The Hartford Small Business Insurance knows that running a small business is a big-time commitment. So this holiday season, they're celebrating hard-working small business owners with a chance to go to I Heart Radio Jingle Ball in Miami on December 16th. Nominate yourself or another small business owner for a chance to win a trip for two.

Includes airfare, two-night hotel, tickets to the show, plus $1,000 in spending cash. For official rules and entry information, visit IHeartRadio.com/SmallBusiness. Today on Radical Personal Finance, we're going to launch a sponsor. And we're going to launch that sponsor with an interview. I'm thrilled to introduce you to a new sponsor of Radical Personal Finance.

It is the number one most requested sponsor and most requested, excuse me, most used piece of software by you, the audience. The software is called You Need a Budget, YNAB for short. And the sponsor is You Need a Budget, YNAB. But today I interview Jesse Mecham, the founder and CEO of YNAB.

And I'm going to share with you why I believe this is something that you should be using. I don't like to use that word "should" much. I don't like the "should" on people. But I do believe that. So sit back, listen, and see if I can make a case as to why you should be using YNAB.

Welcome to the Radical Personal Finance podcast. My name is Joshua Sheets and I'm your host. Thank you so much for being with me today. And thank you for giving us a shot. I'm in the process of launching a bunch of new sponsors on Radical Personal Finance. And today, I promise, this is the number one most suggested by the audience.

Number one audience pick. And that's why I'm excited to introduce you to it. I'm going to kick us off with an interview with Jesse Mecham. Jesse is the founder and CEO of YNAB. And in that interview, you're going to hear me share a little bit about my story with YNAB.

I'm not a long-time user, but I am an extremely impressed short-time user. And I've now switched all of my own personal financial management over to using YNAB. And that was at the audience's suggestion. You'll hear that story in a moment. So we're going to start with an interview here so you can get a little bit of an idea about the YNAB story.

Get a little bit of an idea about who Jesse is and about my thoughts on it. And then I'll come back at the end and wrap up and give you some instructions for trying it out. And I wish you would. Jesse, welcome to Radical Personal Finance. I appreciate you being with me today.

Oh, yeah, I'm excited. Thanks for having me. By the way, I want to publicly acknowledge you on two things. Uh-oh. Number one, everybody that we have a mutual connection through who mentions your name has nothing but glowing things to say about you. And I think it's nice. I want to tell you that while you're alive.

I don't believe in saying nice things about people when they're dead. I think people should hear about it when they're alive, when they can actually appreciate it. And number two, my audience, even though I think this will be the first time that I've publicly talked about You Need to Budget on the show, my audience is obsessed with your product.

I put out a call on Radical Personal Finance saying that I had come to a point where I was willing to accept sponsors. And I received, I think, almost a dozen individual emails from listeners saying, "You need to get YNAB. I love YNAB. Joshua, you should talk with YNAB." So you've created the most popular Radical Personal Finance product by a large margin.

Congratulations. Well, yeah, thanks. I love hearing that people are obsessed. I think that's healthy. We'll assume it is. I'm going to get into your story, but I want you to have an idea of where I'm coming from and say it here. I'll just tell you my personal story with YNAB.

I first came across it when I was an avid reader of the personal finance blog space back in about 2005, 2006. Oh, wow. I was an early user of the spreadsheet version. And I downloaded the spreadsheets and I think I used them for a little while, but they were more complicated than what I needed.

At that time, I was single and all I needed was a simple one-page, six categories down with a pen to handle my own personal budget. And everything was very simple. I went on over the years and I worked for years as a financial advisor. And because my first exposure to YNAB was the spreadsheet, I never returned to it because I was like, it's a spreadsheet, but it's overly complicated.

And over the years, I was a consistent fan of envelopes. And I loved the concept of envelopes, of proactively allocating the money that's in your checking account. And I always recommended that to people, but I never personally wanted to pay the money because they have an expensive monthly subscription.

And I managed everything with just a simple Excel spreadsheet. I worked six years as a financial advisor and I just handled all my books with my own custom spreadsheet that I had designed and built myself. Right. When I got all that feedback from the audience for YNAB, I said, OK, let me go check this out again, downloaded the new version and was blown away at how different it was than the spreadsheet.

And you've created, I've been using it for the last month and a half and I switched all of my accounts over to it. I dumped my spreadsheets and you have created something that's truly incredible. So how's that for an introduction to an interview? That is nice. I don't have much to do with the creation.

There's a whole team now behind it. So they get all the credit. But I am proud of where it started and more importantly, where it is now. I'm pretty proud of it. But the key thing that you solved, and with this I'll get to your story, is you solve the problem that so many of us have of having a bunch of money in our checking account and trying to figure out how do we track our transactions and allocate where this money is going to, recognizing that we can easily switch and change if we need to.

That's my problem with many of the budgeting systems that exist is they're too hard to change. And so you don't use them because they're hard to change. But your product is different. Yeah, absolutely. Tell us the YNAB story. Where did you need a budget come from? It was it was born out of necessity.

And I married pretty young. I was actually quite young. I was 20. Let's see, just I just turned 22 a few months before I got married. So my wife and I were both in school. And we were just we were poor. And that was all it was fine because we were in love.

And so none of that mattered. But I recognized pretty early on that we'd have to be very careful with our money. And I was in this situation where we were sharing finances. And so that added another layer of complexity. So I just started thinking maybe I should use a spreadsheet to get going with it.

