Quick note:
Hey there, sorry to be out for a bit. Unfortunately, when life gets busy, writing is the first thing to go. The strange thing is that I may never feel more grounded and more myself than when I get a chance to write. On top of that, the longer it’s been the harder it is to get back into it. So this year, I’m definitely making the commitment to do more of it, sharing what I’ve found and the things I’m working on with you. Looking forward to getting the momentum moving forward, and of course, hearing the sort of things you’re working on for 2026.
I actually had a couple in the queue that still seem applicable, so I’m going to start there.
Cheers to a happy new year!
And now, on to the post:
Last year, in a newsletter, YNAB revealed that they had quietly been eliminating the word budget throughout their software and website. Instead of the app being called You Need a Budget or YNAB for short, most often it would now just be YNAB, with no real reference to what those letters mean. In the app, the budget tab would switch to the word plan.
The reason?
People don’t like budgets.
Maybe they think they don’t need them, maybe they think it doesn’t work, or maybe they think getting on a budget will mean they won’t be able to spend on things they like because “the budget” means restriction.
According to YNAB,
For years, we’ve tried to change that narrative. We tried to redefine the word “budget.” But the truth is, for so many people, that word still brings up feelings of restriction and judgment.”
But if you say that you have a plan for your money, or that you’re creating a plan for how you want to spend your money in ways that matter the most to you, that makes people feel more comfortable.
But whether you’re creating a budget for yourself or a plan doesn’t really matter, as long as you’re using the tools available to direct your money in ways that matter to you.
One of my favorite authors on money, Ramit Sethi, famously says that budgets are stupid. In his book I Will Teach You To Be Rich, he says
‘Create a budget!’ is the sort of worthless advice that personal finance pundits feel good prescribing, yet when real people read about making a budget, their eyes glaze over. Who wants to track their spending? The few people who actually try it find that their budgets completely fail after two days because tracking every penny is overwhelming.”
Instead, Ramit suggests using what he calls a Conscious Spending Plan, which helps you automate your money and spend on what you love.
But how do you create a conscious spending plan if you don’t know how much things cost you and how much to spend in those areas?
When I picked up his 2nd edition copy of I Will Teach You To Be Rich (my original one was on Nook, and I definitely wanted a copy), I was really pleased that he had come up with a way for people unfamiliar with their money to collect data on how they spend. Guess which tool he recommended to collect that data?
To get more prescriptive about your spending, I recommend using a piece of software called You Need A Budget (youneedabudget.com) or YNAB (I know, the name is ironic in this chapter where I talk about how I hate budgets). YNAB lets you assign every dollar a ‘job’ like ‘cell phone bill’ or ‘guil-free-spending.’ Use it for two weeks-just two-and you’ll get incredible insight into your spending.”
Then later
All this conscious spending and optimizing sounds nice in theory, but how do you do it? I recommend the envelope system, in which you allocate money for certain categories like eating out, shopping, rent, and so on. Once you spend the money for that month, that’s it: You can’t spend more….These ‘envelopes’ can be figurative (like in YNAB or even Excel) or literally envelopes that you put cash in. This is the best system I’ve found for keeping spending simple and sustainable.”
So it’s interesting to me that the guy who thinks budgets are stupid ended up thinking that YNAB was a pretty good tool.
I love Ramit’s work, and I won’t blame him for creating systems to make money approachable and as simple as possible, but what it really boils down to here is that these sorts of Conscious Spending Plans, like Ramit is talking about, are really a budget you’re using to decide how you should spend.
Everyone truly does need a budget, or a plan, or whichever way it works for you to think about it.
But when it comes down to the restriction some people feel, do you really have to track every penny? Yes, I’d say for my household, that tracking everything closely is helpful, not a hindrance. I have clarity and thus a good idea about how things are shaping up this month.
But the tools available to us now make the task not nearly so burdensome. While we might have used cash envelopes in the past, where managing it simply meant stopping when you run out of money, importing transactions in a tool like YNAB makes keeping up with all of those annoying “pennies” so much easier.
And always go back to this rule. Create a category only when you need to track it. I recently shared how we broke down our big Needs category into three separate categories. When you combine the fact that groceries are costing more, our children are becoming unquenchable snack monsters, and our need to be more disciplined with food, we found that we needed to be able to track our spending on that more granular level, which helps us hone in exactly where we need to assign those dollars.
Maybe someone else doesn’t feel like they need to track that closely. Perhaps instead, you have an idea for how much your expenses will be each month, and you simply want to keep the rest of your spending under a certain threshold. You’re still meeting your biggest goals, and you feel like your spending is aligned with your priorities.
That counts.
It’s not granular enough for my situation, but it may be for yours.
If you feel like you’re in alignment with the way you want to be spending, any plan you’re using works, and it certainly doesn’t matter what you call it.
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