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You heard about it here. Again, that's longangle.com. Hello, and welcome to another episode of All The Hacks, a show about upgrading your life, money, and travel all while spending less and saving more. I'm Chris Hutchins, and I'm excited to have you on my journey to find all the hacks.

Now, there aren't too many words I could use this early in a show that might send people running, but I'm going to use one today. And I encourage you to fight that urge and stick around because I'm about to have an amazing conversation about budgeting with Jesse Mecham, the founder of what many consider to be the best budgeting process and tool in the market today, YNAB, or You Need a Budget.

Jesse started this company as a side hustle back in 2004 and has bootstrapped it to a place where they now support over 100,000 customers in their financial lives. He's also written a book on budgeting and hosts the YNAB podcast. In our conversation, we'll talk about why budgeting gets such a bad rap and preview lots of people might just be doing it wrong.

We'll talk about an approach to budgeting you could do in far less time than I used to spend categorizing every single one of my transactions and hear about some of the hacks Jesse's picked up raising his family of seven children. Also, I'm going to try to get a special deal set up for listeners who want to try out YNAB, so check out allthehacks.com/ynab.

Okay, and before we jump in, I always have to remind you, Chris Hutchins works at Wealthfront. All opinions expressed by Chris and his guests are solely their own opinions and do not reflect the opinion of Wealthfront. This podcast is for informational purposes only and should not be relied upon for investment decisions.

Jesse, thanks for being here. Absolutely. I'm glad to be here. Yeah. So, you know, budgeting is such a charged topic. I feel like people love it. People hate it. I'd love to get your take on just why is it so, so charged and is that controversy justified? I'll start with the second part.

Yes, it is justified. I think it's totally justified to feel like budgeting means that you are never going to have fun again. You know, like if you think budgeting is like dieting, it's like, I will never eat chocolate cake again. Like that's a horrible way to live your life, you know, or worse, your spouse or partner wants to start budgeting and you're like, Oh no, no, no.

I know what you're doing here. Like there's so many scary things that are associated with the word budget only because people have been for the most part doing it wrong. But we approach it that the budget is your plan and it's yours. It remains yours forever. And so that's where for me, I then can go out and play 18 holes because I said I could.

And so when I'm out playing, I'm mad about my swing or sad or feel guilty that I've spent money playing golf. Like that's because I wanted to. So budgeting lets you spend on what you want while not feeling guilty about it, whether or not you actually could afford it.

And we can unpack that if you want, but I don't blame people for hearing the word budget and kind of freaking out a little bit. Not at all. It's very, it's very common. And if someone is that person there, they're like, Oh yeah, okay. It's too good to be true.

What's the first thing you would tell them to try to come over to the dark side, I guess, and realize that, that budgeting maybe can be more freeing than it is restrictive. Yeah. Well, I can walk through like what, from what most people experience and you know, you'll see something that you want and I don't want to, like when I say want, I don't mean any kind of moral judgment to it.

Like, should you want it or not? It's just, you want it. So we're just dealing with like a pure one and someone will say, I want this. And then the first thing they'll ask is, can I afford it? You know, could I buy this if I want it? And can I afford this is one of the most stress inducing questions we ask ourselves, or we ask each other for sharing finances.

Sometimes we don't ask each other. And that also is a whole other separate thing. So you say, let's say that you ask yourself, can I afford this? And then you say, yes. Then you buy the thing. You don't actually know if you can, you looked at your bank balance.

You saw that it was high or low, whatever that means to you. And you gave yourself permission to buy it. But then after the fact, so many times people will be like, ah, should I have shared that they'll feel kind of this little pang of guilt, like, I don't know.

Worse. They get a bill the next day that I hadn't thought about when they were doing the, can I afford this dance? And then they know they couldn't afford it. Then they feel really bad. Or the flip side is the person actually can afford it. They do buy it, but they don't know that they could.

So whether or not they can't afford it or can't, they both don't know it. And they both feel guilty or consternation or stress because of it. So a budget solves that stress of, can I afford this by telling you? Yes, you can go buy it. Enjoy it. Don't feel guilty about it or no, you can't.

And that still brings a lot of people peace and resolution to what they're trying to figure out. Now, does it mean you can't ever buy it? No, no. It might just mean you need to wait a little bit. You know, you might need to wait a paycheck or two, but it's freeing because it frees you from that question that you can't answer accurately.

And that's what we're trying to tackle for people. Yeah. And does it have to be hard? Is there a 80/20 to get started that doesn't involve looking at every expense you've had for the last year and categorizing everything? That often seems daunting. When you said it's like a plan, it's like, oh man, I got to put together a full financial plan.

That sounds scary. What's the way to get started thinking about it that maybe doesn't have to be so scary and you can do in, you know, minutes or maybe a couple hours. Let's do it. Well, first, first, do not look back. So with the first rule of budgeting, I mean, we have four rules.

Our first rule is not actually this, but really what we're talking about is do not look back. Do not look at your history. It's already done. It's finished. So you can't, you can't change anything about it. We only are looking forward. That will save you countless hours. If you just say, oh, I'll just deal with what's forward.