So the original YNAB wasn't named anything. We just called it the budget. It was our own spreadsheet. And it worked well for us, despite having fairly meager circumstances. So one thing led to another. And I thought maybe we could sell the spreadsheet. We were using it about a year, year and a half, and it was working well for us.

So I thought I'd give it a shot to see if other people could, you know, could get mileage out of it as well. So that was that was the original start. The whole goal, the grand goal of an entrepreneur, in my instance, was to pay rent. So it wasn't it wasn't very audacious, but it was a big enough goal for me that it got me moving.

So you just you had programmed the spreadsheet that I remember was just a programmed, I guess, just a bunch of formulas and macros and a few different sheets. And you would just basically put this thing together, cobbled it together and then started selling it. Yeah, I mean, I, you know, I'd refined it over the time.

But at the end of the day, it was it was a spreadsheet. If if you're familiar with them, you might appreciate the work that goes into them. But if you're not familiar with them, they're intimidating. Right. So about a year and a half after starting to sell the spreadsheet, just little little bits here and there, nothing big.

A guy contacted me named Taylor, and he told me he could help me improve the spreadsheet. And I said, well, really, I'd like to build software to replace it because it has so many limitations. And and he said, well, I build software. And so he and I got to talking and about nine months later, we released the the version of the software that that replaced the spreadsheet completely.

So while we have about a 10 year, 11 year existence, the spreadsheet really was only with us about two years. But it's kind of our heritage. So we so I talk about it fondly. Are you the number one budgeting software in the marketplace? Um, if you don't consider mint budgeting software or you don't consider quicken budgeting software, I think we may be.

It's hard to measure those things. But we seem to be the very, very tiny third player in the area. You know, you've got the big guys owned by Intuit. And then there are just a lot of other great independent software vendors out there. You know, envelopes you mentioned. I mean, I could list a ton of them, but there there's a there's a lot of small guys.

And we're probably the biggest of the small guys would be my guess. So how I would summarize, you need a budget would just be a very simple way to allocate your money from one or two accounts to the spending categories and then keeping an easy track on kind of where it's going.

And what I think is brilliant about the software now that I've been using it every day for the last month and a half is it is simple. And what often happens, at least what I always experienced with financial planning clients is I would I'm a lover of the complex.

Oh, yeah. So I get excited about looking at quicken and QuickBooks and setting up. You know, at one point I had gone through and I had switched over. My my spreadsheet wasn't wasn't quite working so well. So I'd switched everything over to new cash. Do you set up a double entry accounting system for my personal finances?

I enjoyed that. But most people don't know. Do you tell me about some of the just you have an amazing number of testimonials. Share with me your favorite story of financial transformation that you've heard over the years from your clients. Oh, man, that is that is tough. There's I can't give you a specific story.

I have to look it up. But I could the general story that we see, kind of the recurring theme is people that are stressed. And believe they're incompetent when it comes to money, and they just a bit at a time turn that corner, the stress starts to go away and they realize that the complex was was not complex and that the stress that they were really feeling, real stress that really affects you goes away.

We still have stress because we're alive, but we can get we can whittle a lot of that unnecessary, unnecessary stress away. And that's what we see over and over again as people just come into a sand. I was stressed. Now I'm not. And nothing's changed except they've just gotten gotten their their hands on their money and they've kind of come to grips with it and they're making good decisions.

I've seen that personally with coaching people who are in financial emergencies. I really recently released a show on how to budget when you're in the middle of an emergency behind on your bills, not enough money. And when I've worked with people in that situation, the thing that I've found remarkable is if you just write the numbers down and look at them and then you realize, well, I can't pay that bill.

I better just tear it up and toss it away and I'll deal with it. Maybe next month I'll make it a time to think about it. It releases that emotional tension of saying, I've got to think about it constantly. I've got to face the stress of this continuous. Nope.

Next week I'll think about that and I'll see if I have enough money to pay it. But for now I don't. So I've made a decision on it. Yeah, we often when we're teaching people, and I really think we're more of an education company that happens to sell software.

But when when we're teaching people, we'll just ask them, what do you have in your checking account? What would you like that money to do before you're paid again? And that is the simplest of questions, but it helps people do just what you're saying, where they can immediately begin to prioritize.

They have a finite amount of money and they just go with their priorities top to bottom. And when they run out of money, that's the end of the exercise, whether it's a thousand dollars, ten thousand or two hundred. And they feel peace even though their situation hasn't changed. They've just come to grips with it.

What's the common what are the common themes that you get when you get resistance from someone who says, I don't budget? What are the common themes of resistance that people give to the budgeting process? One is they well, they're all scary and they all drive me crazy. Right. So one that's common is they'll say, I already know how much I spend.

And they don't unless they're actively looking at it and tracking it. Nobody knows how much they spend and they all think they they spend less than they do. Number two is even worse, where they say, I don't spend anything anyway. And it's surprising how often people will say that, like, oh, I don't really spend.

I just buy the necessities and I just think, oh, how interesting that is. And then finally, a third one that's that really get me is people will say, I don't have enough money. I already know, you know, I don't have enough. So what what good does budgeting do me anyway?

