It's Not About The Money

Best-laid plans rarely survive contact with reality, but getting your budget to reflect reality is where the clarity comes from. 

Tyler and Steve have both had aspirationally-too-small budgets for groceries and eating out. What to do? 

Rule 3 empowers you to get your budget to show what's actually happening and align the way you spend your money with the things you actually, truly value. 

  • (00:00) - Dogs and their exercise
  • (03:39) - Where contact sports intersect with personal finance
  • (06:11) - Underestimating groceries
  • (10:17) - Reflecting reality is the goal
  • (13:48) - Your priorities change all the time
  • (18:12) - Where is the money going to come from?
  • (19:51) - Can you roll with the punches too much?
  • (22:05) - Conscious tradeoffs
  • (23:50) - "Recent moves" feature
  • (27:31) - Modifying behavior, not just changing a number
  • (30:29) - Honesty and alignment

Steve Nay: 

Tyler Smith: 

Creators & Guests

Steve Nay
Strategic tax advisor for solopreneurs. Enrolled Agent; Owner of Daybreak Tax LLC
Tyler Smith
Financial coach for working professionals

What is It's Not About The Money?

Solopreneurs and small business owners: learn about leadership, operations, entrepreneurship, productivity, taxes, client creation, marketing, bookkeeping, and more.

YNAB Rule 3: Roll with the punches


Dogs and their exercise

[00:00:00] Tyler: Steve, when I got my dog a few years ago,

[00:00:03] Steve: Yeah.

[00:00:04] Tyler: I had a serious concern and that concern was, am I going to have what it takes to take this dog outside every single day

[00:00:12] Steve: Heh.

[00:00:12] Tyler: and get it an exercise, you know, rain or snow, sunshine, hot heat, summer, all the things, right. And it was a challenge. I got him in the early summer and it was really, really hot that first few months.

And I was out there every day and there wasn't a lot of shade where I was at and whatever. And then it got to be winter and it was freezing cold. And, but, uh, I quickly learned that the consequences of not taking him outside to run around every day were all the motivation that I would need.

[00:00:45] Steve: Uh huh.

[00:00:47] Tyler: And I did not take my dog outside today.

[00:00:49] Steve: Oh no, what happened?

[00:00:51] Tyler: am paying the price. I'm paying the price. So I've got a three year old Whippet. So as far as dogs go, they're, they, they [00:01:00] pretty far on the couch potato side of things. Much less energy than a working dog, uh, might have. But, but they are runners. They are sprinters. And if they don't get that running, uh, man.

It's irritating. So like basically, uh, we don't need to talk about it. That's all. That's all. I just say, uh, I have no choice. I must take my dog outside to sprint no matter the weather every day, if I want my sanity. So I guess that, that, that concern resolved itself. I, your dog's a little older, right? I don't know if you face this

issue or

[00:01:32] Steve: yeah, my dog is, uh, seven, eight, something like that. Uh, so, you know, she likes to run, but, uh, if I just take her on a brisk walk, that's, that's good enough, once or twice a day. Although the, the, the little dog that we're fostering right now seems to have more energy and also is not quite as well house trained as, as the older one is.

So if I don't take him out at least once or twice a day, we'll we'll have [00:02:00] accidents around the house.

[00:02:01] Tyler: Oh, that's no fun. Yeah. Yeah. I mean, I've really, really enjoyed raising a puppy and having this kind of young dog. It's, it's a lot of fun. Don't get me wrong. I love it, but you know, I will also love when he's five plus years old and just a little, you know, a little calmer little, and, uh, it is, I love watching him run too.

It's a sight to behold. And yeah, with regard to the walks, like I A walk does nothing for him, apparently. I could walk him for 45 minutes and we get home and he's like, Hey, time to run. I'm like, no, so I have to take him like to field where he can be off leash and just like sprint for like 20 or 30 minutes.

And then I'm golden.

[00:02:38] Steve: Wow. Okay. How do you, do you play fetch or something to get him to do the running or how do you get him?

[00:02:44] Tyler: yep. We play fetch, which took him for some reason, a long, long time to learn. Um, but even better if there's another dog at the park that likes to play chase, that's where the real, the

[00:02:55] Steve: Hmm. Okay.