Then if you're talking about five minutes, pull out your phone, look at your bank balance and ask yourself one question. This is the question you ask. What does this money in my bank account need to do before more money will come in? Don't tell yourself, oh, more money will come in on Friday.

So what should that money do to it? Resist the urge. When we coach people, sometimes one-on-one a little bit, they'll often say like, oh, well, I'll get paid. Jesse, hold on. I'll get paid in five days. I'm like, no, no, no. We only want to deal with money that is on hand.

So if you do those two things, you forget history and you only decide to budget the money that you have on hand in the moment. Suddenly that big financial plan that looked really scary. It's nothing like that. It's just, hey, I have $800 in my checking account. 200 needs to go to groceries.

150 needs to go to this bill. 70 for my cell phone. You know, it's very clear. It's amazing how many times we walk people through this hundreds of thousands of people, and at the end of that simple five minute exercise, they will often say, oh my gosh, I feel so much more in control already.

And we're like, that is a budget. A budget is control. It's awareness. It's intention. And you only get intention by looking at money actually on hand. And you only have that intention going, going forward. Well, you would have saved me countless hours of arguments with my wife because my version of budgeting that, you know, like dieting just totally went by the wayside and never to be repeated in our house was at the end of every year, we said, okay, let's download our mint history of every transaction.

Let's categorize it all. Let's see how much we're spending. And the reason I did that, and I'm curious if you think it's not valuable, if there's an alternative was, you know, it helped me say, okay, I make X, I spend Y, I'm okay. Like I'm what I'm doing today works.

And that actually freed me up to say, if I just keep doing what I'm doing, I'm probably okay and I don't need to be thinking about it every day because last year I did. Okay. But it was a lot of work, you know, if you just look at the money you have today and what its purpose is, is there any easy way to get a sense of, I don't know how much I'm saving this year or, uh, kind of some of those more macro ideas.

Yeah. The macro is interesting because it can give you an idea of, I don't know what happened, what may happen again. The New York times ran an article years ago that still kind of makes me mad because they were, they came off as, as, um, this light bulb moment they were, they were saying, Hey, on, you know, if on annual budgets, people tend to stay within an annual budget, that was their point.

And, and I just was shaking my head. Like an annual budget is not where mistakes are made. Mistakes are made on the Saturday and Sunday between two paychecks. That's when the mistakes were made. So what we're talking about is like, when I look at your, the Hutchins household, like macro view, I'm like, yeah, on average, they're good.

And most people, when they come to us, they're like, I don't get it. I make good money. Like, why aren't I getting ahead? What's the deal here? And it's not because of the macro level, they aren't looking okay. It's because on January 22nd, they had purchased some really nice boots that they definitely wanted, and they're totally okay to buy boots, but on the 23rd, they also had a life insurance premium come due and they're like, oh, it was just a timing issue.

Right. And so, because there was a timing mismatch of money on hand and money required, they had to put a little bit on the card and most, you know, we know the average, you know, credit card balance for Americans. It was honestly in 2020, it was just dropping like crazy much to the bank sphere, but we're heading right back where we were, you know, pre pandemic.

And so many of those swipes are just timing mismatches. It's like, I didn't have the resource, but I used to have the resource. And what we want to have people do is just look ahead to those larger, less frequent expenses. And then when you're debating whether or not you want to buy these boots, I hate to use examples, Chris, because then people will be like, oh my gosh, Jesse doesn't think I should buy boots.

I really don't care. You know, like what I do not care what you spend your money on. I just want you to make sure that all your big expenses are taken care of as well. So let's say you've got this insurance premium that's due in eight months. You divide it by eight and you have a monthly insurance bill now that you're setting aside for, and the software does this, you know, that's that's the software part, but then you're also debating like, should I buy these boots or not now?

It's like, you have future Chris and current Chris that are at the negotiating table together and, and current Chris is like, I want the boots and future Chris is like, yeah, it's fine. Cause you've been, you've set me up. I'll be good with the insurance payment or future. Chris is like, no, no, no, no, no.

Don't take, no, not yet. Wait a little bit. We have this due or future. Chris is on the side of a road and he's a tow truck. And it's like, come on, man, throw me a bone. Like car repairs really happened. They're really a thing. It's the mismatch of when we have the money available so much of the time that gets us into trouble.

So I want people to pretend that they have like a future version of themselves that also has a say in what current money should be doing. I like that. Yeah. I actually think sometimes budgeting is create a bunch of buckets and then see what happens with the money. And this is flipping it and it's see where the money is and then decide what needs to happen with it.

Yes. In many ways, it's totally different from what anyone ever thinks of as budgeting. So I'm curious, did you ever consider calling it something different? Oh yes. And still like literally to this day, I'm like, should we rename, you know, like we're this company called you need a budget and half of the country is just, or world is like, oh my gosh, I will not give that guy the time of day.

And that kind of worries me, you know? Cause I'm like, no, no, no, no, no. That's not what I meant. It's not what I meant to say. You know, I feel like I'm chasing after him trying to explain what I really mean when I say budget. So yeah, I've totally like from a purely like product guy to product guy.