Those themes, I think we don't labor on them. They in my mind, the key comes down to clarity and experience. What I learned is I worked as a financial advisor. It was nobody knows how much they spend. And my experience is usually I would take the estimate that somebody would give me of their monthly expenditure and increase it by about 30 percent.

And that would usually be in the range of where it was right. I learned to actually instead of taking the numbers that people would give me of their their so-called budget numbers, I would just take their gross income and run the tax calculations. And based upon what I knew they were putting in their 401k and what I knew they were paying on taxes, I could run the tax calculations.

I could figure out that unless they had one hundred thousand dollars in a savings account, I knew exactly how much they were spending. Do you think that software is the right place for people to start with budgeting or should they start more simply? You know, if they're really if they're pretty intimidated, then, well, I should say software is getting better and better.

Design is getting better at making things more approachable. So 20 years ago, software was pretty intimidating, but I think it's getting better. That being said, if someone is still intimidated, like my mother in law, for instance, computers still kind of figure out. I would just say write it down.

Don't don't worry about categorizing. Don't worry about balancing anything. Just grab a little notebook and when you spend money, write it down in the notebook. And magic happens even with that small exercise. Do rich people continue to budget after they've become rich? I think so. I think their budget becomes a lot easier to follow.

I mean, I'm not rich by any stretch, but I certainly know that it's easier for us to budget now than it was 10 years ago. So the budget just changes. I mean, my ideal for me personally, I would love to have like you'd mentioned when you were single. A budget of six categories.

Right. Just super simple. You have so much squish in there that you don't really have to sweat, you know, sweat the dollars. That seems great. But the the important distinction, whether you're rich, middle class, poor, the important distinction is, you know, what your goals are, what your meaningful priorities are and your money is aligned with those goals.

I think rich people just maybe have an easier time moving around and navigating and not needing to deal with the tedium, perhaps. Of course, on the flip side, I have had a friend that sold a business and came into a lot of money and he said his stress levels went through the roof.

So take that for what it's worth. You know, how do you and your family actually run a budgeting process at this stage in your career? So I do all of the tedious stuff. My wife has no interest in it. We have five kids and we're busy. My wife's super busy with the kids and the house is just mayhem sometimes.

So I will budget or I'll I'll balance everything out and make sure that all the transactions are captured. I'll import transactions from our bank and catch it all up. My wife will import or enter spending on her phone. So she keeps up on that. And then once I know that all the transactions are there, I'll sit down.

We'll just do this once a month and I will have already pre filled half the budget because it never changes anyway. And then I'll come to you and I say, hey, we're ready to budget and we'll sit down for and actually recorded our last budget meeting because I wanted to put on our podcast.

It's the most boring 10 minutes you've ever heard. But it's it's just it's so it's just so simple. And it's just kind of like, what about this? What about clothing? What about vacation? What do we want to do? Want to put some aside for that? It's it's pretty straightforward.

The key being that that that frequent budget meeting means that there are never big throw downs because you're frequently talking about the stuff that could end up exploding. You know, if you weren't regularly communicating. But the actual meeting itself is pretty boring and pretty quick. We just plug the numbers in and and carry on.

Do you advocate, you know, the different philosophies about budgeting, you advocate the monthly model where you sit down once a month and think about the month ahead, you don't advocate a longer term than that or a shorter term than that. I like. It depends, but I like monthly because that seems to be a good cadence for people anyway.

If there if things are tighter, if they're just learning, they're just starting. I like to be even more frequent than that. Basically, whenever you have a large chunk of money that hasn't been budgeted, you should sit down and budget. So for some people at first, that's their paycheck that they might get every two weeks for for a lot of wine abbers that now live on last month's income where they're spending money that's essentially 30 days old.

They'll do it monthly because it just kind of streamlines your process. But once a year, I like for people to have a moment where they can take all of their spending and look at it. Just kind of everything's on the table and everything's under the microscope. And you can ask yourself all sorts of crazy questions like, should we move?

Should we sell a car? What if we sold both cars? What if we did this? I mean, just really making sure that you're questioning even your most basic assumptions about your money. Doing that just once a year kind of jars things loose a little bit and you find where money has started to kind of do its own thing and not quite line up with your priorities.

And it's a pretty fun exercise. So I like that annually guessing what you'll spend for an entire year. On average, you're right, but in the monthly ups and downs is where all the decisions are made. And that's where that annual budget usually is wrong. So we like to get people into about a monthly cadence.

That was kind of a long answer, but there you go. I don't think it's a you've got classes and sites and all kinds of things on the basis of basics of budgeting. And I'm going to go through and talk through more of the philosophy. So I don't want to spend the limited time that we have talking about the details of the process.

You've got you've got a huge organization. But I would like to focus on is a little bit of your entrepreneurial story. OK. You didn't set out to make this a business, but what was the transformation process to where it grew from a spreadsheet to the point where you have?

I don't know how many employees working with you now. I think we maybe have 32. I think it's it's 31 more than I'm comfortable with. But so what was the like? When did you recognize that this could be bigger than just a spreadsheet? I was I became a CPA.

I got my master's degree in accounting and got my CPA and went to work for a large accounting firm down in Dallas, Texas. And during that time, I had YNAB just kind of going on the side as this little thing. It was. It was making more money on the side just as as that initial software than I had ever had, you know, that I was earning with my.

My paycheck. So and I was working like 80 hours a week for this accounting firm, just killing myself. And then with YNAB, I was working between four and five thirty a.m. on it. And then that was all I mean, I didn't have time for anything else. It was just totally in maintenance.