[00:02:56] Tyler: all out sprinting. Yeah, it's good stuff. [00:03:00] Anyway, on with the show. Hello there, dear listener. I am Steve.

And I'm Tyler. Welcome to another episode of It's Not About The Money. The podcast where we help you gain the clarity you need to never buy a dog and to run a successful small business.

[00:03:24] Steve: Tyler has a financial coaching practice and one dog. I run a tax business and have one dog and a foster at the moment. And we are both small business owners like you. And this podcast is our exploration of entrepreneurship one episode at a time.

Where contact sports intersect with personal finance

[00:03:39] Steve: And I promise we don't talk about dogs all the time, but it does come up. I think that's it for today, though, because we're going to talk about YNAB rule three.

[00:03:49] Tyler: it's a big part of life, dogs and kids. I don't have any kids, so I have a dog. I don't know what to say. Um, okay, moving on though. Yes, yes, YNAB rule number three. Well, by now we've talked [00:04:00] about YNAB rule number one, which is give every dollar a job, and YNAB rule number two, which is to embrace your true expenses, both of which lead to and enable you to follow YNAB rule number three, which is roll with the punches.

Which is a boxing metaphor. And as what,

[00:04:19] Steve: Can you explain to me, I am not a sports person, I do not, I've, I've heard the term, and I know it comes from boxing, but I don't know what it means. What does it mean? Hmm.

[00:04:29] Tyler: on you on YNAB's YouTube channel, Hannah made a joke once that I thought was kind of funny. It's basically just like, there, there aren't many, uh, Areas where contacts or combat, combat sports intersect with personal finance, but we found, we found the one. Yeah. And I'm not a, uh, a boxing fan either, but it's a pretty basic idea.

So like if someone's going to punch you in the face, the idea is that you want to move in the direction that they're throwing the punch simply because it reduces the [00:05:00] impact of the punch. Right. So.

[00:05:02] Steve: That makes sense.

[00:05:03] Tyler: Yeah, yeah. So it's a pretty apt description for this rule, which is about reducing the impact of change in your life and therefore your money.

[00:05:15] Steve: Because change will happen. Sometimes it's your fault, and sometimes it's just that that's what happens in the world. Things

[00:05:23] Tyler: Right. Right. And I guess if you want to follow this analogy even further, sometimes life just smacks you in the face, you know, with an unexpected, unpleasant.

And, Uh

this rule is about how to, I guess, be resilient in your personal finances and how not to stress out when that happens, because, you know, one of the biggest reasons people quit budgeting and just go back to their old ways in personal finance is that they aren't very good at predicting the future and they get frustrated when things don't go according to plan.

And this is YNAB's answer to that. It's their [00:06:00] understanding. of human nature and their, you know, their suggestion for how to avoid getting frustrated and quitting, I think is a big part of it. So,

Underestimating groceries

[00:06:11] Tyler: so I've got a question for you, Steve. In my experience, uh, people often feel guilty when they change their budget.

And I'm curious if you've Like, if they're, I don't know, have you ever experienced that or felt that way? Or if not, like, why do you think people would feel guilty when they change their budget?

[00:06:31] Steve: Hmm. Uh, I think this is not a big problem for me, although Shanae does have this, and, uh, it makes YNAB a little difficult for her to understand, because I'm, I'm very adept at rolling with the punches, and she would like to know what, what was the original plan, and then how did we measure up to the plan?

Where I'm just like, things happened and here, and [00:07:00] here we are at the end of the month. Here's what the new numbers look like and, and I've lost her because the context is gone of, well, where did we start from? I understand this is where we are now, but,

[00:07:11] Tyler: Right.

[00:07:12] Steve: uh, yeah. So, um, I don't feel like I have that hang up personally,

[00:07:19] Tyler: Okay.

[00:07:20] Steve: but I, I, someone that I love very much does.

And so I, I kind of understand where she's coming from.

[00:07:25] Tyler: Yeah, no, that makes sense. Um, for me, this was more of a problem when I used to try to budget in a spreadsheet that I made myself and didn't have some of the magic of the YNAB software in it. So it was actually hard to, to be, flexible because it was all kind of either hard coded or it involved updating a spreadsheet and like, who's got time for that

[00:07:44] Steve: That makes


[00:07:45] Tyler: happening.