I'm like, Hmm, is our name right? You know, like there's, there's something there to that. I don't know what I would name it, but, uh, every domain is taken now. So if you have any ideas, let me know. Yeah. I mean, I at least liked it. YNAB doesn't, you know, it could just be a name, right?

If you need a budget in its long form, obviously bring some kind of emotions out, but if you just call it just YNAB, it's it's you, maybe you don't think about the word budget out the gate. I've also thought like, maybe, maybe we're trying to purposely exclude people that aren't ready to hear the news, you know?

So I don't know, but that's the marketer. That's like always, always debating. Like, is this, is this working or not? It's a pretty good filter. It gets a laugh when I tell people, yeah, I, you know, my company's name is you need a budget and they're like, uh, like nervous, you know, but, uh, everybody does regardless of income level.

I've tested it. I've tested not having one and I make pretty good income and it wasn't, it wasn't good. So everyone needs one. So everyone, what would you say to the person that's saving on track for retirement, not using a budget and spending money and enjoying life and feeling like everything's working?

What could a budget do for that person? I would argue this might be semantics. I would argue that they already are budgeting. It's just very high level. So they've budgeted for savings. They probably have an idea of what they want to spend on like large purchases, vacation, holiday spending, things like that.

And also they would naturally in this circumstance have to have lots of wiggle room because they need to have enough money where those timing issues don't pop up. And that does take, that takes a good bit of income above your expenses. I mean, there's a good gap of living within your means for people that don't deal with timing issues.

I'm one of those people. I don't deal with, with timing issues now. You know, if you were to be like, Hey, eight of your big bills came at once. I'd be like, Oh, that was uncomfortable, but. We, it would be fine. But most people, especially for the first while, as they're working the budget, they, they are definitely dealing with a timing problem.

So I'm someone that's lucky enough to not have to budget so specifically that that's fine. Their budget is optimized for their circumstance, but most people do not have that circumstance. So I tested it in 20, was it 2020? Yeah, it was, it was just last year. Cause I just ended it.

I tested doing a very high level budget for me and Julie. And like we had an other category that was just massive. And I would just update once a month and be like, did checking account go up or down? And I would make an adjustment and then budget money.

And I lost thousands and thousands of dollars somehow. I don't know what we spent, but like for the first time in seven years, our checking account didn't stay at this level that it's like boring how it just stays there for the first time in like years after 2020. And it wasn't because of the pandemic.

Cause we didn't eat out. We didn't travel. Like there was some things going for us to make that number go up. It was interesting. Cause yeah, money was gone. And I'm like, oh my gosh, first time in so many years that our checking account is down probably 18, 25%.

And I couldn't say why. And it might be the recovering accountant in me that just is really bothered by not having the accountability for it. But I did find it interesting without that awareness, without that intention, like the money just kind of did what it did. Yeah. That's fascinating.

If you ever find out what happened to it, let us know. Maybe it's in that unclaimed money stuff. Like maybe that in that hack that, you know, you talk about with unclaimed money that they're like, oh my gosh, Jesse's unclaimed money is with the state of Utah. He just doesn't know it.

So I don't know what happened to it. It seems like with every business, you get to a certain size and the cracks start to emerge. Things that you used to do in a day are taking a week and you have too many manual processes and there's no one source of truth.

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So check them out today at allthehacks.com/peak, P-I-Q-U-E. Now, I noticed one interesting thing. When you say, you know, the company, it's YNAB, you need a budget. You're not saying you need YNAB as a customer and software, like you don't think it's for everyone, but you think the process of budgeting is, and you're willing to share how you guys do it.

Could you talk a little bit about the difference between this kind of style of budgeting you've created and the company and the software? Yeah, we teach four rules. We teach to give every dollar a job. And we mentioned that already, like only money you have on hand, not money you're going to get, and you're facing forward.

What jobs will this money do? The second rule, we call it embracing your true expenses, which means Christmas is a true expense. Like Christmas is a monthly bill. Car repairs are monthly bills. They just don't come that way. But as you start to take large, less frequent expenses, break them up into monthly amounts.

You can see that your real expenses aren't just cable, groceries, and all those like monthly standard stuff. That's rule two. So you have rule one and rule two, where you're giving every dollar a job, including future you in this equation. Rule three is to change your mind. We call it rolling with the punches.

But it's just like when life happens, you end up having visitors come to the house. You have to catch a flight somewhere for an emergency. Life happens. And, and so you need to be able to adjust the budget as needed. A lot of people think budgeting is like, I don't know, like it's just set in stone and rigid budgets, they, they break.

And so we, one of our rules is to be flexible. You're, you're more like a, a coach making adjustments to how the opponents are playing all the time. Versus just being some clairvoyant person that can guess and predict every single spending move you'll make. Our fourth rule is called age your money.

And it's essentially the idea that when you follow the first three rules, you will get to a point where the money you're spending today, you earned 30, 40, 50, a hundred days ago. It's people that you mentioned, Chris, earlier on that have that pretty good slush in their budget.