And I talked with a man that was fairly entrepreneurial and kind of a mentor. And I just told him, I said, hey, I've got this side thing and I'm making more money from it than I am from my job. But I'm spending like four hours a week on it.

And he just told me I was crazy and that I should get started on the side. So I had a lot of unlearning to do about risk, what I thought was risky, about building a career by climbing a predefined ladder. A lot of that stuff I just had kind of picked up and thought was the appropriate, safe, conservative thing to do.

And so it took a lot of of unwinding of that before I really could get comfortable with the idea that I could basically employ myself. I'm at a stage in my career with radical personal finance where it's a one man show and I've had employees in previous businesses in my financial planning practice, but I never was able to get those businesses running to the point where they were actual businesses.

They were always high paying jobs and long hour jobs. What have you learned? Share with me some of the lessons that you've learned in your personal development journey. How have you learned to go from a solopreneur, one man shop to a 30 something employee company? I mean, it's always it's just one employee at a time.

Right. So that that makes it easier. Because usually you'll have a pretty good amount of clarity around what the next person is going to do. I really have enjoyed more recently thinking about things structurally before I think about the details. And that's helped me. That's helped me get my head around decisions of scale.

So and it sounds real, this sounds really boring, but I'm about to say, but if I were a one man show and I was thinking about hiring my second employee, I would write a story about the second employee as far as their day. And that story turns into essentially kind of a brain dump on what you would need that person to do.

That turns into a process and it just lets you kind of think through that first hire or that next hire and get your arms around exactly what the person would be doing, where they would be adding value and what they would be accountable for, responsible for, what they'd be managing.

So it's a way to kind of bring clarity to your thinking instead of having it just be, oh, my gosh, I'm slammed or I'm working so many hours, I've got to get help to be able to back off and kind of write a story about that next hire. Helps you think without the emotion.

And then I feel like you can make pretty, pretty good hiring decisions. Has your personal finance philosophy changed over the last decade? Yeah, I've become a little less. Let's see, I've become a little less extreme. I used to be fairly extreme and. Oops, I used to be fairly extreme in the sense that I.

Said, you know, all that is bad, I really was kind of of the mind and only accidentally, but of the spending itself was kind of bad, you know, less spending is better inherently. And I've learned that that's not really it really, it's about the individual, the individual's dreams, ideas, loves, passions and making sure their money just lines up.

And then who am I to question whether you love collecting strange glass figurines and I love whittling things with really expensive tools, you know, like we both just love these things and we can appreciate our love for these weird things that the other person doesn't understand at all. And we can spend enormous amounts of money on those things.

And it's totally OK because our money is doing what we want. The part where I'm very fiercely or fairly vocal is where people have money doing things that they don't even care about. That still makes me quite sad. How do you teach them to learn about that and to identify that?

It's just it's basically our first rule. You know, we we we say give every dollar a job and we actually tell them to back off before they even start allocating dollars and kind of just have this introspective moment where we ask them, like what they care about, what they want, like what are some goals they have?

The same approach, if you're trying to get a reluctant spouse or partner on board, is you you come at him from the side a little bit and you just talk about something really positive, like a vacation. And all you do is frame the budget around vacation, saving for this vacation or whatever it is that that spouse can can get excited about.

And then slowly you can have the person learn that, like, oh, my goals can actually be realized just by deciding what they are and then being a little more conscious about what my money is doing to help me get there. What appeals to me about the budgeting process, I think of it almost like have you read years ago David Allen's book Getting Things Done?

I love that book. Love it. In the book, he uses the metaphor of the airplane. He talks about being on the runway and he takes you through different stages of perspective of life from the runway through fifty thousand feet. And in the section of the book, he defends the practice of teaching people how to be very good at dealing with the moment to moment tasks, because if you're competent there over time, you can roll up to the fifty thousand foot view.

But he doesn't necessarily say that the fifty thousand foot view isn't valuable. You know, if you have a clear vision of what things look like fifty thousand feet, that might have some impact on the day to day. I think of that metaphor applying to budgeting and finance a lot of what I spend a lot of time talking about on radical personal finance and also almost the work of a financial planner is the big picture, the fifty thousand foot view, the long range goals, retirement, you know, big fancy house, financial independence, whatever it is.

Those goals, if you don't have an ability to deal to get the plane off the runway, they might be inspiring, but you're never going to get there. Right. So you've got to go ahead and build the system in over time. But if you have a vision of where you're going, then you have motivation to get off the runway on the flip side.

You can also work from the bottom up. And just by just teaching somebody over time. OK, here's how you systematically budget each dollar or systematically execute these tasks. If you get a good system going there, then you can step back and you can say, wow, I've got a little bit more time available in my day because I've become excellent at executing important tasks.

Now, what else do I have capacity for or I become excellent at managing these dollars? Now, what else should I allocate them to? Do you see them working together in that way? We do. We have a phrase for we call it thinking long, but acting now. And it's just exactly what you say.

You have a long term goal, but it's the it's the small decisions that add up over time that get you there. And you want to have that long term goal as motivation. It gives you focus. But you also need to recognize that the small decisions, the day to day items need to be lined up and pointed toward that goal.

