Book review: You Need a Budget

In a nutshell: By diligently applying four simple rules, you can move from being at the mercy of money to being a master of money.

You Need a BudgetIn 2004, Jesse and Julie Mecham were twenty-year-old newlyweds trying to make ends meet. They lived in the 300-square-foot basement of a sixty-year-old home. He was pursuing a master's degree in accounting, while she was finishing a bachelor's degree in social work. Plus, they were planning for their fist child.

The Mechams felt flat broke.

But because Jesse was (and still is) a self-proclaimed "numbers nerd", he decided to create a spreadsheet to budget for every day of the year. The couple steadfastly stuck to their budget, and something surprising happened. Despite their meager circumstances, they no longer felt desperate about money. They paid their bills and still had a little left over for a couple of date nights each month.

Later, while brainstorming ways to earn extra money, Jesse wondered if other people would be interested in his budgeting method, which involved four simple rules. He started teaching others these rules and sharing his spreadsheet. In time, that spreadsheet morphed into a piece of software called You Need a Budget [my review].

Today, You Need a Budget is one of the most highly-regarded personal finance apps available. (Seriously. Everyone who uses it seems to love it. Its users are die-hards.)

In his recent book -- also called You Need a Budget, naturally -- Mecham shares the method that has helped him (and thousands of others) overcome financial anxiety. Let's take a quick look at the YNAB method.

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Visualize your budget flows with a Sankey diagram

There's a new fad in the financial independence subreddit, one that might be fun for Get Rich Slowly readers to play around with. People have discovered Sankey diagrams, a type of chart that makes it easy to visualize data flows. That sounds sort of geeky, I know, so it's probably best to show an example. Or four.

Perhaps the most famous example of a Sankey diagram (certainly the example I've seen most often) is Charles Minard's map of Napoleon's disastrous invasion of Russia:

Minard's famous map of Napoleon's invasion of Russia

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Household Budgets for Beginners: Simple Tips for Success

Female bicycle commuter

We all know we should make and stick to a household budget if we want to be able to sock away savings each month—and end up financially comfortable. But building a household budget as a beginner can be daunting.

Only one in three Americans takes the time to create a monthly budget, a recent Gallup poll showed. (I don't need to tell you the rest of us are spending an inordinate amount of time looking at cat memes instead…)

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The High Cost of Summer

The high cost of summer vacation

“No more pencils, no more books, no more teachers' dirty looks.” And for many parents, no more child care for eight hours a day. Summertime — every child's dream season — can be every working parent's nightmare.

Think about it: From late August or early September through mid-June, working parents have the luxury of public education to make sure their children are cared for, watched over, intellectually stimulated and exercised. Yes, it's education. Yes, your taxes pay for it. But it's also child care (and up to two meals a day).

As any working parent who played the house of cards known as child care when the kids were too young for school knows, it takes tremendous time, effort and lots of money to make sure your child is cared for — well cared for — while you are at work. And it eats a significant chunk of your pay.

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Our kids’ data usage is killing us

A photo illustration of data charges and urban landscape

The first rule of Data Club is don't go over your monthly data allotment.

The second rule of Data Club is if you do go over, only go over a little.

The third rule of Data Club is hope Dad doesn't notice we've gone over our data allotment because he will be mad and will give us a talking-to. Ah, data. The modern-day parents' nightmare. In my parents' day, we had a phone bill, and that paid for the phone. One phone. In the house, attached to the wall. A decade or two later came the cable bill, which paid for that giant box on the top of the TV that allowed us to endlessly watch the same seven movies on what was then called Home Box Office. Those were good times.

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How to save money each month

how to save money each month

Is this the year to focus on saving more? If you've been disappointed when you've checked out your savings account balance, let's change that this year by figuring out how to save money each month.

How Much Should I be Saving?

Actually, advice on the topic of how much you should be saving differs based on who's giving the advice. At a minimum, most people recommend saving 10 percent of your income. Dave Ramsey recommends saving 15 percent of your income as a good goal. Still others recommend 20 percent. However, no one will complain if you save as much as you possibly can.

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10 ways to maximize your end-of-year finances

Runners nearing the finish line

Oh, 2015, where did you go? It seems only moments ago it was time for New Year's resolutions, and now here we are again. With only a month left before another year is behind us, you may be wondering how best to maximize this year's finances. Well, look no further!

1. Prepare for taxes.

Hopefully, you've already started to put the year-end tax-planning 2015 checklist to good use. But here's another item: If you pay taxes quarterly, make sure you send in that final payment --  and, ideally, save a little bit extra if you think you might owe. (It seems like I always end up owing just a little more than I projected.)<

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7 surprising results when you pay your kids for chores

One of our parenting goals is to rear frugal kids. Take care of their stuff. Spend wisely. Save for a rainy day.

Making the goal is easy, but implementing the goal? Definitely harder.

How Our (Current) Allowance System Works

Over the last couple of years, we've been experimenting with the best ways to teach our kids to manage money. What I've learned is that it's best to keep our system flexible as the kids mature and develop more skills. So we decided that our system will probably always be subject to change so we can accommodate their growth, but here's how our family's allowance system currently works:

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How do you decide what to spend on a computer?

Decide to buy a computer these days and immediately you're confronted with a complex decision process wherein you pit features against price. The choice is intensely personal and a total reflection of your tastes, priorities, and pocketbook. I know how I've gone about it in the past, but I was curious to see how other people approach the problem.

It wasn't hard to get people to talk. (People are passionate about their computers!) But as they did, I identified three basic methods to decide on price:

  1. The features route
  2. The cheap route
  3. The set-price route

Now that I think about it, this may be true for a lot of purchases!

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How do you budget for experiences after debt?

In college, my mind was set on becoming an ethnographic researcher. I wanted to study people and cultures that were new to me while traveling as extensively as possible. After I earned my diploma, I pooled every dollar to purchase a one-way ticket to Costa Rica.

Even with my rookie-style budgeting, I was able to make the trip happen — and it didn't matter that my typical Costa Rican lunch had to be hand-picked avocados and stale bread. It was a life experience I wouldn't trade for the world.

Saving money for practical matters always presides; but once you've eliminated debt from your life, you start to have choices. In my estimation, if you're debt-free, budgeting for life experiences is totally worth it. How do you budget for them, and where do you draw the line? Continue reading...

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