[00:07:46] Steve: Yeah.

[00:07:47] Tyler: Um, but I think one of the reasons people feel guilty about it is they feel like they've made a commitment to their, to themselves that they are now breaking. Like, I promise I will only spend 200 this month on [00:08:00] groceries, which is a very ambitious promise to make to yourself. And then, you know, cause you're trying to spend less money or save more money or whatever it is, you know, and when you fail to do that, it feels like a failure, potentially. So I, I can understand where that's

[00:08:17] Steve: There was a time in my life where I could spend $200 a month on groceries, but that was a long time ago,

[00:08:24] Tyler: Right,

[00:08:25] Steve: have any other family to take care of at the time.

[00:08:29] Tyler: And I might say, it's surprising how little you can spend on groceries when you spend your money eating out instead.

[00:08:38] Steve: Yes, that's true.

[00:08:41] Tyler: Well, the reason I mentioned groceries specifically in that example is that's actually, in my experience, that is, well, both groceries and eating out, food in general, that is an area that people tend to grossly underestimate how much they spend.

[00:08:57] Steve: And it's also tends to be a very [00:09:00] large category in the budget generally. And so it's easy to think, well, I could, I could trim that down a little bit this month. Let's, let's try and bump it down to 500 or something. And then, you know, but really just, uh, saying that number. The budget does, doesn't change the behavior by itself.

You also , it's kind of, you have to, you have to that one specifically, you have to come at it a different way of, uh, how are we going to reduce the food spending, like meal planning or, uh, whatever planning ahead, um, what meal prep, whatever it might be, so that the, the effect will be we spend less money rather than trying to say, this is the amount of money we are going to spend.

And, and, and that's the end of it without changing the behavior.

[00:09:49] Tyler: Yeah. I, that's, that's a cool insight actually. And I think that might be another reason that people feel guilty sometimes when they have to change their [00:10:00] budget is not just because they weren't able to keep a commitment they made to themselves, but actually. It's frustrating that we can't just snap our fingers and change some of these deeply rooted behaviors just by typing a number into a spreadsheet.

[00:10:12] Steve: Right.

[00:10:13] Tyler: to it. There's more to it than that, right?

Reflecting reality is the goal

[00:10:17] Tyler: And, um, I think YNAB rule number three plays really well with the first two rules. Because it basically is rule one, again, giving every dollar a job. You're just changing the job of the

[00:10:32] Steve: yeah. Okay.

[00:10:33] Tyler: Moving it between budget categories, and you're only able to do that if you've been following rule two, even just a little bit, right?

So that you've got money in budget categories that you don't need immediately to pay for

[00:10:48] Steve: Right.

[00:10:49] Tyler: You've built a little bit of a buffer, and you've created these little pools of money that you can draw on when plans change and move from category to [00:11:00] category. So in the view of YNAB, in their methodology, in the world of YNAB, I should say, not only is it okay to change your budget, but it's actually considered smart. It's a really good thing to do. And there's a couple of reasons why I kind of want to talk, talk those through with you.

[00:11:16] Steve: Yes. I have a guess maybe, but

[00:11:19] Tyler: What's your guess?

[00:11:21] Steve: you are, we are, we humans are terrible at predicting the future. And so you might have what you think will happen, but that's not actually what's going to happen. So matching, matching your, well, maybe this is more of the point. Matching your budget to reality is really where you get the clarity. If your budget's just aspirational, head in the clouds, and not tied to what's actually happening, it's not going to be useful to you. But if it's, if reality is not matching up with your predictions, let's get the budget to match reality so that you understand, in hard numbers, what's going on.

[00:11:59] Tyler: Oh, [00:12:00] that's exactly right. That's one of the primary reasons. I think the way, the way I think of it is that rolling with the punches, it helps your budget become more honest or more accurate, I guess. Right. So because if you've never budgeted before or paid attention to your personal finances, pretty much all of your budgeting is going to be based on nothing like guesses essentially, right?

Like here's how much I think I want to spend on travel or groceries or whatever. I mean, you've got the exceptions. You've got your hard. monthly bills, your mortgage, your utility bills, things like that, that you can make a very, very, you either know the amount or you have a very educated guess, but in everything else, you're just like picking a number,

[00:12:39] Steve: Mm hmm.