Not perfectly. There's all sorts of variation as life happens. But in general, those small decisions do make the difference. And you don't want someone that obsesses over the small and never thinks big. And you don't want someone that just thinks big. And they're always thinking about 10 years from now and their decision making in the moment won't ever get them there.

So there's you got to have the context of the big and be able to operate with a reliable process with the with the day to day decisions. For years, I was working with a variable income where I didn't know what my income would be from month to month. I always have found that to be an incredible challenge with regard to budgeting.

And because of that, for a long time, I just simply quit budgeting proactively for the month going forward. And I just simply carefully tracked for the month going past. And that was close enough to where I was close enough to allow me to keep track of things. What advice do you have for people who face variable the variable income situation?

It is it is not easy. I mean, it is definitely tougher than being on salary. It's still totally doable. I I was on variable income for most. Well, I still kind of am. But for most of my my life, I've been on a variable income. The fourth rule we tell people is to age their money.

And what we want people to do is basically spend money that's about 30 days old. So for people with variable incomes, like a realtor, for instance, they'll have big months and then they'll have totally dry months. And the first thing we do, if they can if they can get to a point where they're spending money that's about 30 days old, then they aren't having to wait for the commission to land or wait for that house to close in order to start thinking about what they can do with their money because they're using money that's 30 days old.

So that gets them away from the edge and gives them a little bit of of breathing room. Second, when you're when you're giving those dollars jobs with that first rule and you start to. Know what your priorities are, you're basically in the lean months, you're not able to to budget to those priorities as far as you'd like, but in those flush months, you can budget ahead even further.

So if I let's say I had a twenty thousand dollar month as a realtor, my average is maybe eight. I could take some of that twenty thousand and I could say, well, hey, I'm going to fund some of my my mortgage for the next couple of months or I'm going to fund groceries.

And it's it's really on you to recognize the drought that may come and put money in those categories kind of as a preemptive strike. And those two things kind of budgeting when you're flush and then budgeting with money that's about 30 days old. So you're not just so stressed about exactly when money is going to drop.

Those two things tend to get people on the variable income train to kind of get them to be able to have things normalize quite a bit. That's actually one of my favorite features of YNAB, the dashboard view that illustrates out multiple months in the future in a really, really easy to capture way.

Because it allows me to see, for example, even the current financial situation that I'm in building a business that has very volatile income. It allows me to look forward and say instead of saying, OK, here's how much money is in my checking account. It allows me to look forward and say, here's how many months of money is in my checking account right now.

Exactly. And that is that's a game changer. It is. Yeah. There's no there is no comfort in a checking account balance just by itself, whether it's small or large. People stress out because they really don't know what the money is supposed to do until they tell they give it all jobs.

I understand as I was doing my due diligence on your company, I understand that you manage your business accounts also with YNAB. Yeah, that's correct. Yeah, absolutely. How and why? How is just the same as I do personally. So it's there are a lot more transactions. So it takes me I do it once a month and it takes me about three and a half hours to to do it all because it's it's takes forever.

I'm always trying to figure out how I can make it faster. But there are a lot of transactions. So that happens. The why is because I was completely stressed out as a business owner. I think it was back in 2011, maybe 10. And I just you know, people would come to me and say, we need to hire somebody.

Or what about this marketing initiative? Can we do that? And I would look at this big pile of money in the checking account because I was I was risk averse. Right. So I wouldn't just spend the money. And so we have this money here. But I was still stressed because every time we needed to spend it, it was kind of like, OK, look at the pile of money.

Do we have enough? I don't really know. And it's the same thing personally. So what I did with the business was basically I just gave every one of those dollars a job. I started building up a reserve. So our money is, you know, the money we spend is old.

Trying to follow all those rules. We look ahead to bigger expenses that are coming up. Like we do an annual company meetup. That's it's expensive, obviously, for all those people to fly in and everything. But we just save for it. And so now when someone asks me if we can buy this or that or if we can hire so and so, I can look at that.

Instead of looking at that big pile of money, I get to look at all of our line items and just see if there's enough for that specific question. And my stress just completely melted away. It also helped me grow more aggressively because I could finally make good decisions. I was I was actually slowing us down by being so afraid to spend, even though we had the money there.

How do you do you integrate that additionally with a bookkeeper to create tax records or use the reports out of YNAB? I do. I give my I don't have a bookkeeper. I mean, I guess I'm the bookkeeper, but I don't I don't do my own taxes. That would be a disaster.

So I export the income versus expense report out of YNAB and I give that to my tax accountant. And I also give give him an export of all transactions for the year. So if he has any questions, he has the data and can look at it. And between those two reports, he he manages just fine to to get the taxes done.

Are any of your employees local to you or is your entire team dispersed? My assistant is local and our CEO, we all work out of a small office. Do you sometimes wonder if that's the right decision or do you feel good about that? Sometimes I feel good and sometimes I really wish everyone were in one big office.

It's if you decide to do remote, which has a lot of advantages, you need to be extremely good at communication. And we've started doing all sorts of things to shore up communication gaps, cycle time between emails. You know, you send someone an email that's in a different time zone.

They wait a little while to respond. And suddenly a simple yell down the hall at the office took 48 hours. So we've had to stress to people to use synchronous forms of communication and hop on a video chat instead of shooting off an email. Just little things like that to help keep everyone more in sync, because it is by far the biggest challenge.

