Ok, let’s get this out of the way: We’re big fans of You Need a Budget. Like, huge fans. Massive, life-changing kind of product fans. So you can imagine that we’re a bit beside ourselves this week.
See, for someone who has had struggles with money in the past, discovering a tool that has the capacity to rewire your brain around budgeting and spending is a pretty big deal™. That’s YNAB, a budgeting tool like no other. Even better, while the team had not intention to make a budgeting tool that can work for folks with ADHD brains, for a lot of us, they did just that.
Jesse Mecham is the Founder of YNAB and personal finance expert. He hosts the You Need A Budget Podcast, the Beginning Balance Podcast and is the Wall Street Journal best-selling author of the book of the same name, You Need A Budget. The Smart Money Mama herself, Chelsea Brennan, introduced us to YNAB in 2020 and the tool quickly landed at the top of our list of favorite, life-changing services, so Jesse is here not only as a budgeting guy we think you might like to meet, but because we are legit fans.
YNAB isn’t a sponsor of this show, but we encourage you to visit right away and sign up for their 34-day free trial and see how it works for you.
Episode Transcript
Brought to you by The ADHD Podcast Community on Patreon
Pete Wright:
Hello everybody and welcome to Taking Control, The ADHD Podcast on TruStory FM. I’m Pete Wright and I am here with Nikki Kinzer.
Nikki Kinzer:
Hello everyone. Welcome.
Pete Wright:
Hi, Nikki.
Nikki Kinzer:
Hi, Pete Wright, how excited are you about this show today?
Pete Wright:
Giddy. Giddy with anticipation.
Nikki Kinzer:
Yay.
Pete Wright:
I’m not often giddy with anticipation, but today I am. We started this conversation last week about budgeting for the holidays, and we’re doing a little pair of episodes around money this fine holiday season, and this week we’re talking to Jesse Mecham. Jesse is the founder, originator, first CEO of You Need a Budget, YNAB, .com which is a tool that has completely changed the metaphor that I live with, with money, and it is extraordinary. We talk about how it came to be, the methodology behind it, and I know we are going to talk a lot about YNAB as a tool, but I hope that when you’re listening to this, even if you don’t use YNAB, which you don’t have to do, that you hear the methodology behind it, listen for those rules that he talks about because I think it can change the way you relate to money too if you’re struggling with it at all, if you find that you could use a little bit of a better practice around living with your money. It’s huge. So, that’s good news.
Nikki Kinzer:
Yes, indeed. Great news.
Pete Wright:
Before we dig into our conversation with Jesse, head over to take controladhd.com. You can get to know us a little bit better. You can listen to the show right there on the website or subscribe to our mailing list, and we will send you an email each time a new episode is released. You can connect with us on Facebook, Instagram, or Pinterest at takecontroladhd. But if you really want to jump in and chat with us, head over to our Discord community. Just visit takecontroladhd.com/discord and you’ll be whisked over to the general invitation and login.
If you are looking for something a little bit more, particularly if this show has ever touched you or helped you understand your relationship with ADHD in a new way, we invite you to support the show directly through Patreon. Patreon is listener-supported podcasting. With a few dollars each month, you can help guarantee that we continue to grow the show and add new features and invest more heavily in our community. We have a bunch of different tiers, and with each tier, you get more stuff. As we record this, for example, one of the benefits is joining us for ADHD Happy Hour which happens the day we’re recording this tonight, which is where we all hang out together in our Discord channel and we talk about stuff that isn’t necessarily always painful. We just have fun and happy and catch up, and it’s really, really great. It’s one of my favorite things about this community. Learn more about that at patreon.com/theadhdpodcast, patreon.com/theadhdpodcast. Okay, Nikki, do we have news?
Nikki Kinzer:
We do, we do, we do.
Pete Wright:
Yay.