They'll have an age of money that is far higher because they aren't living paycheck to paycheck. And so our fourth rule is basically a metric that the software tracks that tells you like how close to that paycheck to paycheck edge are you? So I mentioned those four rules in brief.

We dive into them with classes and podcasts, everything under the sun to teach people those four rules, because it's, it's about how you're thinking about the money. And then you can run off to mint or what, yeah, you could probably do it with mint or your own spreadsheet. Like this whole company came about because I started it with a spreadsheet.

So I would never fault someone for building their own. You can run it with ledger paper that your grandma might have in like an old drawer or something. Like there are places where you could run the method and you don't need to worry about the software. Our software is killer best in the business.

But for some reason, if someone's like, Oh, I I'd like to roll my own. I mean, my word, go for it. You know, there are enough people that will buy our software. I'm not too worried about it. Yeah. Are there specific things that software does that you think are worth calling out that makes it hard to do on your own or things like that tracking that age of money number, which now I'm sitting here like, ah, I want to track that.

That seems like a good metric. Yeah. It's a, well, one thing on your phone, I mean, the apps on your phone, obviously, and on the web and all of that it's with Alexa, you could ask Alexa, how much is in your grocery category, but she'll tell your friends and neighbors to like, you have to be careful.

She's not like super discreet. So you, you know, on your phone, like I can be in home Depot and go to add a transaction and the phone recognizes like, Oh, Jesse's in home Depot. Last time you were, you know, he put this as home maintenance cause I'm buying air filters or something.

And so it like pre-populates all of that. It's, it's like a two second thing. Um, you could probably build some kind of a Google form that route to like a spreadsheet of your own and maybe get smart and do something like that as well. But the phone itself just on the go is dynamite.

You can share it with your spouse or partner, and then you are both on the same page. And so, you know, you and your wife are like, Hey, how much do we have to, to work within two different categories? And you can both make decisions independent of each other that will be totally appropriate and fine.

And then, you know, monthly you can get together and kind of make your plan. So the sharing of information we've nailed, and then the obviously grabbing bank transactions, that is a quagmire of politics and tech and like old tubes of old banks. Like it's a mess of a place, but we do our absolute best and I don't want to give away the farm, but we use multiple providers.

We do very smart things behind the scenes to make sure that we're really trying to give the best experience we can. And so for users just to be able to pull in their bank transactions and catch those that they didn't do on their phone, that's something that would be real tough, real tough to build on your own.

So much so that I think paying the annual fee for us might, as far as hacks go, might be a pretty good hack at that point, you know, so I don't know. Yeah. And how much time do you think a YNAB user can get to needing to spend on budgeting each week or month or day?

Yeah, I, at this year, I do experiments every year. 2020 was my experiment of basically no budgeting. The year before I did an experiment where I was all manual. I didn't connect to any bank accounts. Every morning I would sit down and literally type in each transaction from the prior day.

You know, we've got a big family, seven kids, and we got some churn in the house as far as transactions go, but it took me, it was a little ritual. It was like a five minute thing each morning. And, you know, staying on top of it daily was, was dynamite for as far as like behavior change goes.

For anyone that's saying, I'm kind of a little bit of a train wreck. I would like to do this better. The more frequent visiting of your budget is key because we're trying to get behavior change. But if things are on autopilot, I do it like weekly on my phone, sitting somewhere, you know, lazily.

And I'm just going through and categorizing and I think probably an hour a month on kind of maintenance. I'm, I'm pretty good at it, but I mean, I'd like to think so. I'm not like trying to go fast or anything. It's just, it's pretty, pretty straightforward. So now I will say my, my finances are very, very simple.

I have one credit card, one checking account. I'm not trying to manage my entire financial life. We're just trying to manage our inflows and outflows. Yeah, that makes sense. Yeah. I mean, sitting in the line at a grocery store, scrolling through Instagram, you know, those small bits of time is probably, you could use it like this.

You don't need one hour sitting straight at a computer. You can kind of do it in pieces throughout the month. Is that, give us a little bit of your Instagram time. That's what I'll, that's, that's going to be a hook now. Just like, can we have 10 minutes of your Instagram time each week?

I think we can do this. Yeah. And I love that you are, are building a company around convenience. I know something we've done at Wealthfront is like, look, if you want a portfolio, we'll give it to you. Uh, we're not trying to make a secret out of how we invest your money.

The value we offer is that we make it easier, faster, and more convenient to do what you want to do. And if you don't want that, you know, come here, read our blog, look at our articles. So I love that you guys have a similar approach to focusing the value on making life convenient and doing it at what I think is a very reasonable price to pay to get back the time it would take to use a grandma's ledger paper.

You said you have seven children. I've one child and there's a lot of costs, seven, obviously, hopefully you get some economies of scale, but running a family that big, are there things you've had to do or, or hacks you've had to introduce to your life, your spending, et cetera, to make everything run more smoothly?

So obviously hand-me-downs become much more valuable when there's like a downline for kids. So you got to do the hand-me-down thing that goes without saying you store those clothes. I mean, there are tiny things like we don't fold laundry at all ever. Because more, I feel like that, that might sound like a crazy thing to people.