And people kind of wave their hands and say, oh, yeah, the downside of remote, you don't feel as you know, you don't feel as connected camaraderie. It's not just that stuff. It's straight up communication quality. You really have to be intentional about it if you want to do it well.

I feel like we're still learning. They're headed in the right direction, though. Final theme I'm interested in your perspective on is your own personal business goals as they relate to family. You said you have five kids. How old are your children? My oldest is 11 and the youngest is three and a half.

Do you wish you built the business before you had kids? Do you feel like you were able to manage the balance there? How do you deal with the personal side of life? I built the business. I mean, I originally started selling the spreadsheet way back in the day because our first son was on his way.

And I wanted Julie to be able to not have to work once he came. So that was a huge goal for me and Julie. So the motivation was I could build up a side income to replace Julie's income. And so, yeah, he was the impetus for the original thought to start the business.

I remember a conversation a few months after he was born where he was maybe only three months old and we launched YNAB. And I was walking around the neighborhood with Julie. I don't even I think we'd left the baby with my mother in law because I'm pretty sure we were just alone.

And she kind of called me out and she said, hey, you're spending a lot of time on the computer working on this new business. And like, you've got this little baby. And for her, it was maybe a little bit of a red flag, like, gosh, here's this guy that you've been married to not terribly long, a couple of years.

And is he a workaholic? You know, so is he going to like abandon the kids and just bury himself in work? So that she just kind of gave me an early warning to be aware of that. And she calls me out if I'm, you know, if I'm letting things go too far, I tend to go I tend to go kind of 100 miles an hour.

When I go. So she's a good balance for me in that regard. And I feel like I've I've drawn pretty good boundaries around when I work and when I don't. And that's been that's been useful. It is it is a tricky thing. You there's not a little quick hack or quick tip or anything like that.

You really got to just want to do it right. And and then you got to listen. If your spouse is giving you some feedback, you know, make sure you're humble enough to to hear it and adjust. Do you have a guess as to how many hours a week you work and what are your normal working hours?

My normal hours, I get to the office around nine and leave about five thirty. I definitely do some work before nine. I'll usually work here at the house with the kids kind of rolling out of bed, especially in the summer. So I'll be doing some stuff in the mornings then.

And then at night, you know, I never really sleep. So there's there's usually something for me to do or read. And then your mind is obviously always going on it always, you know, and so it's a lot of hours, but it's it's enjoyable most of the time. And I find it to be fairly, you know, fairly interesting.

So lots of different aspects of business that are challenging. You feel like you get your head wrapped around one thing and then a new challenge presents itself. People are challenging. Organizations are challenging. I I took an OB class in college. I thought it was so fluffy and lame and it wasn't about math and easy answers like accounting.

And now I wish I would have had ten more OB classes just learning about, you know, like culture, communication, teams, you know, inner team dynamics. All of that stuff is so interesting and and difficult. And so that's the stuff I wrestle with these days. And it keeps me entertained.

So I can't complain. Do you regret building such a large business? Some days when you're really dealing with, you know, stuff that's on fire, you're like, oh, is this the right move? But man, my favorite thing that's happened so far in the business, we all met in Costa Rica and there were about 30 of us.

And I just was looking around the room and all these people that I just thoroughly enjoy, they all do great work. And I had this moment where I thought, gosh, you know, like this is really something. And you don't get that feeling when everyone's remote. And I was I was I was happy with it.

You know, I remember feeling good about it. So for the most part, the team at large, I love and I love that we're all working toward a common goal. So it's I wouldn't change it. It's you know, you just you take it one day at a time and things end up where they are because you hopefully made good small decisions along the way.

But for the most part, I I couldn't be happier with with the team and kind of where we're at. We have so much still to do that, you know, the stress is still there and there's, you know, plans on the horizon. But I like where we've come so far.

I guess the reason I'm probing on this theme is it's a selfish reason, because it's I mean, it's evident to me just by the simple fact that you have five children, that family is important to you. Yeah. People who don't like children generally don't have five of them. We would hope that would be the case.

So but you also seem to have created something that is a really fabulous business that in many ways should be able to run itself. You have a product that's electronically delivered. It's well marketed with a wide base. I assume sales are relatively consistent. So that makes me think, well, you know, lifestyle business.

This business funds my lifestyle. I should just be able to relax and and pull back. And yet you're obviously still working hard to grow and to manage a team and to manage a culture. And some of me wonders, I have a young, you could hear my children crying. And some people might be able to hear my children crying in the background.

I got a three month old daughter and a two year old son. And so I've been working hard to kind of get my new business established before my children are older so that I can pull back on the number of hours and the time during those key childhood years between a few years old and adolescence.

But I wonder if it's even possible. And I look at you and I say, well, if Jesse Mecham and his giant business can't do that or he's choosing not to do that, then, you know, who am I to ever say think that I would just I would pull back.

Do you think the lifestyle business, you know, lifestyle design goal is a pipe dream or are you just simply making a different choice? No, I think I could do that. I think the best lifestyle for me is one where I'm learning constantly, where things are are hard and usually hard things inspire learning.

And if I'm learning, that also means the topic is interesting because I won't try and learn boring things. So if I just use the measurement of learning as as a lens through which I view my activities, then building the business bigger is a learning experiment. Now, also be trying to be a good dad is an experiment.

