The magic is in the method. Follow these four simple rules and change your relationship with money.
Change your money mindset
The YNAB app doesn’t work because it’s pretty (it is, though) or because it has amazing tech (it does, though). It works because it’s built around four rules designed to change your financial future.
rule one
Give Every Dollar a Job
Show your money who’s boss and spend with confidence.
How Rule One works
Every time you get paid, ask yourself, “What do I need this money to do before my next paycheck?” and assign every dollar you have available to an expense category until there are zero “unemployed” dollars left.
Step 1
Get some dollars.
Step 2
Decide what those dollars should do.
Step 3
Follow your plan.
Why it works
You’ve already mapped out a plan, so instead of stressing over every little (guilt-inducing) spending decision, you’re just following your own instructions. No raise, windfall, or inheritance required. (Though all of those would still be nice.)
rule two
Embrace Your True Expenses
Transform large or infrequent expenses into something more manageable.
How Rule Two works
Future-proof your finances by anticipating large, non-monthly expenses (they’re going to happen!) and breaking them down into smaller, manageable chunks of monthly saving instead.
Step 1
Find a big, infrequent expense.
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Step 2
Create a target to fund it monthly.
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Step 3
When that expense arrives, just pay it!
Why it works
Holiday shopping, home repairs, and annual insurance premiums are a fact of life. Turning those big, scary expenses into smaller monthly bills helps you make fully-informed spending decisions...and allows you to sleep a little easier.
rule three
Roll with the Punches
When you overspend in an expense category, just adjust. No guilt necessary.
How Rule Three works
If you run out of money in one category but still need (or want!) to make a purchase, just move money from another category to cover it. No shame or guilt needed—it’s your money and you can spend it how you want.
Step 1
Choose a category with overspending.
Step 2
Move funds from another category to cover it.
Step 3
Move on with your life—no guilt!
Why it works
Plans change. Managing your money shouldn’t feel punitive or restrictive. You’re the one who decides what your dollars should do and you’re free to change your mind at any time!
rule four
Age Your Money
Increase the time between when you earn your money and when you spend it.
How Rule Four works
As your awareness about money grows, you’ll naturally start spending less. Eventually, you’ll be paying bills with money you earned more than thirty days ago. The end result is more breathing room in your financial plan.
Step 1
Be purposeful in your spending.
Step 2
Consistently spend less than you earn.
Step 3
Watch that Age of Money grow!
Why it works
When you are spending money you earned last month, you create a built-in buffer. One day you’ll replace that pile of bills waiting on money with a pile of money waiting on bills (or something more fun, like annual theme park passes!)
Flip the cards to reveal your financial fortune with the four rules
Rule one
Give Every Dollar a Job
With Rule One you will…
Make more intentional spending decisions based on what’s important to you instead of mindlessly spending money based on your account balance—and regretting it later.
Rule Two
Embrace Your True Expenses
With Rule Two you will…
Stop feeling a tidal wave of dread every time an unexpected repair or a forgotten annual expense appears. You’ll just pay it (without drama) with the money you’ve saved.
Rule three
Roll with the Punches
With Rule Three you will…
Realize that being mindful about money isn’t restrictive, it actually allows you the freedom to make choices about how you spend. And to change your mind, without guilt!
Rule four
Age Your Money
With Rule Four you will…
Breathe a little more easily because you’ve created a built-in buffer by increasing the time between when you earn money and when you spend it.
Master the method
We’ve got the rules and the resources! Learn more about taking total control of your finances by reading our book or watching a free video course.
A magic method for money management
The easiest way to practice the four rules is with the YNAB app!
As a seasoned financial expert deeply entrenched in the world of personal finance, let me dissect the article's core concepts and shed light on the method presented for transforming your relationship with money.
The article introduces a financial management approach centered around four rules, emphasizing a method that transcends the superficial allure of a well-designed app or cutting-edge technology. Let's delve into each rule and the evidence-backed rationale behind them:
Rule One: Give Every Dollar a Job
How it Works:
- Get some dollars.
- Decide what those dollars should do.
- Follow your plan.
Why it Works:
- By assigning every dollar a specific purpose, you create a comprehensive plan, eliminating stress over impulsive spending decisions.
- The method doesn't rely on windfalls or salary increases, promoting financial discipline without external factors.
Rule Two: Embrace Your True Expenses
How it Works:
- Identify a big, infrequent expense.
- Create a monthly funding target for it.
- Pay the expense when it arises.
Why it Works:
- Anticipating and breaking down larger, irregular expenses into manageable monthly savings avoids financial shocks.
- Enables informed spending decisions, providing peace of mind for expenses like holiday shopping or home repairs.
Rule Three: Roll with the Punches
How it Works:
- Select a category with overspending.
- Shift funds from another category to cover it.
- Move forward without guilt.
Why it Works:
- Acknowledges the inevitability of changing plans and overspending, offering flexibility without punitive measures.
- Encourages mindful spending without unnecessary guilt or restrictions.
Rule Four: Age Your Money
How it Works:
- Be purposeful in spending.
- Consistently spend less than you earn.
- Witness the growth of your Age of Money.
Why it Works:
- Increases financial awareness, leading to reduced spending and the creation of a financial buffer.
- Ultimately allows you to spend money earned more than thirty days ago, offering a sense of financial security.
In summary, this method emphasizes intentionality, preparation for future expenses, flexibility in spending decisions, and the cultivation of financial buffer over time. The YNAB app serves as a practical tool to implement these rules seamlessly, offering a comprehensive approach to mastering personal finance. So, embark on this transformative journey and witness the magic unfold in your financial life.
