The Mythical Perfect Budget
Let’s give a warm, YNAB welcome to Dave! It’s his first time on the blog! Dave is a YNAB teacher, homesteader, excellent budgeter, and generally full of wisdom. Well, you’ll see…
Hi – my name is Dave. I help our superb Education Team deliver free YNAB classes. I'm all for keeping things simple. When it comes to managing money, I want a budget that's easy to understand, deal with, and use.And those three words go a long way toward describing my view of the The Mythical Perfect Budget (TMPB).
(I’m not entirely sure TMPB exists. Sure, there’s this grizzly guy in a wood cabin about 40 miles north of me that swears he saw one once. But he also reckons my beloved Blue Jays are going to take the World Series this year. Crazy, crazy guy…)
Although I doubt the existence of The Mythical Perfect Budget, I do believe that searching for TMPB delivers its own rewards. And the way I search, is by creating a brand new budget every 6 to 9 months.
Take a deep breath. I can already hear you saying it, “But, your history! What about your transaction history!?!?! Won’t somebody please think of the transaction history!!”
No need to worry, my history is all still there, safe and sound. Sure, I no longer have continuous history all in one place, but I’ll tell you, I have never missed it once. What I did last year means very little to me. What I will do this year is far more important. For me, the only time I need the old files is once a year, during tax season.
Because what’s behind you doesn’t matter.
– Enzo Ferrari
When Ferrari removed the rear-view mirrors from his racing cars, he gained “forward focus.” He stripped away the tradition and the conventional wisdom and heck, I want some of that for my budget! And so I encourage you to:
Challenge the Assumptions
So what do I get out of this new budget process? A lot. Because I’m not just hitting Fresh Start. I am actually starting over. And in doing this, I am forced to rethink my accounts, my categories, and my scheduled transactions. That is the whole point.
In the past, I’ve sat and watched my budget. I budget for car insurance. Then the scheduler makes the entry for me each month. I clear the transaction when it clears my bank. And that’s it, job done.
But creating a new budget and re-entering that scheduled transaction triggers something in me. Adding that scheduled car insurance transaction feels like spending money. It reconnects me with the awareness that YNAB gave me when I first started: Why do I have this car insurance? How much do I pay every month? Is that a good value? Should I call some other providers? And that quarterly subscription to Tomato Sauce Makers Word – do we really need it? What are we spending on food? Is that the right amount? Over time, the answers may change. Or they may not. But this thought process, the questioning itself, is valuable.
Creating a new budget regularly is like adding an expiry date or a sunset clause to each of your previous assumptions.
Put Everything On The Table
When you’ve been budgeting for a while, it’s pretty amazing to sit back and see a bigger ‘Available to Budget’ amount than you ever thought possible! As a good YNABer I focus on category balances to guide my spending decisions, but it’s massively motivating to start a new budget and see that pool of money getting bigger and bigger as past rainy day categories bulging with old money are emptied out onto the budgeting table.
Sitting and deciding how to allocate that money to categories is a great way to ensure that your budget is a statement of today’s priorities and best intentions. It’s a moment to check in with yourself, your priorities, your life. Is that three-month Emergency Fund still the best home for that money? Maybe you don’t feel quite so certain about the coming year, as you did when you created that category, maybe a six-month Emergency Fund would feel more comfortable in this season. If so, it’s time to set new goals and adjust your budget accordingly.
And sometimes, yes, I use a new budget as an opportunity to add a category or two for something just for me. Like the 21- year-old beater of a farm truck that we just picked up for $500. I want to budget for those future repairs separately from my wife’s car. At least, for now anyway.
Best of luck on your search…