Nikki Kinzer:
Yay. Okay, so GPS, Guided Planning Sessions, the monthly membership is open. Enrollment is open. It will be open until January 2nd. There is so much to this membership that I can’t even tell you all about it right now in this podcast. You have to go visit the website because there’s so many good things about it, and I’m really proud of it, and it’s been a wonderful journey that I’ve taken with all of these current and past GPS members and I want to take this journey with you guys too. So, check out GPS on our take controladhd.com website. You’re going to see the different stages, all of the different benefits, everything that is beautiful around planning and why it can be a beautiful thing for you. It doesn’t have to be an awful thing. So, go check it out, and if you have questions, let us know. If you happen to be listening to this after January 2nd, still go to the website, still go check it out, and put yourself on the wait list so that you will know when it opens up again in a few months.
Pete Wright:
You can go straight to it at takecontroladhd.com/gps.
Nikki Kinzer:
There you go.
Pete Wright:
Just /gps, take you right there, and enrollment opened now. Okay. Shall we get Jesse? Shall we get Jesse?
Nikki Kinzer:
Let’s get Jesse.
Pete Wright:
Jesse. Jesse Mecham is founder of You Need A Budget or YNAB, an award-winning money management app and personal finance expert. Jesse hosts You need a Budget podcast, the Beginning Balance podcast, and is The Wall Street Journal best-selling author of the book of the name You need a budget. The Smart Money Mama herself, Chelsea Brennan introduced us to YNAB back in 2020, and the tool quickly landed at the top of our list of favorite life-changing services. So, Jesse is here not only as a budgeting guy we think you’d like to meet, but because we are legit fans. Jesse, welcome to The ADHD Podcast.
Jesse Mecham:
Thank you very much. I’m glad to be here. Very excited to be here.
Pete Wright:
Jesse, you started podcasting-
Nikki Kinzer:
Welcome.
Pete Wright:
… just a little bit after we did, and I should just tell you, I’ve listened to every episode. Sometimes you podcast me to sleep, but as I’ve listened to every one of your episodes, I’m just curious if you listened to every one of ours. Is this a reciprocal thing yet or…
Jesse Mecham:
I’ll get started.
Pete Wright:
Okay.
Jesse Mecham:
I’ll start right away. Yeah.
Nikki Kinzer:
Right? Great answer.
Pete Wright:
That was stunning. That was perfect. The bar has been set and now we’re ready to go. I know you’ve told this story many, many times, but for those who have never met you or heard you or listened to your podcast yet, just give us the brief, the summary of how you ended up here by way of budgeting. What a weird path.
Jesse Mecham:
Yeah. So, the brief of it is I met a girl and we quickly fell in love, decided to get married. I think we would’ve been, I had just turned 22 when we got married, and we were still in school and I had always been kind of money-minded, like all this stuff seems useful as a kid. And so, when we were engaged I had this idea of let’s just… We’re going to need to really watch our money. We don’t make a lot. I think we were making 10 bucks an hour at places, and Julie majored in social work, and so her job prospects after she graduated in a year were going to be 13 an hour.
Pete Wright:
Yeah, right, yeah.
Jesse Mecham:
And I still had three years of school left to get an accounting degree. So, that was the big plan. But I knew we needed to watch our money closely, and so I built at the time a spreadsheet just for me and Julie. I had no concept of, oh other people will want this. This was before phones that could do anything except have you call people and the spreadsheet did the job. So, we used it, and I kind of would tweak as we used it and kind of fell on our faces. I made it work in a way that I thought just worked, and that, for the whole year that we kind of used that first iteration gave us a good bit of savings, but still not enough for Julie to be able to step out of the workforce once our first baby was coming and for us to be able to ride that savings through until I graduated.
And so, that was then this pinch of we need money, how do we get money, was, well, maybe we could sell this terribly useful spreadsheet to people, and they would find some utility there as well. There was not some grand business plan. There wasn’t like I’m an entrepreneur, nothing like that. It was just, oh, this might be useful. And so here we are now almost, gosh, almost 20 years later.
Pete Wright:
Yeah, right.
Nikki Kinzer:
And it took off.
Pete Wright:
It did not take off.
Nikki Kinzer:
Right?
Pete Wright:
It has been the longest grind.
Nikki Kinzer:
Okay.
Pete Wright:
And yeah, it was very…
Nikki Kinzer:
Wow, yeah.
