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Budgeting: An Action-Driven Pep Talk

Here are seven steps for successfully building the life you want through budgeting.

As the season of spontaneous summer spending comes to a crashing halt, we thought it might be a good refresher (for all of us!) to get back to basics. A little "Budgeting 101" to help us reset and refocus on the "why" and "how" of budgeting, prioritizing, saving, spending—all of it! There may even be a little homework. Class is in session, so grab your budgets and follow along!

If you’re ready to accomplish a lot more with your money than you ever imagined, you’re in the right place. See, budgeting is about much more than simply fixing financial problems. After you’ve practiced giving every dollar a job (that’s Rule One), a funny thing happens. Not only do you start making progress on your weak spots—paying off the debt, breaking the paycheck-to-paycheck cycle, etc.—you start imagining what other things you’d like to accomplish.… fun things.… life-enriching things.… things that you never thought would be possible.That’s the true power of budgeting, and it’s available to anyone who’s willing to step out of their comfort zone and give it a real go. And here are seven things you can do to achieve budgeting success. The sooner you start, the sooner you’ll win!

1. Define Your Version of Happiness

Here’s the thing, intellectually, you know that being debt-free or having some money in the bank would make you happy. Life would be way less stressful, which is a great perk. The problem is that knowing this doesn’t generally create much urgency around making it happen. It’s far too easy to spend impulsively on whatever shiny thing has our attention at the moment. I mean, takeout for dinner sounds delicious, right?That’s why it’s important to define the life you want to live. Sticking to a budget is easier when you know what you're working towards. Instead of focusing on fixing problems (not much fun) or cutting back (also, not much fun), you simply focus on what you want—the big stuff, not the silly details that you’ll forget by this time, next year. Maybe you really want to own a home large enough for each of your kids to have their own bedroom. Maybe, you want to quit your job and travel. Or, maybe, you just really want a Tesla.Try this journaling exercise, and dig deep. Paint a picture so pretty that you can’t help but be motivated to make it happen, and go big!

2. Set Tangible Goals

Great. Now you’ve got a vision. To make it happen, you’re going to need a game-plan (it’s your budget!). And if you want your plan to be effective, you’re going to have to break it down into small, manageable bites. At YNAB, we call them targets, and they’re like little cheerleaders, encouraging you to win. Every time you log into YNAB, you’ll see colorful reminders of your progress and be encouraged to keep going. If you’re totally new to budgeting, check out this thorough post on setting up your first YNAB budget template, goals and all.

3. Create Accountability

If you’re budgeting with a partner, you’ve got accountability built-in with the power of budgeting dates. Great. If not, and you think it would help, why not recruit some friends? You don’t have to share actual numbers if you don’t want to, but you could share your aspirations and set up some check-ins. Or, join the YNAB Fans Facebook group, and surround yourself with like-minded people.

4. Leave Room for Fun

If you’re not motivated by accountability buddies, then perhaps some fun money will do the trick. Even if you can only squeeze an extra five dollars out of your budget for fun, it might be just enough to make life feel tolerable when you’re really pushing hard on your financial goals.You might also set up mini-budgeting goals to treat yourself along the way. What would you like for your three-month budget-versary? Reward yourself for all of your work, but in a planned-out, budget-friendly way. Pick something that will bring you joy, it doesn't have to be super expensive!

5. Expect Slip-Ups

Life is unpredictable, and the last thing you want to do is get discouraged and quit. That’s why there's Rule Three—you’ve got to be able to roll with the punches.You will slip up and get the takeout when you’ve already spent all of your ‘Eating Out’ money for the month. Your car will break down. Your bills will go up. Sometimes, all of it will happen at once! It’s nearly impossible to plan for everything (although you’ll get much better at it with practice!).The important thing is to keep your focus on the long-game. Don’t let today’s setbacks become tomorrow’s regrets. Cover your overspending, and carry on with your plan!

6. Enjoy the Present

As you begin redirecting your money towards those big, life priorities, there will be areas where you’ll have to cut back. You might decide to switch from new to second-hand clothes. Maybe you’ll give up your Amazon habit. Or maybe you’ll cook more at home. But change doesn’t have to mean misery!Keep an open mind and look for new ways to have fun. You might be surprised how much satisfaction you’ll feel when you make spending decisions that support your long-term happiness. If you have a rough moment, remember that gratefulness is a potent elixir for happiness.

7. Download a Free Trial of YNAB

If you’re ready to take back control of your cash, download our free, 34-day trial. On average, new budgeters save $600 by month two and more than $6,000 in the first year! Give it a spin, and if you have any questions, drop into our free, 20-minute, online classes. Our teachers would love to answer all of your questions.

Your Homework

  1. Give your version of happiness some deep thought, define it, and write it down for extra credit! The more specific, the better.
  2. Download a free trial of YNAB, and try it out for a month.
  3. Set a target. Make it specific, and give it a due date.
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Budgeting: An Action-Driven Pep Talk