Yeah. We have photos of the kids folding their laundry and we would all be in a big basket and we'd be in the living room. And I snapped a photo from years ago when they were probably like six, four, two and zero or something like that. It was a big chore every week, like a huge chore.

And the kids hated it. And so now we teach them to use the washer really, really early. And it's super easy. And the dryer's just as easy. And then as soon as they can reach the soap, it's like, okay, you're old enough to do this. They put in their own load.

They change it over. Julie will harp on them like, Hey, change it over. Hey, go change over the laundry. Hey, go, you know, she does that. But then they just drag it back down to their rooms. And that's the end of us caring about laundry. And I know they don't fold it independently.

Like, I know I'm not lying right now. You know, like we just, we don't fold. Even you, your shirts just thrown in the drawer unfolded or? I mean, I fold, but I, it's like, for me, it's like, it takes me five minutes. You know, I'm like, this is nothing, but to manage it for seven people, I'm like, you know what, you know what, well, you have a one-year-old what it's like to fold like a one-year-old onesie.

You're like, this thing is so small. Like, what are we doing here? So yeah, that's, that story ended a long time ago. We just, it saves so much time not folding laundry. It's unbelievable. And the kids don't care. They don't care. Yeah. Yeah. If the onesie is a little wrinkled, it's like not a big deal.

Come on. Yeah. They're not going to important business meetings. What about food? How do you manage meals for a household of nine? Yeah. So we don't do leftovers. Cause there is nothing left over. You know, people will say like, Oh, you know, cook on Saturday and make like all of your lunches or do like make all of it.

I'm like, you gotta be kidding me. We need like a commercial kitchen to knock that out. Like it, so we, we, the leftover thing isn't a hack for us. I have noticed some, a few small things. Um, well, one is we, we'd never put the food on the table because to have seven tiny voices and some that sound like man children now, but like to have those people be like, Hey, it's past this.

And like, they won't use the person's name. It'll just be like, pass this, pass the salt, pass it. And like, it's just this cacophony of past this. And then it's going to be like, Hey, I asked three times or like someone grabs it before they pass it and they take some, and then someone else gets upset.

Cause they, it's called a shortstop, Chris. I don't know if you've dealt with that, but if someone, you know, intercepts it, it's a shortstop. And you're like, Oh my gosh, we cannot do this. This like, we can't converse and we're big on dinner. Like we're big on eating together.

Like that talk about life hacks. I feel like that's like top three. It's like eat dinner together as a family. Like, it's just so it's like this great touchstone for you. So I don't want to throw dinner out. So we bring all the food over to the Island, leave it off the table and it's all buffet style.

And that, that helps tremendously. The other thing that like, even gosh, tinier hacks, like Julie and I, when we're plating the kid's food, because that's faster than having tiny hands using large spoons, we years ago decided we would lay all the plates out, like top to bottom, left to right age order.

So I would always be bottom right. And Julie's just next to me, you know? And when we would have guests, this is what's funny. I like, if you were over at our house, Chris, I'd be like, Chris, how old are you? And maybe you say like, I don't know, you're 39 or something.

I'm guessing I'd be like, oh, well, you're younger than me, but you're older than Julie. So I would stick you between me and Julie. Like we're very, like we, we stick with the age thing, even when we have guests over, but that helped me and Julie not have to be like, who's plate is this?

Who's plate is that? You know? And because you're, you're portioning. Proportionate to the mass of the individual. And it's, you know, there's, there's a big variation until dessert comes. And then for some reason, the proportions don't matter anymore to those little kids. They're like, why isn't my piece as big as that kid?

That's four times my size. You know, you have to explain it. We've discussed growth rates and things, but it's still a fight. So, yeah, can't figure it out, but yeah, those are a few it's a, it's a fun, I mean, there's, it's always lively, you know, can I give you another one on the family stuff?

Absolutely. I, uh, you know, dinner was one that's like family together time. And I know you're big on like intentionally making sure relationships are solid. Another one that I love, I call it parlor time with the kids and the parlor is an old room, you know, that people don't know about anymore, but like the parlor was where the family would go when like the day's work was done and maybe there wasn't even electricity or something.

And it's this very romanticized idea. And I probably have cattle at that point. And you know, like there's a lot going on in my head with parlor time, but at the end of the day, it's where we all sit and I tell the kids, you can read, you can play a game with someone, but we're all in this room.

Like you can do whatever you want, but we're all in this room, obviously no screens, like that would kind of suck someone away. And I love parlor time. So you'll have kids that are, uh, you know, sitting there playing a game. Lot, my kids are readers. A lot of them will read.

I, at that point, I love the reading and you just have all your kids kind of in that little spot for a little bit of time, 30 minutes, 40 minutes. That feels good. That's one of my favorite acts. No, no. It just, I mean, honestly, it's just like, I call for it.

Sometimes like guys were doing parlor time and you know, like sometimes there's a little bit of groaning, but everyone comes up and they'll have something that they can do. It's mostly for like Sundays where things are a little more chill already. And, uh, I love it. Love that. So the kids like it too, once they settle in, you know, if we go back in time a little bit, how did you end up, uh, becoming the, the YNAB guy?