Pete Wright:
It took just, I mean just loads of effort, year after year after year, but it was fun the whole time. So, that part I guess in a sense took off for me. I realized, “Oh, I like this. I like seeing what it’s doing for people. I like talking about it. I seem to not get tired talking about it.” I probably talk about it too much, and everything is a metaphor about money management in my mind. I just thought, “Okay, I think I found my spot.” So, I lasted in accounting for 10 months, got my CPA, and now I’m recovering ever since from that. It really is, it’s just a passion of mine that it’s merged teaching people with seeing their lives positively affected, and I just, I just count myself so lucky that this gets to be my job.
Nikki Kinzer:
So, I know you have a podcast, you have this book, you have this great platform that we love. I mean, you have to have people around you. So, do you have a YNAB corporate office?
Pete Wright:
Is it just you and YouTube Hannah?
Nikki Kinzer:
How does that work as a business? Yeah, yeah.
Jesse Mecham:
Yeah, Hannah is an AI, actually. [inaudible 00:09:17]. Yeah, so it is me and Hannah, and then about 195 other people.
Pete Wright:
Fantastic.
Nikki Kinzer:
Yeah, yeah.
Jesse Mecham:
So, there’s no corporate headquarters to your point. Sometimes I wish there were.
Nikki Kinzer:
Right.
Pete Wright:
You’re all virtual.
Jesse Mecham:
During the pandemic, I was glad we didn’t do that, but then there are a lot of times where I’m like, “Oh man, I really wish we could just hang out a little more.” It’s the first time where I’ve felt like my coworkers, I want to see them more than we get to see each other. But yeah, we’ve made it all work remotely, and so far so good.
Nikki Kinzer:
Yeah, great.
Pete Wright:
Oh, so you just set the ADHD stage. What is your relationship with ADHD?
Jesse Mecham:
Well, I was saying to you people before the show, maybe it’s more than I thought it is. I don’t have any official relationship. I’ve just been told over the years, I’ll have someone write a passionate email to me, and I will say, mostly it’s at odd hours.
Pete Wright:
That checks out.
Jesse Mecham:
And they will send me this email that’s like, hey, all this stuff, and it’s moving to read because they’ll tell me, “I suffer from ADHD. This has never worked.” And I’ll admit here, I’m still ignorant to the nuances of why YNAB works so well for people that have ADHD, and I did admit to you perhaps I have a little bit of it, and that’s why I found it worked for me early on, and still to this day, I can’t… I tried getting rid of, I’ve tried not doing it to see what would happen. I’ve run experiments like that, and I lose a little bit of my soul. So, I got to keep doing it.
Nikki Kinzer:
I think one of the letters that you probably have received, signed Peter, right?
Pete Wright:
Well, actually, it’s probably all my handwriting but signed probably 50 different names.
Nikki Kinzer:
Names, yeah.
Pete Wright:
When I discovered, I’m a Quicken refugee survivor, and I tried for many, many years because I thought I was supposed to, I was supposed be ledger-focused, and that turns out was disastrous to me. When Chelsea introduced us to YNAB, I’ll just tell you my hyperfocus kicked in and I was so absorbed with making the changes that YNAB was asking me make, to stop thinking in terms of accounts. Our credit union allows us to have to set up free accounts, individual savings accounts for any goal we ever wanted to set. I would go in there and they would see me coming because I was the guy with 50 savings accounts, and it was a disaster. So, YNAB was a real revelation to me in the way I think about money.
Before we talk about some of those foundational elements, you did a podcast a couple days ago that, or a couple of weeks ago, it was two or three weeks ago, on the tenses of money, and I think this was a response to one of those listener letters, but it really hit home for me. So, to get us started, can you just reflect on what the tenses of money are as you reflected in that podcast? And we’ll start talking about fear of budgets.
Jesse Mecham:
Yeah. I’ll stumble a little bit because it’s kind of a new way of thinking about it. Like I said, everything is kind of a money metaphor for me. I’ll say this, we attach a lot of emotion to money. That’s the most obvious statement in the world, and we attach a lot of emotion and moral kind of judgment, a lot of judgment with debt and a lot of judgment with savings. They go in each direction. So, if you have debt, you feel bad. If you’re saving, you feel good. That’s the cheapest way to… And if you’re spending, toss up, right? Most of the time we feel good and then bad with the spending.