[00:12:40] Tyler: And so it's actually really common. One of the exercises I like to do with my clients is we'll sit down before we do anything, and they'll make a list of all the budget categories they want, you know, everything they want to spend money on. And then I'll have them, this is not even in YNAB, I'll just have them list it out, maybe in a spreadsheet or on a piece of paper.

And say, okay, cool. [00:13:00] There's everything you want to spend money on, or that you think you need to spend money on. And now a list, when is the next time that you're going to have to pay for that thing and how much will be due at that time, or how much do you want to save for that time? And that basically generates a list of like all of what they want to spend money on and how much it's going to cost.

And very, very often, almost always that number is way higher than their monthly income.

[00:13:24] Steve: Uh huh. Yeah.

[00:13:31] Tyler: um, and so, and so that's okay. Like, I still encourage them to put all those targets on those budget categories and like, you know, they're going to have to work through rule one and give every dollar a job until they're out of dollars. Right. And that's where you get into those really interesting conversations about what are your values, your priorities.

Your priorities change all the time

[00:13:48] Tyler: Um, so yeah. The first big reason that it's smart to change your budget is it helps you be more honest and realistic about your true spending. And secondly, um, [00:14:00] the fact of the matter is your priorities change all the time, and so do your circumstances. Which means Not only is changing your budget smart, not changing it is stupid, I guess.

Right. Cause it's like, it's like failing to acknowledge like the fundamental reality of life that you are in flux and so are your circumstances. Yeah,

[00:14:27] Steve: is very intuitive to me. I hadn't thought about how your priorities are changing all the time, too. But that makes sense. Like, a friend calls you up and says, I'm in town, can we grab lunch? And I hadn't budgeted for lunch. I would like to see that friend. And so, now my priority is, Yes, I want to make this happen.

But I didn't think about it on February 1st when I wrote this budget, so what are we going to do? We're going to move some money

[00:14:55] Tyler: right. Yep. And that's a perfect example of rolling with the punches. [00:15:00] And it's worth pointing out that you can do it. One of two ways. You can roll with the punches before you have the expense or after the fact. And so in that exact scenario that you outlined, doing it before would be, you know, between the time that your friend calls you and the time that you actually go to lunch, you look into your budget, you notice, I don't have a budget category for eating out with friends or whatever, or maybe I'm out of money in my eating out category.

[00:15:25] Steve: Mm hmm.

[00:15:26] Tyler: And before you go out, you're like, well, I'll just borrow 20 from the groceries category or from some other category. You actually move the money in your budget before you go make the expense, right? And that's like, I would say, ideal. But not required,

because now, now, you have an idea when you go out to eat, you actually have like made a decision about how much you want to spend at the restaurant and you can kind of

let that guide your, your behavior a little bit, but you know, let's say you forget to do that short notice, whatever you forget, you can also roll with the punches after what that will look like in your budget is you'll have an overspent notification in [00:16:00] that budget category and YNAB will prompt you to cover that overspending with money from some other category.


[00:16:10] Steve: different circumstances, but yeah.

[00:16:12] Tyler: same,

same, yes, but that I just, that was such a cool example because it is a perfect example of how priorities can change at a moment's notice. Right? I mean, you've got your budget, you're feeling great about your plan, the progress you're going to make, but in that moment, do you value the relationship or your budget?

As currently contributed. More, right? And there's not even a right answer to that. I mean, you might decide like, actually my wife and I are really working on this other savings goal. And like, I'm going to have to say no. Or I'll bring a bag lunch or something. That's fine too.

[00:16:42] Steve: Mm hmm. Yeah.

[00:16:43] Tyler: But, but the point is you're thinking about it.

[00:16:46] Steve: Right. And, and through all of that, it's about what you want to do with the resources you have. It's not somebody telling you what, what you ought to do here. This is the whole point. That's one thing I'd love about the YNAB rules is [00:17:00] it's a framework for thinking about what are your priorities, your values.

What trade offs do you want to make with the limited resources that you have at the moment?

[00:17:09] Tyler: Yeah. Which is like so empowering.

[00:17:13] Steve: Yeah.

[00:17:14] Tyler: It switches the mentality potentially from like a victim mentality to a In charge mentality, right? It's like,

I don't know, it has a potential to do that anyway. It's, it's really powerful.

