Review: “You Need A Budget” by Jesse Mecham

 

 

"You Need A Budget" by Jesse Mecham
“You Need A Budget” by Jesse Mecham

Cost: FREE! (Download it here)

In 2003, Jesse Mecham got married while finishing his Masters in Accountancy. Life got complicated when Jesse and his wife Julie discovered that they had a baby on the way while Jesse was still  finishing his degree. Scarcity of resources and the need to meticulously map out every expense lead Jesse to develop a successful budgeting strategy that has bloomed into the YNAB system.

YNAB Rules:

Rule 1: “Assign Every Dollar a Job”

  • Every one of your dollars needs to fulfill a specific purpose, eg. Rent, food, entertainment, health care.
  • If you’re working with a limited income, your budget is going to be more specific than those working with a six-figure income.

Rule 2: “Save for Rainy Days”

  • Stop the financial roller-coaster. Think ahead. Be Proactive.  Set aside a little bit of money each month for known/unknown expenses you’ll be facing down the road, eg. Car repairs, birthdays, property taxes etc.

Rule 3: “Roll with the Punches”

  • Life is unpredictable. And that makes ‘going over-budget’ inevitable. The key is to stick with it and make sure you pay yourself (not your credit card company) back for these little setbacks.

Rule 4: “Build your Buffer”

  • Once all of the previous rules are in place, stop living paycheck to paycheck. Given enough time and motivation, you should strive to give yourself a one-month buffer. Basically, you should endeavour to pay this month’s expenses entirely with last month’s income.

Other key personal take-aways:

  • You Need A Budget – because you really do
  • Shift from being REACTIVE to being PROACTIVE  about your money

I like this book because it speaks specifically to a young generation at the birth of their adult lives. While many will agree that money learning should start in childhood, the reality is that most of us probably haven’t had any experience handling our money properly until we’ve struck out on our own.You Need a Budget is quick and concise guide for young people starting up their personal finances. Jesse does a fairly good job summarizing the fundamentals of money management and, while the book certainly drives the appropriate messages home, I would consider it more inspirational than instructional. The personal examples from his life resonated with me on a cohort level and hearing about the tremendously positive impact YNAB has had on his life are great motivators, but as far as specific instruction on how to create a functional budget, the advice is very generic. I can’t say that I blame Jesse for scaling back on the instructional component as I’m sure he reserves the specifics for his YNAB products. In the end, we all gotta get paid, right? For anyone looking for some inspiration to get them started on the road towards financial independence, this book is well worth a read. As for the YNAB system – it costs about $60. If anyone has tried it, let me know what you think!

Jesse Mecham’s Blog: http://www.youneedabudget.com/blog/

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