How I Got a Handle on My Finances
Andrew Abela is the dean of the Busch School of Business at the Catholic University of America. He has an MBA, a PhD, and years of experience of managing a work budget. But when it came to managing his budget at home, it was complicated and stressful.
How Hard Could a Home Budget Really Be?
I’m the dean at a business school, and I’ve managed multimillion dollar budgets for years! I could do that, so how hard could a home budget be? It turns out: really hard.
When we first got married, my wife managed our household budget using actual cash in envelopes. But when kids started arriving (six in twelve years) she got too busy, so I took over the household budget, and oh boy—that was a mess.
I Tried to Use My Business Budget Tactics
I tried to get sophisticated: I armed myself with Quicken, and ran our household budget according to Generally Accepted Accounting Principles (GAAP) like any good accountant would. But it was a lot of work to keep track of all the pieces. I tried other programs—all with the same results. It was all just a whole lot of work, and despite all the work I put into it, I never had a clear enough sense of how we were actually doing.
It Was a Cycle of Anxiety
Weeks would go by, and I’d grow increasingly stressed not knowing how we were doing financially. Then I’d spend several hours on a Saturday with Quicken/Mint/whatever program I was using at the time to catch up. I’d feel in control again! But shortly thereafter, I’d fall behind again—it was such a hassle to keep up—and the anxiety cycle would start all over again.
The Four Rules Are the Best Way to Manage a Home Budget
After what felt like the umpteenth accumulation of frustration and anxiety, I read about YNAB and thought I’d give it a try. That’s when I realized that the rules of accounting are not the best way to manage a home budget, and I discovered that YNAB’s Four Rules are.
- Rule 1: Give Every Dollar a Job
- Rule 2: Embrace Your True Expenses (Plan for non-monthly expenses)
- Rule 3: Roll With the Punches (Let your budget flex and bend!)
- Rule 4: Age Your Money
Rule Four: Age Your Money was the real life changer for me. I used to treat our home budget like a Profit and Loss (P&L) statement, and match up income and expenses in the same period. It was hugely complicated, and sometimes the revenue or expenses wouldn’t come in as expected (I have small business earnings as well as my salary). Things would get really complicated between inflows, outflows, reimbursements, accounts receivable, and I never really knew what we could afford.
Now, by aging our money, I always know that it’s actual cash already received that we’re budgeting, so there’s never any question about whether it will come in or not. When you think about it, it’s really just the cash envelope system my wife used to use—only now it’s virtual and a lot easier to maintain!
I particularly love Rule 3: Roll with the Punches. Life is messy! Before, I was always over budget in some areas and under budget in others, but—it wasn’t easy to aggregate the result. So, I’d kid myself that it would balance out, without really knowing if it would.
YNAB makes it easy—and more importantly, permissible—to reallocate budgeted dollars so that you can Roll with the Punches for whatever life throws at you.
Now, I Have a Handle on My Finances (With a Lot Less Stress!)
Now, at any moment on any day, I know that our upcoming expenses are covered. I know how much we can afford for a new car, new furniture, and whatever else we need to buy. When we renovated our basement this past Christmas, we had all the money set aside, so there was no pain when the bills came in.
Learning to budget with YNAB has made a huge difference in my stress level, awareness, and day-to-day decision making. This is a generational shift too—I’ve gifted YNAB subscriptions to my two oldest daughters, Theresa and Monica, and it’s winning them over too!
My advice to you? Start using YNAB now, and spend the 30 seconds a day it takes to keep it up to date. Life will be so much better!
Ready to take your tangle of finances and turn it into a streamlined, uncomplicated source of truth to inform your daily financial decisions with a single glance? Get started today with YNAB’s 34-day free trial.