You Need a Budget - Jesse Mecham

In 2004, Jesse Mecham and his wife, both 20 years old, were newlyweds. They lived in a 300 square meter basement. Jesse was pursuing a master's degree in accounting while pursuing a bachelor's degree in social work. In addition, they thought about having their first child. And that was when they felt broke.

So, the author decided to create a spreadsheet to monitor all his expenses, daily. Although their situation was difficult, money was no longer viewed with distress. Staying true to their budget, the couple was able to pay their bills and enjoy a few nights a month.

Mecham's method is based on four rules that we will see later. Over time, he started teaching this method to others and the spreadsheet became software called “You Need a Budget”.

In the book “You Need a Budget”, Jesse Mecham teaches practices that helped him eliminate financial anxiety.

Let's address the rules that will help you get there too. Keep up with us!

The book “You Need a Budget”

The book “You Need a Budget” was written by Jesse Mecham and shows how to gain control of your money.

This work consists of 240 pages and 9 chapters. After reading, you will find that this book will contribute two powerful skills for you: a concrete decision-making system and a new mindset.

Who is Jesse Mecham?

Jesse Mecham is the founder of the “You Need A Budget” app. The app was created based on his and his wife's experience with money.

The author currently helps thousands of people around the world to control their finances and enjoy life on their own terms.

To whom the reading of “You Need a Budget” is indicated?

The book “You Need a Budget” is for those who have tried to save money and have failed. If you have a hard time doing this and think it is stifling and stiff, this book will change your perspective.

If your family wants to pay off debts, break the “salary in salary” cycle, or be able to pay for vacations without a credit card, you need to save money to get it and this is the book's proposal.

What can I learn from “You Need a Budget”?

From the content presented in the book, we've put together the best strategies for you to develop skills and knowledge to lead an organization of your financial life. The key points of the book are:

• How to give a purpose to your money;
• Learn how to differentiate your predictable from unpredictable expenses;
• What to do when the unexpected happens;
• How the age of your money is calculated.

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Rule one: Give every penny a job

The essential question is, “What do I want my money to do for me?”. Begin by highlighting the destination of your money, your obligations, the mandatory expenses that must necessarily be met. Rent, transportation, and food are some examples.

Once you do that, the real work begins. The next step is to decide what to do with your money, because you know how much you have left to do what you want, travel, buy clothes, change your car or smartphone.

Once again, for a start, set aside your money to pay the basics for you to live. Then use it to enjoy life from your point of view.

According to Mecham,

“Before you start owning your money… you have to decide what needs to be done. You are literally writing a to-do list for your money. If you've never done something so proactive with your money, you'll quickly see how it changes your perspective on every penny you hold.”

Rule two: Take charge of your actual expenses

Well, in rule one we saw the obligations with money and the part of using it for fun. However, what is between these two sides? It would be irregular expenses. This is what the second rule is all about.

Mecham says you should set aside money for what he calls “real expenses”. These expenses are not obligations, but expenses can be of two types:

1. Predictable: these are car insurance, home insurance, which can be paid throughout the year. They also include water and electricity bills, which may vary according to seasonality;
2. The unpredictable but indispensable ones are things like crashing the car, taking the dog to the vet, accidentally breaking furniture, things like that.

Unpredictable expenses are what usually hinder us, says Mecham. They make it difficult for us to save money.

According to the author,

“Rule two makes you proactive with your money on a much deeper level than you have ever experienced. When you think hard and act now, you are not just looking at your immediate bills, you are seeing the bigger picture and you are hyperconscious of all your expenses. Your expenses no longer surprise you.”

Rule three: Learn to take punches

Even following rules one and two, your plan to save money will have some unexpected impacts. Of course, according to the author:

“There is a difference between a plan and real life. If you are obsessed with sticking to the plan […] despite any consequences, you are sure to be stressed and unhappy.”

And that's where the third rule comes in. It consists of making adjustments based on the changes that happen in your life. As your life changes constantly, your plan must accompany such changes, meaning the transitions in your life must be reflected in your plan.

This rule also tells us to be honest with ourselves about what really matters and deal with the punches life gives us. Imagine if your garage door breaks. A day earlier, it was not a priority, unlike now.

According to Mecham,

“Change is so important that we dedicate an entire rule to it […] Rule three is what will save you when all the other apps, experts, and budgeting programs make you feel that you have failed at the moment you deviate from the original plan. It's what pulls your budget out of a spreadsheet into the real world.”

Rule four: Grow your money

The goal of the first three rules we've seen so far is to let you take control of your money instead of letting it control you. By following them you will find that you will gradually generate a surplus of money.

Well, to explain this rule, Mecham introduces the idea that money has an “age”.

“The age of money is based on the time difference between when you earn money and when you spend it.”

For example, if the money you are spending on Tuesday was deposited on Monday, your money is one day old.

With the idea of ​​the age of money exposed, we can now go to rule four. This rule is about building a cash stock so that you have enough to cover your expenses for a long, long time.

Your purpose is to make your money as “old” as possible when you spend it. You may want to let it age for 1-2 months, but that's fine if at first, it looks too long. The important thing is always to strive to increase this time.

Remember that if you are in debt, the “age” of your money is negative. You spent the money you haven't even earned yet.

According to Mecham, living on “old” money may seem like a dream if you are living paycheck to paycheck. As you apply the rules, you will move from a stack of bills waiting for cash to a stack of cash waiting for bills.

Books about financial independence

Grant Sabatier in “Financial Freedom” says that financial independence is being free to do whatever you want. You can have it.

Making a lot of money quickly is possible. Having more time is possible. Living life on your own terms is possible. You have a unique opportunity that many do not have. You really can have all the money you need.

In “The Total Money Makeover”, author Dave Ramsey gives the following tip: "Although you know you need to adjust your financial situation, you can't change everything at once".

So one step at a time; this will make your move gradually and stay motivated, without radical changes in the short term.

Another work that also explores the subject is “The 4-Hour Workweek”. Tim Ferriss says that instead of working hard for the rest of your days in an office waiting for retirement, start enjoying life today from a change of mindset.

How can I apply the ideas from “You Need a Budget”?

Jesse Mecham advises:

“If I had to choose one thing for you to learn from this book, it would be the lesson that budgeting is not restrictive.”

On the contrary. By budgeting with the Four Rules, you are in complete control of your economic situation. You are creating a life based on your priorities and nothing seems better than achieving your goals, no matter how long it takes.

So, how about starting as follows?

• “Give your money a function: have a goal in mind”;
• “Accept your actual expenses: pay off your debts”;
• “Learn to fall: prepare for unexpected expenses”;
• “Ripen your money: save it”.

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