But when I was thinking through the tenses of money, it was just like, oh, it’s just, debt is money spent in the past tense, meaning you spend it before but you’re still dealing with it. You spend it in the past, and then you have your present spending, your present tense of money which is what you’re going to do right now, tomorrow, and then you have the future tense, like I will go. The future tense of money is saving up for something. But the nice thing about thinking about it is it’s all just doing, or in money sense, it’s all just spending. And so, we can just kind of say, “Oh, well what is money here for us to do? Just and only spend it.” The end.
Now, you could say, “Well, what about giving it to your kids?” Well, guess what they’re going to do with it? Spend it, worse than I would probably. Or you could say, “Well, you shouldn’t have debt.” Well, what is debt? Well, it’s past spending. And so, being able to kind of defang a little bit of how we categorize the money and then quickly feel about what we’ve done with money, I’m just, I’m finding that useful in my thinking. It’s all spending. So, now what?
Pete Wright:
It sucks the emotion out of it. I like the way you use that sort of defang it. I think when you think about debt, past spending and the shame that goes along with it, once those spending decisions have been made, it’s past decisions but you’ve filed all the serial numbers off. Right?
Jesse Mecham:
Yeah.
Pete Wright:
It’s just this giant weight that you carry, and we, living with ADHD, are no strangers to shame and self-doubt and judgment and fear. I think whatever we can do to help alleviate some of the weight of that is a step into the future. So, that allows us, I think, to segue nicely into the four rules, and for those in our audience who don’t know the four rules, let’s walk through them real quick. Number one?
Jesse Mecham:
So, one thing I’ll say is I’m going to be a bad salesperson right here for just a moment, but I want to tell everyone that the rules are so much more important than the software. So, our business makes money from the software and we teach for free. The rules work, period. So, if you said, “I like the rules, but I like this, or I want to build my own spreadsheet, or I want to do a pencil and paper,” or whatever, then do that. One more caveat is if something is already working for you, okay, don’t change it. And by already working, meaning you don’t feel guilty when you spend money. If you’re sharing finances with your partner, you’re on the same page. You don’t have fights about money, but you have really good meaningful conversations about money, that’s a plus, and if you are hitting your financial goals that you’ve set. So, if you’re doing those things then do not, do not rock the boat. So, that’s my caveat.
Our first rule is really you’d say it’s the most important rule and we call it giving every dollar a job, and all we’re trying to do is exactly what you are doing, Pete, with the savings accounts, we’re just trying to say, “I have this pile of money in our checking account,” and we try and derive information from that, like can I afford this? Should I buy this? Could I buy this? How will I feel when I buy? All this, or your spouse like, “Hey, I just bought this,” or whatever. Can we buy this? And that’s such a stressful question. We don’t give it nearly as much credit as it’s due. It is a stressful question to constantly, daily, regularly ask yourself, “Can I afford X?” Whether it’s a coffee or $500 leather boots, right? It’s all the same. It’s like, can I afford this? Stress.
So, when you’re just looking at a pile of money in your checking account and you’re trying to divine from that can you afford that, there’s no way you’re going to know. So, what we do is we divvy up that pile of money and we’re asking ourself just one question over and over again. We’re saying, “When you have money, what should this money do before new money comes in?” That’s the whole secret. And so, then you can start to take that pile and kind of divvy it up, and you can be like, “This is for the boots and I’m excited about the boots. This is for coffee and I’m excited about coffee. And this is for property taxes, less excited, but I’m glad that I’m being responsible.” Right?
And as you divvy up those piles, then when Nikki comes and she’s like, “Hey, y’all, do you want to go to sushi?” I can look at my pile of money. Instead of just being finger in the wind, how am I feeling, it’s just like, well, do I have restaurant money? No, I don’t. Okay, I’m getting to the third rule. Could I pull money from the boots, defer my boot purchase for couple weeks, go to sushi with Nikki? Yes, I could. I think that’s worth it. And so, you make a little adjustment, but I’m still looking at information that’s actually telling me the answer of can I afford this. And so, that first rule is paramount. It’s kind of the core. Everything else is built on top of that. I’ll kind of pause there, or I’ll just keep going.
