January 25, 2018
In my 2017 review, I wrote about a skill I’ve learned that I consider to be my superpower. That skill, believe it or not, is budgeting.
Of all the pieces of software I use frequently, my budgeting software (You Need a Budget) provides me, by far, the best return on investment. It costs only $50 / year and has already saved me many thousands of dollars, not to mention making my finances completely transparent and stress-free.
I even credit it with much of the success of my business, as it lengthened the runway I had to work on the business before I needed to earn money, and it allows me to forecast large expenses and keep our cash position healthy.
I currently have three budgets: personal, business (CAD) and business (USD).
Specifically, here’s how YNAB has benefitted me:
Here’s what the software looks like when you first create a new budget:
There are categories for expenses you pay every month, like rent, groceries, and internet. The second category - True Expenses - are the ones that used to trip me up: unexpected medical bills, needing to replace a computer, car insurance, etc. Basically, infrequent lump-sum expenses that I forgot about until it was too late.
YNAB makes sure that I budget every month for, say, my annual car insurance payment so when it comes, I have all the money and can pay it without a second thought. This is one of the four rules in the YNAB method - I highly recommend reading through all four.
I’ve customized my personal budget, but it looks similar to the stock one above.
Here’s how YNAB has benefitted my business:
I’ve customized my business budget quite a bit, into key categories like Team, Admin, Office, Software, Hardware, Professional, and Marketing. I don’t use YNAB as a bookkeeping replacement (like YNAB founder Jesse does), so there’s no need to get too complex.
The way my business budgets are set up, I have visibility into key expenses, revenues, and can see, at a glance, how things are going.
I get a lot of pushback when I talk about budgeting software. It’s weird. Maybe it’s a quirk of human nature, but people can’t seem to get past spending $50 to save money. Spending money on entertainment, or on a method to make more money seems to be thought-less. But spending to save money hits resistance.
It’s obvious at this point that I’m pro-budget. I think proper budgeting should be taught in schools; rammed into our heads until we budget in our sleep. Properly managing one’s money is that important. It makes things so much easier, at a cost of simply being willing to be honest with oneself, and being enough of an adult to understand that one can’t have everything all at once.
Good things, it’s said, come to those who wait. Well, I think great things come to those who budget. The benefits I’ve experienced, and continue to experience, are remarkable. And that’s not an exaggeration.
I’ll stop preaching now. But this is potentially the most impactful piece of advice I will ever give. Just give it a try!