Like the, the guy who's like, I love budgeting. I start a company telling people they need a budget. What's the origin of that story? Yeah. I wish I had some grand vision of entrepreneurial, you know, I don't know, swagger or something, but it was nothing of the sort. I, Julie and I were married pretty young and then scraping, you know, making 10 bucks an hour in school.

I had three years of school to get my master's in accountancy. She wrapped up her schooling, but it was in social work. So her full-time job, she was making $11 an hour. And we were actually pretty thrilled with that. You know, we're like, oh my gosh, 11 bucks. This isn't too bad.

Rent was 350 bucks a month, including some of our utilities. Like, you know, we lived on the cheap, which I know you can appreciate, but we wanted to have a baby. And so when the baby was coming, Julie also wanted to be able to step out of the workforce.

She's just like, I just want to focus on this baby, new mom, you know, obviously new baby. And so that was a big deal for us. The other big deal for us was we didn't want to borrow money for school. I had a little scholarship that helped with tuition some.

And I kept crunchy numbers. Like, how can I, can I work more hours? But my accounting program already really frowned on lots of work. So I was working more than what they allowed even, and I just couldn't squeeze out any more. And at least not structured in that way.

And so we had been using a spreadsheet that I had built for just the two of us. And it had worked well. Like we had gotten some savings together and we just weren't going to be able to get those last two years without borrowing. And I was kind of mad because I'm like, man, we've been budgeting.

We can't live any more cheaply than we are. And it wasn't going to be enough. And so I had this just kind of crazy, a little bit egotistical idea. I was like, Oh, maybe, maybe people would just buy this spreadsheet from me. And so I launched with a spreadsheet, like, you know, September of '04 launched and sold little bits at a time, enough to keep the interest of me.

And then in February of '05, I discovered that the spreadsheet had enforced rules that I hadn't known were there. And so I turned it around and started talking about the rules and a lot less about the spreadsheet and our sales doubled and then doubled again. And I mean, doubled like, you know, 500 to a thousand, a thousand to 2000, it wasn't crazy number, but that was enough for me to think, Oh, the rules are kind of the key here, the spreadsheets kind of second fiddle.

And then I met a guy named Taylor, who's now my business partner. And he said, Hey, I can improve the spreadsheet. I'm a developer. And I said, no, how about just real software? You know? And he said, I can do that too. So we launched the first like windows only, like paste in your license key type software back in the day.

We launched that had never met each other in person and launched that at the end of '06, by that time I was a CPA and doing my CPA thing for about 10 months before I realized I do not like doing this. And I really liked this little side gig, the side hustle, you know, and I was making more from my side hustle than I was from my CPA job.

So it still took me a little bit of time to get up the guts and realize that I could support a family on my own business. Only years later, do you realize that there's no super secure way to make money. Like there's always risk of things, but yeah, that was kind of the Genesis.

And we've just iterated on that little old spreadsheet since then. So now that, you know, the spreadsheet died, gosh, 15 years ago, but, uh, the software just keeps getting better and better. And I think we keep getting better and better at teaching people how to think differently about their money.

So it's, yeah, it's been a fun business to run. It's been fun to see people make changes. You know, that like, they'll write and be like, Oh, our marriage is better. Or I took this, I took a job that had a pay cut, but the job is way better.

And it's like stuff like that, where you're like, man. And then they're like, my family life is better. You're like, how do you put a price tag on that type of win for somebody? You know? So it's, it's a fun business to, to be involved in. Yeah. Do any of those stories include cool ways people have managed to uplevel their finances outside of just, you know, budgeting hacks they've learned or shared or things they've done?

I'll give one. I mean, this might be obvious and this is maybe too close to budgeting to be appreciated by your audience perhaps. But the biggest hack of all is when you realize that some of your money has been doing things you don't actually value, like that, that, and it's like the, it's like a, it's a high level optimization you're doing there.

And so the budget at the end of the day is a tool to let you know that your money is, is going toward the things you value. We spent all this time, like hacking our careers, you know, like making sure that we're making the most, that we love our job.

We've gone to school and then we're like day to day, we're getting up early. We're like grinding, we're adding value. We, we put all of this energy into the time to money creation, right? Where we're converting our time into money. As soon as the money is in our hands, for some reason, so many people don't just extend that effort a little bit further and say, okay, now that it's money, how do I optimize it to be in line with what I truly care about?

They stopped. They've optimized their career like crazy. They're killing it. They're high performing, but then it's become money. And they're like, oh, I'm not a money person or whatever that, I hate that. You know, we, I want people to just extend a little bit of effort a little further along, like take a surgeon, for example, someone who's just like high performer, you know, saving people's lives every day.

And then there's like, oh, I'm not good with money. I'm like, come on, man, you replace someone's heart. Like you're good. You're good at anything you decide to attack with that brain of yours. So like, you're good with money. You're good with whatever, just, you just got to learn how to make sure that it's doing what you really care about.

That's the biggest hack of all. Of course, in our forums, in our Reddit, like we have an awesome subreddit. Our Facebook fans group is, they're the ones where you can go and then be like, hey, everyone, you know, I got this health insurance bill, totally caught me off guard and people will be like, oh, I can tell you a story.