And I, and you know, because of that, actually, because of the way it impacts your mindset, I think that's why it's so effective at just about every level I can think of, of a, of a person's financial journey, right? Like you and I are lucky in that we've been doing the YNAB method for a long time, and so we've been experiencing the benefits of these rules for a long time.

And we're like pretty. I mean, there's, well, there's a, it's never ending journey, I suppose. Right. But like we, we've realized many of the benefits, right. But for someone who's at the very beginning and doesn't even have, have enough money to cover the current [00:18:00] months, or maybe even the current weeks expenses, rule one still works and it's still powerful and it can still give you a mindset that's going to make you succeed in the long run.

I just love that.

Where is the money going to come from?

[00:18:12] Tyler: So, uh, I, I, I love what you said that just then so much, I want to kind of restate it maybe in a different way and see what you think about this. So. You can do anything you want in your budget, as long as you can answer the question, where is the money going to come from?

[00:18:28] Steve: Yeah, I like that framing. Mm

[00:18:31] Tyler: You still have to have the money, but as long as you can answer the question, where is it going to come from? You can do it. And having a budget lets you answer that question.

[00:18:41] Steve: hmm.

[00:18:42] Tyler: a budget, you don't know how to answer that question typically. Won't stop you from doing the thing most of the time, probably, but it might get you into some trouble.

[00:18:50] Steve: Right. I could go buy a boat if I wanted to. As long as I can answer the question, where is the money going to come [00:19:00] from? I don't want to

[00:19:00] Tyler: And that could be in the form of, you know, like, I don't know how much it costs to finance a boat or what kind of boat or whatever, but like, it doesn't have to be the full cost of the boat. You can just be like, can I afford a 300 a month payment based on my budget as presently constituted? If you can find the money, you can do it.

[00:19:17] Steve: I have no interest in a boat, by the way. That was a totally

[00:19:20] Tyler: Do you even live near water? I

[00:19:24] Steve: I mean, sort of, yeah, there is a, there's a lake nearby ish. Not super nearby, but you know, a boat, then you got to store it somewhere. You got to repair

[00:19:36] Tyler: yeah.

[00:19:37] Steve: You got to make sure it stays seaworthy. I'm not interested. Too much

[00:19:43] Tyler: I, I hear the thing to do is to make friends with people who have a

[00:19:46] Steve: Oh, there you go.

[00:19:47] Tyler: That's the best option.

[00:19:48] Steve: Okay. I got to get on that.

Can you roll with the punches too much?

[00:19:51] Tyler: Yeah. So I, um, I do think, uh, one of the things about rule, there are some pitfalls to rule three, not really pitfalls. That's a little bit [00:20:00] dramatic, but, um, let's just say. or let's pose the question, do you think it's possible to roll with the punches too much? Like we've just been talking about how it's actually smart.

You should change your budget as your circumstances and as your priorities change. Can that be overdone?

[00:20:15] Steve: Uh, yeah. Like if I said, Oh, well, there's, there's 5, 000 here in the property taxes budget. It's only June. I still have six months before this is due. We could, we can buy a new computer today. Is that kind of what you're thinking?

[00:20:34] Tyler: you can't, I mean, no,

I, yeah.

[00:20:36] Steve: that, but, but the danger there I think is, um, it's not clear just from that framing, whether there will be enough income between now and June to make up the difference,

[00:20:48] Tyler: Right.

[00:20:48] Steve: the money is sitting there in that category, but it's, cause that's its job, but whether there will be enough to replace it before the thing comes due is a separate question.

[00:20:59] Tyler: [00:21:00] question and one that YNAB, stays away from answering, right? They don't get into for, they don't allow you to forecast, right? Future income. So, which is why it's important, I guess. So to answer my own question, I think, yeah, it is based on your example. It's pretty clear to me that you can roll with the punches too much.

And the way you would know is if you are getting thrown, if you're not accomplishing what you want to accomplish.

[00:21:21] Steve: Yeah.

[00:21:22] Tyler: With your money, if you, if you find yourself continually like, uh, giving way to impulsive things that are derailing your longer term goals, but that's why it's so important to stick with, to, to, to also use, to use this in conjunction with rule two, right?