And you feel bad for your kids because you're like, I've never done this before. And you're all you know, I'm all you get as far as dads go. So like, you know, but you're like, well, my dad, you know, things worked out like I'm OK, I'm alive, you know, and things.

So you get a little bit of comfort there. And you also think back to like your earliest childhood memory. And and mine was maybe kindergarten or slightly earlier. And so I know like before the age of five, we're pretty safe on like making loads of mistakes as parents. So all of that, I I just know that the parenting side, the business side, it's all just learning.

The idea of lifestyle for me, if it implies disengaging from the learning, totally uninterested in that. You know, I would last like a week. That would just be a vacation because I'm tired and I need to refuel. But beyond that, like I want to keep learning and and keep doing until, you know, till I'm done.

And then I want to bring my kids along. Like I don't want to have them this this arbitrary bifurcation between kids and work. I want to have that be much more of a complete system, you know, where I can talk with my oldest about the business stuff and I can have them come to the office and they can clean the office for me and I can get them involved in the business, not so they could take it over or because I'd want to cram a career down their throat, but just so that.

I could join those two worlds a little more. I I try not to separate them too much because I feel like I don't know, it's another learning experience for the kids. So that's that's kind of a rambly answer. But if if you use just learning as the lens through which you for me, through which I kind of evaluate my activities, it's made a lot of sense just to keep trying to grow the business and and figure out new things.

What types of things have you been able to integrate the older children into at this point? Well, just mainly discussion right now, I mean, Porter's just he's just getting old enough where he asks really good questions, you know, and they know we're working on a new version of the software and and they'll ask how that's going, which I find so entertaining.

And and they just they think through, like, what is profit? You know, what does that mean? And they started a bread company that lasted one week and it was interesting just to watch Porter. He was figuring out the ingredients for a loaf of bread and they were going to sell the bread.

And I said, well, you'll need like fifty dollars worth of ingredients. And he was just distraught, thinking, well, I've got to I'm going to spend that fifty dollars. And he kept thinking fifty dollars per loaf. And then we're selling them for five. So just walking him through the math of like what, you know, spread the fifty dollars over all these loaves.

You've got your variable cost. That was fun. And it wasn't out of a book or from a worksheet at school. It was just from trying to be a little more engaging with the kids. And I'll tell you, it's so easy when they ask you questions to give them like the quick answer, you know, and as they get older, I've I mean, I'm still learning at this.

But you just if you're able to pause and think I should give them the more thorough answer, you know, there you know, their little brains just absorb it all. And it's fun to see. So I'm not doing anything formal with them as far as the business, but I am trying to not give them short answers when it comes to what I'm working on.

Are they in school? You teach them at home. How do you handle their education? We tried homeschool all last year. Way hard. Lots of respect for every single person that homeschools. We are going to have them in public school this year and see how that goes. We just kind of lost we just lost steam on the homeschool bit.

There were a lot of things we loved about it. And then there were things that we just yeah, we were like, well, we just don't feel as great about it as we did. So we aren't certain why we felt so good about doing just that year. But we did that.

It worked out well. We've had them in a private school before and that was OK. And then now they're just going to go back to the school, you know, when that starts up again and we'll see how that goes. So one thing I've learned as far as the education goes with the kids is you can change your mind.

You don't have to pick their path right away. You know, you can you can experiment and they're they're pretty, pretty. What's the word? I mean, they bounce back. They're pretty malleable. They're they handle change way easier than we do anyway. So parents sometimes think they have to pick the path right away.

And I think you can change a lot more than you think you can. You know, it seems to me that's the fundamental value of a lifestyle business like you've created. It's not that it doesn't require work. It's the fact that you can integrate that work and your life together to some degree.

And I remember, you know, watching you at FinCon last year, sitting there just banging away for a few minutes on your laptop. I didn't bother you. You were you were using your 20 minutes watching YouTube or something. No, you weren't. You had your you had your 20 minutes and you were working your way through your task list.

I can I can tell it's quite obvious to me, people who are effective and people who are not. And so I watched you work for a few minutes. And in my mind, just the ability to have an integrated life is the big benefit. The fact that you can involve your kids, you can go and help them bake bread if you need to.

They can come to the office. You can all go to Costa Rica if that's what you decide to do as a family. And yeah, yeah, that's the ultimate freedom, the ability to learn and to be challenged and to do it on things that are important to you. It is the ultimate freedom of entrepreneurship.

I couldn't agree more. It's well put. Last question. Do you see a limit on how large YNAB can grow? Oh, yeah, I'm probably the limit. You know, you probably I feel like I'm a one trick pony and I often ask myself, like, who am I holding back here? Like, how am I holding this whole company back?

But I probably the limiter there. But I have I have pretty lofty goals for us. And if we hit that and then I feel like I've run the course, then we would go from there. But I feel like we have a lot of room still to grow. I mean, it's fun when you're in the airport and you're wearing a YNAB shirt and someone comes up to you and says they use YNAB because that that used to never happen.

And now it happens sometimes, like every once in a blue moon. And so I'm always intrigued by the idea that, you know, YNAB could become a household name. And I think if we keep working what we're working and and keep the team focused, I think we can get there.

And it would be great to be able to reach that many people and just alleviate world stress, so to say. Do you offer non-English versions? We don't. But the software is simple enough that we have a lot of non-English, you know, as far as English being their first language.