Here's what you can do. So our community is full of them. But for me, I, I just focus on that big one. Money, priorities, perfectly in alignment, magic. That's great. Sometimes the smallest changes make the biggest impact and Trade Coffee is a great addition to your new year routine.

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And outside of budgeting in your own life, are there things you're doing with savings investing that, you know, what does that world look like for you? So one that I found that's kind of like a nerdy, I like just heard about recently. I mean, you're, you're familiar with like the Roth, like the mega backdoor Roth type stuff that people will be able to get tax-free growth.

I'm in a tax bracket where the Roth isn't available to me anymore. And we did this deal with our 401k when we switched providers and they have a, they have a setup where you can contribute after-tax money to your 401k and immediately convert it to a Roth. And so there's no gain on that after-tax money.

There's no growth gain that you would then have to actually pay taxes on because they've converted immediately. So we went from being able to save, what is it? 19.5 or something. Um, I can put away like pre-tax. I can go all the way up to, I think 50 grand that difference, uh, for after-tax and then convert it to a Roth.

So I can get in to a Roth, even though I am technically allowed, but I'm, but I'm not easily allowed. And, uh, so that was one that like just this year, I discovered a lot of, a lot of our employees at YNAB jumped on that, um, trying to, you know, maximize that savings that they can get.

So you get this tax-free growth. Then later on down the road, we're talking years later. I now have this tax-free money that I can use and strategically time with deductions and other things. It gives you room to maneuver and make your income go up or down as needed, you know, to optimize your tax bill.

So that was one that, yeah, there's two, two, two things I'll tack on that. So yeah, look, if your employer offers it, there's something called the mega backdoor Roth. If your employer doesn't, and you're not eligible for Roth, you could still do a backdoor Roth. And, you know, I would say Google around.

There's a lot of things to be careful of. If you already have a lot of traditional IRA assets, it can be a real tax problem. But if you don't have an IRA at all, and you're not eligible to contribute to your Roth, you can contribute after-tax money to just a traditional Roth and roll it over.

Or if your employer allows, and the question to ask is, do you allow me to make after-tax contributions to my IRA and do, I think it's called an in-plan rollover, but if you just Google mega backdoor Roth, there's so much stuff out there, it's really cool and lets you really boost your retirement savings.

The other thing, if you build up a really big Roth IRA balance, if you're already set for retirement or you're already saving enough to be on track and you have enough and you want to take a little bit of risk, something that people don't often realize is, you know, we say, look, if you want to take risk in your investment portfolio, let's keep that to like 10% or less, and you could go pick stocks or you could invest in crypto and that kind of stuff.

Well, it turns out that a lot of those risky things, uh, you know, are high risk, high return, and most people do them in their taxable account, but if you search around online, there's a handful of companies that let you do self-directed IRA investing, which means you can start to do some of those risky things in your IRA, which I will give this huge caveat.

They're like, this is only if you're on track for retirement, otherwise, like you should not be risking your retirement money. Uh, but if you're on track for retirement, you can actually self-direct your IRA and use that to invest in stocks or invest in cryptocurrency or invest in things that are higher risk, higher return.

And if you Google around, there's a handful of people that have been doing this who have tens of millions of dollars in their IRA, which based on contribution limits seems impossible, but because they were using their IRA to make the more risky bets. So I'd say if you've already decided, I can take some risky bets with this amount of money and, and you're diligent about saving for your future, you could use your IRA to lower your tax bill.

If those risky bets pay off. Yeah. There's another one kind of speaking to the people that maybe haven't maxed out their kind of plain vanilla retirement. Like I should, I should tell everyone just out of the gate, I'm allocated like a 90 year old grandma. Like I am, I'm in bonds up to my ears because my business is such a risky venture, right?

Like all of my, my work and net worth is tied up in this business essentially. So everything else is very, very safe and, and that's appropriate. But for those people that are maybe not caught up on retirement or they're feeling like they can't find the money. I introduced years ago on my podcast, the idea of what I call the 1% rule.

And then something about the 1% in politics started coming out, like that, that started to become a phrase. And so I was like, Oh man, I just got to name it something else. But regardless of that, the idea is that every quarter you increase your retirement contribution by 1% and the next quarter you do it again.

And the next quarter you do it again. And we're exercising the pay yourself first muscle, just no matter where you're at, whether you're saving 10% now or zero, just do 1%. I've had several people run that for now four years and they've just kept doing it. And after a while, if you do that math really quickly, you know, five years in you're saving 20% of your income.

And I would encourage people to just bump it a percent and see if you don't make due, you know, see if it doesn't just work itself out, it, it will. So that that's one little hack. That's like out of sight, out of mind. Every quarter you could even tell your employer, if you have a cool, like a cool payroll office, they could potentially do this for you where you just say, Hey, I would like it to be raised 1% and then next quarter 1%.

I will not come back and ask you. I just want you to do this for me. Here's my signed piece of paper or whatever that says you can. And then, um, set it on pure autopilot because it's interesting when we don't know what has happened and when we aren't in our way, we can make really good decisions.