About embracing your true expenses, because, um, you answered the question, where's the money for the computer going to come from? It's going to come from the property taxes. But now you've created another

problem for yourself,

[00:21:50] Steve: property taxes still got to get paid.

[00:21:53] Tyler: and you might be able to pull that money from an emergency fund account and, you know, but eventually you'll get to the [00:22:00] bottom

[00:22:00] Steve: Uh huh.

[00:22:01] Tyler: and there'll be nowhere else to


[00:22:03] Steve: got to pay the piper somewhere.

Conscious tradeoffs

[00:22:05] Tyler: yeah, yep. So forgive me for this, but I feel like there's a tie in with the getting things done method. We, we did a book review of that,


getting things done by David

[00:22:17] Steve: Oh, okay. I love both of these


Go on. and one of the key principles underlying the Getting Things Done method, I think, that I took away from it, is part of the power of that methodology is that you are conscious of, very aware of, the things you are choosing not to do. It's like you capture all your responsibilities and your obligations and inputs and all that thing, you know, but then you make decisions about, Yeah, because it's captured, you know, it's not going to fall between the cracks and you have a list, like a physical list of all the things that you are not doing.

[00:22:53] Tyler: And in addition to all the things that you are doing, and so you're making mental trade offs and that's where the stress free [00:23:00] productivity comes from.

[00:23:02] Steve: Mm

[00:23:02] Tyler: It's like conscious being aware of and consciously deciding what not to do, just as much as you're deciding what to do. And I think this. Roll with the punches, and, and, well, the whole YNAB methodology is kind of the same thing, right?

It's like, by choosing to have more of X in my budget, I know that I am choosing to have less of Y. And I'm okay with that. I'm not stressed about it, I'm not sad about it, because that was my choice. It was my priority.

[00:23:31] Steve: Mm hmm.

[00:23:32] Tyler: Maybe it's a stretch, but I see a tie

[00:23:34] Steve: Okay. Yeah, that makes sense to me. Because it, like, it all comes back to the making the trade offs with the finite resources you have. What, uh,

[00:23:44] Tyler: Yeah, the opportunity

[00:23:45] Steve: matters to you? Yeah, opportunity cost. There you go. Yeah.

"Recent moves" feature

[00:23:50] Tyler: So Steve, I, since we've been talking about rolling with the punches, I want to mention a feature in the YNAB software that's pretty handy when it comes to this. First of all, YNAB makes it very, very [00:24:00] easy to roll with the punches. It makes sense. They built their software to like enable you to follow their method, right?

So it's very easy to move money from one category to another. It's very easy to cover overspending in one category. With money that's available from another category. And, uh, more recently they released a feature that allows you to view a history of all of your rolling with the punches.

[00:24:21] Steve: Okay. Uh, recent moves, is that the one?

[00:24:26] Tyler: Yeah. So if you click on recent moves and then filter it down just to moved all the transactions that are moving money, you can see all the pilfering that you

may or may not have done between budget categories.

[00:24:38] Steve: yes, so mine looks like, uh, the end of the month came around and we were doing a bunch of, after the fact, rolling with the punches. And there it all is. That's fascinating. Okay. Hmm.

[00:24:52] Tyler: Uh, one that sticks out to me in mine is, um, this month I moved some money from a category that I have called Stuff I Forgot To Budget [00:25:00] For

[00:25:00] Steve: Oh,


[00:25:02] Tyler: my entertainment category. I had there, you know, someone invited me to go to a movie. Um, but I had already spent all of my entertainment money for the month on going to a play, but it was important to me to hang out with this friend.

So I, I did it. I rolled with the punches.

And then apparently my Spotify went up by two cents, apparently. So I had to, I had to borrow, I had to steal two cents from another category. That's annoying. Anyway, it's a useful feature. You can kind of like, um, I could probably do a better job with this. I don't do that. I don't do this. I've never really done a retrospective on a month from the perspective of rolling with the punches.

That is fascinating. I should do that.

[00:25:42] Steve: I didn't realize that this was all so clearly, uh, laid out here. Because I knew you could go in, um, like each category has the little, uh, icon next to it in the assigned column that shows you the [00:26:00] moves in, within that category, but I've never looked at it all aggregated like this.

