a great weekend. See you next Wednesday. this podcast is distributed by the women in media podcast network

find out more at women in media.network