We have a lot of people in Europe, a lot in Germany, quite a bit in Brazil. So, yeah, there are pretty good user bases where English isn't their first language. It just seems like the need is common around the world. And you've got a great solution. No matter the currency unit attached to money, it needs to be allocated and divvied up and spent carefully.

And as the world comes online, the upper limits are limited only by your personal development and ability to manage the change. Jesse, this has been fun. Final closing thoughts. What encouragement would you give to somebody who has either never made the practice of budgeting part of their life or who has lapsed out of the practice of budgeting to encourage them to revisit those fundamentals of their financial plan?

I would just want them to just think about what they want in life. Don't think about money. Just what do you really want? What do you really care about? And then once you have that pretty dialed down, if you're sharing finances, sharing a life with someone else, then maybe have that conversation together.

But once you've figured out what you want, then just ask yourself if your money is helping you realize those goals. And if it is, don't change a thing. If it isn't, then I encourage people to give budgeting a good hard look. Thanks for coming on the show. I appreciate it very much.

Thanks, Joshua. So as we wrap up here, a couple of comments, additional comments and a couple of instructions for how you can use the affiliate link for Radical Personal Finance to sign up for YNAB and give it a try. Budgeting is mandatory in some form or another. If you were the CEO of any sized business, you would create a budget or you would not be in business long.

CEO can't sit back and have an idea of what they're going to do. The budget, even as you heard in Jesse's story, the budget drives everything that you're going to be able to do. Now, there are different ways of budgeting. I've in the past, as you heard, I've done tracking where it's kind of just a monthly after action review that's been good enough for me at some points in the past.

And you might have a very good handle on your finances and you might just kind of sit down once a year or once every six months and take a quick look. But budgeting is a common habit of wealthy people. You study Tom Stanley's work on The Millionaire Next Door and you find that the majority of millionaires have an idea of where their money is going.

But the most effective form of budgeting, especially when you have big goals or especially when you're in a period of crisis, is to know where every dollar is going to go. But that's hard. It's really, really hard to be able to do that easily. Now, I've done it in the past with a yellow pad and a calculator, but most people who I've taught to do it that way don't stick with it.

That's a sad truth. But I believe that YNAB is the best solution that I have ever seen to help you to accomplish two things. Number one, keep an active track on your checkbook and your accounts. It's very excellent for just tracking those things, clearing checks and things like that, and to proactively know where is my money going to go.

And I would strongly, strongly, strongly encourage you to check it out. You can sign up for a 30-day free trial. The link that I would ask you to use is the link that's on the website, or if you want to navigate there directly, go to radicalpersonalfinance.com/ynab, Y-N-A-B, which is short for – it's the acronym for "You Need a Budget." YNAB, radicalpersonalfinance.com/ynab.

Sign up for a free trial. You can download the full software. You can try it out. I think it's, what, 30 days? You can try it out completely for 30 days. Go through their class. They've got a bunch of great teaching materials on that. And try it out. Just see how it works for you.

But commit yourself to doing it for 30 days. At the end of 30 days, if you don't like it, if it hasn't been useful to you, then just cancel it. It's free. You don't have to sign in. You don't have to give them a credit card number up front.

You don't have to do any of that stuff. So they're not going to bill you after 30 days. So it's super good. It's just a free trial. But after 30 days, I think you'll be really impressed, and you'll want to buy it. I did it. I bought it without any affiliate code set up or anything like that.

I believe it's a huge value. And so if you're not using it, I would strongly encourage you to consider it. So go to RadicalPersonalFinance.com/YNAB for all of the details. Thank you all so much for listening. I hope that this piece of software is really, really useful to you. In my mind, this is the exact type of sponsor that I want to bring you on the show and that I'm going to be bringing you.

It's a sponsor that serves you, the listening audience. And I really believe this will be incredibly useful to you. So I guess you can tell how I think, right? So go to RadicalPersonalFinance.com/YNAB. Give it a shot. Thank you all so much for listening to today's show. I really appreciate each and every one of you who listens.

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That really, really, really, really, really helps. So I don't emphasize this too much or too often, but if you would take a moment and pull up the show on iTunes or Stitcher, give us a rating and a review. "Hey, tell me you hate it," or "Tell me you love it." Just give us honest feedback, a sentence or two.

That affects all of the algorithms for how the show gets promoted within, for example, iTunes. Those things affect the algorithms for rankings, and it's extremely useful. So I would ask you to consider doing that. And finally, if you'd like to support the show directly financially, I am in the process of launching sponsorships.

And I'm doing that because I need additional income from the show in addition to the support of the show. But I launched those sponsors very, very slowly. And I focused first on Patreon in order to keep my interest and my allegiance direct to you, the audience. That's one of the cool things we have about independent media is I don't have to worry about the advertisers.

I can focus on serving you directly. So if you'd like to support the show directly, please consider going to radicalpersonalfinance.com/patron. Well, don't just consider it. Do it. Please do it. Don't just please consider it. Go to radicalpersonalfinance.com/patron. Sign up to support the show. You can do as little as a buck a month, although more is certainly useful.

Bunch of bribes there. You pick how much is right for you. radicalpersonalfinance.com/patron. I don't know what that was. Patron. All right, I'm out of here. Y'all have a great day. We'll be back with you tomorrow. Don't just dream about paradise. Live it with Fiji Airways. Escape the ordinary with Fiji Airways Global Beat the Rush Sale.

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