[00:26:07] Tyler: Yeah, it's

like, it's like, it's kind of like, uh, I don't know if you use Venmo, but you know how some people just like make all their transactions public. And so you can kind of like scroll through the

[00:26:18] Steve: I've never understood the motivation there, but yes.

[00:26:22] Tyler: Neither am I. I just find it weirdly fascinating, but this is like doing that, but for yourself.

[00:26:27] Steve: Uh huh.

[00:26:28] Tyler: So anyway, that's a little pro tip, I guess, that I need to apply

[00:26:31] Steve: Cool. All right. Mm hmm.

[00:26:34] Tyler: be interested to see what patterns I find. Like, am I always, like, I actually purposely have that category stuff I forgot to budget for to cover like smaller rolling with the punches event, you know, things that under 25 or 50 bucks or something that just come up in a month that I don't want to make a different category for or something. But I'm curious, I'll be curious to see as I move forward with this, like, um, am I always stealing from certain categories to [00:27:00] fund? Another category. And if so, why don't I just change my target for that category? So I don't have to keep doing that, you know?

[00:27:08] Steve: In the service of becoming more honest with,

[00:27:11] Tyler: And yes, yes. Right. If you're consistently overspending in a category, you really only have two choices. You can budget more or spend less.

That's it.

[00:27:21] Steve: Yeah.

[00:27:23] Tyler: So, and both are fine.

[00:27:25] Steve: Both are fine. But acknowledging the reality of what's actually happening is the first step there.

Modifying behavior, not just changing a number

[00:27:31] Tyler: Yeah. Very cool. Are there any that stick out to you on your little list?

[00:27:35] Steve: Uh, eating out almost always goes over. Well, so, uh, eating out is an interesting, uh, maybe example here where, um, A while ago, we sat down and said, we would like to spend less on eating out, but we can't just change the number in the budget and expect that to happen by itself. We have to think through what, [00:28:00] uh, what would that look like for us to spend less on eating out?

And it came down to like, we can go out to Uh, this sort of a restaurant every two weeks, and we can take the kids to get this treat, uh, this frequently, and then we can do a date night here, those kind of, like, spelling out, these are the sorts of places we can go, and this is the frequency. And that worked, that, uh, for, for a time, as evidenced by the category going over again.

But, uh, coming at it from that angle of what should the behavior, we would like to get to this target, but what does the behavior need to look like to get there? That was a much more useful way of doing it than just, I would like to spend less on groceries this month, so let's just move this number down, which I've also done in the past, and it doesn't work, as he said.

[00:28:51] Tyler: right. You know, that's actually a huge takeaway I'm getting from this conversation is I love that you brought that planning element into [00:29:00] this because just changing the number in the budget doesn't make it so, I mean, ideally it would. But for that to work, you'd have to be checking your budget really faithfully and diligently before spending, which is a habit that you should develop anyway, but

[00:29:14] Steve: Yeah,

and, and, and with some of my budget categories, I do it, do it that way, but these other ones where, like, it's, uh, you know, we're not in that habit for that. And so, and that's not, that's not going to be the, when, when we're deciding whether or not to go out to eat, it's not, let's look at the budget and see if there's money there.

It's, um, you know, friends invited us out or. The kids are hungry, or I don't feel like cooking, or we're, uh, we're on the way to this other activity and everybody's hungry. And, those are the things that influence the decision. So then if we have the framework of, have we already gone out this many times?

Can, can we do it today? And yes, today's the day let's, let's go ahead and do it or whatever that, that was [00:30:00] more useful for us.

[00:30:01] Tyler: yeah. It's worth calling out, though, that even though, like, maybe you're not checking, you know, in this specific example, you're not able or not checking the budget before spending because those decisions are being driven by other factors. You still are rolling with the punches. You're just doing it after the fact in, in, in

[00:30:20] Steve: Yeah, that's true.

[00:30:22] Tyler: Yeah. Cause you, you know, you're getting the money from somewhere,

[00:30:25] Steve: Right. Yeah. Yeah.

[00:30:27] Tyler: yep.

Honesty and alignment

[00:30:29] Tyler: Okay, cool. Well, I mean, that was a pretty fun discussion about rolling with the punches. I think this is one of the more fun rules to talk about because it acknowledges like the reality of life, um, and introducing a little bit of lightheartedness and humor into it really helps people, I think, kind of overcome some of the stress and anxiety and guilt, you know, that comes from, you know, not being able to just control their behavior with the snap of a finger.

