The Four Rules
Rule #1: Give Every Dollar a Job
As soon as you get money, you’ll decide what it needs to do—whatever is most important to you. Then, instead of deciding to buy something based on your mood, or the big (or small?) pile of money in your checking account, you’ll decide based on a rock-solid plan.
Rule One Steps:
- Get some dollars.
- Prioritize those dollars.
- Follow the plan.
Rule #2: Embrace Your True Expenses
Take those large, less-frequent expenses (that usually send you into a financial tailspin) and break them into manageable, monthly “bills.” Good-bye, Financial Crisis Roller Coaster! You just won a free ticket on the Financial Peace Express!
You’re looking ahead to those larger, less frequent expenses (and big dreams and goals!) and breaking them up into monthly, manageable amounts. As a result, you’re making fully informed, current spending decisions, based on immediate needs and future obligations.
Rule #3: Roll With the Punches
When you overspend in a budget category, just adjust. No guilt necessary. If you plan to take the kids to the beach but it’s pouring down rain, do you still go? Of course not! Circumstances change and plans change with them. Your budget is no different. If you overspend in one category, free up money from another category and move along. Remember, you’re the boss, and you don’t need to be perfect! You just need to commit to the process of planning what you’ll spend (Rules One and Two), and then, following your plan. Oh, that’s right, and then adjusting the plan as needed. Rinse and repeat.
Rule #4: Age Your Money
With the help of the other three rules, you’ll be more purposeful about your spending, consistently spend less than you earn, and be more than prepared for the future. Eventually, you’ll be able to cover May’s rent with dollars from April. Your money will be at least 30 days old and you’ll wonder how you ever lived without the Four Rules.
As your money ages, you’ll find you aren’t stressed because you’re not living on the financial edge. No more wasting time and energy timing bills to a specific paycheck. When a bill comes, you just pay it. The result? Breathing room. Less focus on today and more on tomorrow means bigger thinking and better decisions.
Ready to dive deeper? Check out our Get Started & Prioritize workshop, because getting started in YNAB is all about prioritizing. Our awesome education team will teach you how (and why) to give every dollar a job, how to be prepared for less frequent (and larger!) expenses, and how to adjust and adapt as you roll with the punches! It’s the perfect foundation to build your budget on!