And so it's a step beyond just being automatically defaulted into a 401k. And we're automatically increasing that rate and just see if you don't die. You know, I think it'll work out. I love that. Yeah. I mean, automation is so easy when it comes to saving nowadays. Like I think about what parents and grandparents had to do to automate their savings and write checks and move money.

And now it's never been easier to say, sweep this money before I get to think about it before I get to spend it and put that away. So, yeah. And, and I love that your kind of investment portfolio is so boring. I feel very similarly, and I keep talking to people who have been very successful and most people's investment portfolios are kind of boring because they're doing, taking a lot of risk with their work or their business, or maybe their job's really boring and they take a little bit more risk, uh, with investing, but I think too often there's the hype of, you know, getting in on the next meme stock and all of that.

And everyone assumes that that's how everyone's making money. And I'm like, no, I just have some diverse passive, uh, index funds and I'm just, you know, spending my free time thinking about things that could level myself up like you did starting this business. Yeah. I mean, I do a little bit of risky for fun entertainment type.

Uh, I wouldn't even call it investing. It's like, I'm not going to call it gambling, but it's somewhere in the, between those two. Yeah. And that's purely for fun and to chat about with my buddies, you know, but yeah, everything else, it's the, uh, 90 year old grandmother that goes to a bridge game.

That's my asset allocation. That's awesome. Any other hacks, tips, things you've learned in the space worth sharing? Oh man, I live a pretty regimented life in the sense that I wake up to an alarm clock and I get going first thing. And I exercise first. I feel like that's a hack for me that helps tons.

I eat the same thing for breakfast six out of seven days because you know, you just start to kind of find that you don't want to keep recreating the will. I wear the same hat all the time. You know, the, uh, it's, it's interesting because if you were to probably, if I were to like follow myself around for a day, I'd be like, Oh wait, that is interesting.

I've given up a few, you know, over the years I used to have everyone turn off lights and be like the lights are, you know, like kids turn off your lights. Cause I grew up dealing with 60 watt bulbs. Like it did make a difference, but now, you know, you've got two watt bulbs and I'm like, I don't know if I should keep harping on the lights thing, you know, I think, and now you start installing switches to turn off lights when you leave rooms anyway.

So there are things that I've ended up just not caring about as I've gotten a little older, things have changed. But, um, I like my family hacks. I, if I were to end on one, it'd be the dinner one. Try and make dinner happen with the kids. You know, if you don't have kids, just have dinner happen with your significant other.

Like it's, it's just a quieter time, you know, don't watch TV during dinner. Obviously don't pull your phones out during dinner. Obviously just eat slowly and chew your food 35 times or whatever that number is that people say is good. Yeah. And, uh, yeah, converse a little bit slow down.

I think that's done wonders for our family over the last 18 years. That's awesome. Yeah. We try to do that, uh, with the kid every day and then without the kid once a week. Uh, yes. The weekly date. That's a killer relationship hack. We do that as well. Yeah.

Like religious about that thing. Weekly date. Yeah. Cool. Well, where do you want people to find you online and everything you're working on? Yeah. So if you liked my voice, the you need a budget podcast, you know, YNAB is available on, on all the iTunes, Spotify, all that, um, you need a budget.com.

If you're in a hurry, YNAB.com, we got that four letter domain years ago. And so you can type that in quickly. I'm not on the social stuff, so anyone can email me. Um, there's a hat, Chris. I'm not on any social stuff. So, um, but, uh, yeah, you can email me Jesse@ynab.com and, uh, I'm happy to write back, uh, Mondays and Thursdays or when I jump back into email.

So cool. Well, thank you so much for being here. Absolutely. That was amazing. Thank you so much for listening. If you want to check out YNAB, I'm trying to get a special offer set up at all the hacks.com/ynab. So head there if you're interested and to everyone who's been writing in to share ideas, ask questions or offer to help out with the show.

Thank you so much. I love hearing from listeners and I try to write back to everyone as soon as I can. I know I'm a little overdue right now, but I'm back from traveling. So I'll be catching up soon. Finally, if you're enjoying the show and want to help out, please consider sharing your favorite episode to a friend or family member.

Thank you so much. See you next week. I want to tell you about another podcast. I love that goes deep on all things money. That means everything from money hacks to wealth building to early retirement. It's called the personal finance podcast, and it's much more about building generational wealth and spending your money on the things you value than it is about clipping coupons to save a dollar.

It's hosted by my good friend, Andrew, who truly believes that everyone in this world can build wealth and his passion and excitement are what make this show so entertaining. I know because I was a guest on the show in December, 2022, but recently I listened to an episode where Andrew shared 16 money stats that will blow your mind.

And it was so crazy to learn things like 35% of millennials are not participating in their employer's retirement plan. And that's just one of the many fascinating stats he shared. The personal finance podcast has something for everyone. It's filled with so many tips and tactics and hacks to help you get better with your money and grow your wealth.

So I highly recommend you check it out. Just search for the personal finance podcast on Apple podcasts, Spotify, or wherever you listen to podcasts and enjoy.