Nikki Kinzer:
Well, and I just have to say as a selling point for YNAB, you make it so easy to see that, and you make it so easy to do the I’m going to take it from the boots into the sushi area. It’s so easy to do.
Jesse Mecham:
One thing we have going for us is the software is built, it serves the method.
Nikki Kinzer:
Yeah, absolutely.
Jesse Mecham:
So, there’s that why can’t I track my investments or do this or do that? It’s like, because that’s not what we’re doing. We’re getting the spending to where you love it.
Pete Wright:
I like the way you frame it and the way the software feeds the method. One of the things we were talking about last week in our show on budgeting, getting ready for the holidays which we’ll follow up on here, is just the history and the legacy of envelope budgeting, right? Just, that is rule number one. Give every dollar a job is first we’re going to eat. We’re going to put our cash that we need in our cash envelope for food. And when that money is gone, that money is gone. And so, that leads us to rule number two.
Jesse Mecham:
Yeah, and Christmas and the holiday spending is a good example of this. Rule two, we call it embracing your true expenses. It’s about thinking long, but acting now. So, you want to think about larger, less frequent expenses that will be coming up, and then you just take those amounts and you break them up into manageable monthly amounts. So, Christmas is not a good example right now because we are weeks away, but imagine it’s January 4th and we’re kind of all out of the coma. We could say, “Okay, Christmas, the holidays, they’re in 12 months, and I want to spend $1,200.” And I mean all holiday spending, gifts, gifts you’re forced to give, gifts you don’t want to give, gifts you do want to give, all of it, anything you have got going on, more travel, whatever it is. You would say, “I’m going to spend $1,200,” and then you just now have a Christmas holiday monthly bill that is $100 per month, $1,200. You got 12 months to save for it.
And now, this is the cool thing, going back to rule one, I’ve got a hundred bucks sitting in my Christmas fund. I’ve got the no money in sushi. I’ve got the money in the boots. And then Nikki comes and asks, “Do you want to go to sushi?” And now I’m like, “Oh, Christmas is in 12 months. I could take from there and catch up, or I could…” Now, I mean, I’m doing this weird thing that we don’t ever do where we’re weighing something far in the future and something right now and we’re giving them equal weight. That’s where we start to make really good decisions.
You don’t need a financial advisor this. You just have to ask yourself what do you want, and then you have to have good information that’s telling you what the present state of things is, and with that being the case, you can now sit there and say, “I’ve got this thing in the future and I’ve got this thing now,” and weigh them both together and make the decision. There’s no shame, there’s no should you, shouldn’t you. It’s just you have good information, ask yourself what you want, and then you make that call.
Now rule two, looking ahead to those larger expenses, it’s vacations, it’s Christmas, it’s also bills, life insurance, summer camps, swimming-
Nikki Kinzer:
College.
Jesse Mecham:
College. College, I would almost… Well, it depends on how far away college is. College you could almost start to put investments, I’ve got this newborn, investment stuff, or you could be like, “College is three years away, yeah, we got to start.”
Pete Wright:
We need to now accelerate.
Jesse Mecham:
Get on or convince them [inaudible 00:21:33].
Nikki Kinzer:
The way that I used it is when my son was starting his freshman year at University of Oregon, I had a special area in YNAB that I wanted to have so much money saved by September 1st, just to have the money, the cash, I wanted to have the cash. It did the math for me so I didn’t have to figure out how much I needed to put per month to get to that number. It was really helpful to see because I think it’s really easy to say, “Oh, by September 1st, we’ll have $5,000 saved. So, it will be just cash if we need it.” But when you don’t actually see that goal on paper and you don’t actually see the money, I mean, even if you are transferring it to a savings, it doesn’t feel real. You want to see it. You want to see it, this is what I’m doing. There’s a lot of value to that, I think.