But it's more of a process and a learning

[00:30:56] Steve: Yeah. It's like a, it's a muscle you have to build [00:31:00] to. To get good at sticking to a budget. Well, I don't even like that term, sticking to the budget. It's more

[00:31:06] Tyler: Ew. Yeah. Wash your mouth out with soap.

[00:31:10] Steve: More like, I've, I've made this plan and, uh, this is my, these are my priorities until I change them.

[00:31:18] Tyler: right.

[00:31:19] Steve: will have good reasons when I do. And so, let's, that, that's okay. Let's, let's make it possible to operate that way.

[00:31:27] Tyler: And you know, back to that food example, it actually was pr it was relatively recently, like the beginning of this year, actually, that I finally acknowledged that I need to budget more for, for groceries and eating out. Because I was always very aspirational in those budget categories for

[00:31:42] Steve: Uh huh.

[00:31:44] Tyler: and I was always Rolling with the punches for those.

And so finally I was just like, you know what, I'm just going to budget. I don't even remember what it was. Maybe like 50 more a week or no, no, no, no, no, not a week. Anyway, I figured out what it was. I raised my target amounts. Uh, oh, I remember it was. So instead of [00:32:00] budgeting for those categories once per month, I do, uh, the weekly targets that

needed for spending weekly targets, which is like really cool because then it allows me to track it a little bit more carefully throughout the month, kind of visually in the software anyway, and I upped that.

And you know what, like I should have done it a lot earlier because I feel a lot better about my budget now. And I'm able quote unquote, able to stay on budget now. Right. So again, did the behavior really change? No, but I think I acknowledged the reality of like what, you know, my budget revealed to me maybe a true priority that I didn't realize.

Like, what am I trying to say? I thought it was a priority. To be really frugal on some of these eating out things or and groceries, you know, I, it was just too low though. In reality, I value my time and energy spent elsewhere, I guess, is what I'm learning about myself. And so by adjusting that in my budget, it's, it's been a much more positive experience.[00:33:00]

[00:33:01] Steve: Okay. Interesting. And you got that peace of mind, not from changing your behavior, but from letting the reality reflect back into your budget.

[00:33:13] Tyler: Yeah, like acknowledging the truth. Basically about what I want, right? Because if it was really important to me to eat rice and beans all the time, so I could have a couple extra bucks or like a hundred or 200 extra bucks to save towards my emergency fund or something, then I would do it, I think, you know, but I've proved to myself so many times that actually I value, uh, I actually added a new, an entirely new budget category.

I think I mentioned in a previous episode too, called, uh, meals on me because I, I just had to, I know like it's important for me once in a while to be able to take a friend or a family member to lunch, like for their birthday or for a special occasion or, and that wasn't anywhere in my budget. It was just coming out of those other food categories, which would make me go [00:34:00] over.

Right. So I guess, yeah, I'm actually spending more money than I used to. Well, or similar. I'm spending more money than I, uh, wished, used to wish I was spending on eating out, but I'm happier because I'm actually living. My values and I'm acknowledging those values in my budget. And that took me a long time to work through and I should probably be in therapy.

I don't know, but, um, but it feels good now. It's alignment. You're aligning, uh, with your values and, and yeah, I don't know.

[00:34:30] Steve: Yeah, very cool. The words that I did not expect to hear in this episode were honesty and alignment. But I think they characterize this really well. That's what we're looking for in the budget. Reflecting reality.

[00:34:48] Tyler: Yeah. Reflecting reality and like really learning more about yourself. Right. I mean,

[00:34:54] Steve: Yeah. [00:35:00] This

[00:35:00] Tyler: true, but that turned out to be true. Which is fascinating to me. Well, how existential.

[00:35:07] Steve: was fun. We'll see if Rule 4 is this personal or not. You'll have to wait until the next episode to find out.

[00:35:16] Tyler: Yeah, we don't even know at this point. So,

[00:35:19] Steve: Cool. Thanks, Tyler. This has been fun.

[00:35:22] Tyler: of course, thanks to you.

[00:35:23] Steve: You can email us hello at notaboutmoney. com and we will see you on the next episode.