What does your financial health have to do with your physical health?
In general, people who are financially healthy, tend also to be physically healthy.
This is because these folks generally have:
- Less stress over money
- More vacation time available
- Better options for nutrition
- Ability to afford good healthcare
- Ability to visit a gym or exercise regularly.
However, one of the biggest factors in being healthy and reducing stress is reducing mental debt. Having to be constantly vigilant and worried about payments, income and savings causes your mind to continually be wrapped up in your financial future. Letting go of these things, while also knowing they are well taken care of can bring a sense of well-being and happiness, even if your budget is small and your income limited.
Budgeting can be the answer to this dilemma. Many of us aren’t that into budgeting and it’s not that enjoyable. I completely understand and used to be in that crowd. However, about four years ago, I decided to change that. I’ve been working to educate myself on the best personal finance methods available, and recently I’ve found one that I think is AMAZING and have moved from using QuickBooks and many excel spreadsheets to keep track of my payments, budgets and other sorts of information to YNAB Pro as my personal finance system.
YNAB Pro [YNAB = You Need A Budget] has some really great features and it makes managing your money so easy. After the initial set up, which only takes about 45 minutes, you’ll spend much less time with your finances each week and your mind will be less occupied with worrying about where you stand with your money.
YNAB is designed in a unique way in that it has a set of rules that you use in order to make the most of your money. The idea is that you are able to function more efficiently and determine your financial goals to make your money work for you so your goals are achieved as soon as possible.
YNAB has four rules that make money saving easy
In the beginning, I found it difficult to wrap my head around this new way of thinking about money. The rules are simple, but they require changing your relationship with money from a spending mentality to a saving mentality. The good news is, using these rules allows you to make that change simply.
Follow along for a detailed description about how YNAB works. You can maximize each video for easier watching:
Rule One: Stop Living Paycheck to Paycheck
Please enable Javascript and Flash to view this Blip.tv video.The best way to know exactly how much money you can budget for next month is to simply stop living on this month’s money. The idea of this rule is that you live on last month’s income instead of the income you are earning paycheck to paycheck this month.
This can be difficult to start with, but buffering and saving for that next month is inherent in the system and is easy to do once you get started.
Rule Two: Give Every Dollar a Job
YNAB is based on the envelope budgeting system. The plan is that your categories in the software act as envelopes for your spending. When I first set out on my own, I used to do this. Cash my paycheck and then put each bit of money I “budgeted” into an envelope. One for rent and utilities, one for food, one for fun, etc. When the envelope ran dry, I was done. It was easy then to save up money, because I just hid the money in my savings envelope in a book on my shelf.
Finances are a lot more complicated now than they were then, and YNAB’s budgeting makes it easy to just plop your money down into the categories you create. Money comes in, you assign it into a fund, and you are done. You go out, spend money, you put it into the register with your category, and it subtracts the amount leaving you the balance in that category for your month.
Having these categories also helps you to set a correct and ideal budget amount for your spending, rather than under budgeting or over shooting. Extra funds can be easily diverted into your buffer or your savings.
In terms of the register, it’s very easy to import all of your transactions right from your bank and then approve them into the particular categories! Easy-Peasy!
Rule Three: Save for a Rainy Day
Here in Portland, it rains a lot. The economy is looking dreary, jobs are at an all time low, and folks are hurting. If you are lucky enough to have escaped these problems, you should know it is essential to plan for the future. It is generally recommended to have 3-6 months of income saved up in case of health problems, job loss or other emergencies.
This program does a great job of allowing you to simply divert funds into the various categories for savings. I use this for my ER fund, my license and association fees which come every year or two, our vacation and travel fund as well as saving for special items such as a new camera.
YNAB accumulates money every month in these categories and carries the balance over from one month to the next. That way, when I need it and the bill is due or I reach my goal, it can be spent easily and quickly and we can benefit! Best of all, no guilt because the money was put there to spend in the first place.
How about setting up a “Date Fund” for yourselves and put some money away every month for it. You can spend it on a nice dinner, or save it up for a special event. This way you can be spontaneous and romantic without having to spend a bunch of time finding the money first.
Rule Four: Roll with the Punches
One of the best aspects of YNAB is that it recognizes that when you plan and budget out at the first of the month, you don’t always end up in the same place at the end of the month. Any budget that isn’t flexible is one you’ll quickly abandon, because life happens, and you want your life to be fun and flexible, right?
First off, this program forces you to address the fact that you’ve overspent. The software itself helps you mitigate any over spending or mistakes you’ve made by making you accountable for it in the next month. It keeps you honest and doesn’t allow you to continue spending too much money without ever making up for it.
Once you understand how YNAB handles this then it becomes very simple and reassuring. I know that my budget is consistent, yet flexible. I don’t stress about it as much as I used to. I know I can work it out and start each month off with a clean slate!
Making the best of your Finances
The difference between this software and any other software I have come to use is that it actually addresses the mental aspect of controlling your spending and taking full responsibility not just for your mistakes, but also your successes! YNAB melds both mind and matter together in one easy to use, highly ergonomic software.
The last bit I will tell you about YNAB is that they stand behind their product. This is a company run by folks trying to make it just like you and me. The support is phenomenal, there are tutorials, videos, a blog and a forum to help you address any problems you might be having and to discuss your unique ways of using the system.
This is a simple system. Simple systems work. Their site is heavy with great testimonials from happy customers and I’m not one to push products unless I really love them and think they will help my community of individuals who are working to improve their health and lifestyles in some major way.
Go on over to their site and check it out. There’s so much information that is easily laid out. It only took me about five minutes to decide to do it right away.
And the best part is, it doesn’t break your budget, it fixes it!
Photo of money by borman818
Tags: Mental Debt, Money Saving, Productivity