Jesse Mecham:
The realness that you’re feeling is the conflict, and I mean in the most positive sense, the friction between all of your priorities and this cash cushion for a freshman. The reason it’s real is because you are making a trade-off, and trade-offs are real. Financialization of all things has made it so, so easy, ever since the first credit card came out, to just walk right past zero and not have to make a trade-off of does this matter to me or not. I know there are always people that I have to caveat this because there are people that genuinely do not make enough money and have an income problem. But for the vast majority of people, and I mean, the large swath of the middle, upper middle, they don’t have an income problem. They think they do, but they don’t. They just have an awareness problem.
And so, when you can become aware of those trade-offs, you can recognize not us saying, “Nikki, how dare you buy this or that? Shame on you for this. Don’t do that.” It’s just us helping you gain awareness, have good information, and then you say, “You know what? I don’t want to spend money on that anymore.” And suddenly, the deprivation doesn’t ever show because you aren’t being deprived. You’re just clear-minded, and that’s the ticket. So, you end up with more money, with less guilt when you spend it, and you don’t feel deprived. It’s a sweet, sweet spot in the Venn diagram.
Pete Wright:
I mean, just hearing you say it, you capture my experience with it which was how was I able to live as long as I was feeling those feelings. It is stunning to me that I feel like it’s the amazing sort of awakening when you wake up and realize I found a methodology and a metaphor that allows me to free myself of some of that judgment and shame.
Jesse Mecham:
We carry stress because we’re alive and have all the things going on, but this money stress that we carry, it is unnecessary. It’s a tragedy to think how much that stress permeates into every other part of our lives. So, it is terribly gratifying to have you say that, Pete, where you just, you realize I don’t have to. You can have all the other stresses, you get sick, someone’s sick, you lose a loved one, all those things that belong in this life that we enjoy, but this one, we don’t need to carry. This one, we can shed and never pick up again.
Pete Wright:
So much of what you were talking about in terms of making choices, making those sort of predictive choices with the sushi and the boots and everything, that’s rule number three, roll with the punches, just to put words to it, but it allows me to skip through it and talk about number four which I think was a very challenging thing to wrap my head around early on, and that is aging your money. What does that mean, and why do we care about it?
Jesse Mecham:
I’ll be honest, I think we might want to rename the rule because there’s too many jumps to get someone to understand it for us, but the idea is that as soon as you earn a dollar and it’s in your pocket, it begins to age. It gets older and older. The longer it sits in your pocket, the older it gets. And so, if I earn a dollar Friday and I spend it Saturday, I spent a dollar that’s a day old. This is a metric that I made up. It came originally from how they account for inventory in business which is the most boring thing to talk about. So, that’s the last thing I’ll say about it, but it came from that. So, the idea is that you can just let that money sit, and the longer money sits to a degree, how do I say this, the more options you have.
So, cash always, cash is an option on a future decision. So, when you’re holding cash, you’re holding a decision, a decision not yet made, and that’s critical. So, that’s why it’s valuable. To be able to hold unmade decisions is very, very useful. In finance, they have a whole category of finance, options trading, and a whole way of valuing options, and the whole thing is the longer you have to exercise that option, the more valuable it is. And so, what we’re trying to do is flip all of it on its head where we’re told spend money now. If you don’t spend it now, you’ll run out of it for some other reason, so go ahead and spend it now. We’re trying to just say, “Hey, let money sit.” Just let it sit. Give yourself breathing room to have time to make good decisions. This whole framework is just a decision-making framework.
So, we’ve talked about the power of trade-offs, we’ve talked about being future-oriented, what’s helps decision-making, we’ve talked about rule three, rolling with the punches which is just code for being flexible with yourself. And now this final rule is saying in order to make the best decision, you need to have time on your side. And so, when you can sit and say, “You know this dollar that I spent today on sushi? I earned that 45 days ago. It’s been just sitting in my system doing nothing for 45 days.” It wasn’t doing nothing. It was giving you tremendous peace of mind and it was giving you that optionality that is so critical. So, when my teenage son slides into a pole in a parking lot because of some snow that he decided it would be fun to drive through instead of go around, hypothetical, probably or maybe not-
Pete Wright:
Don’t know anything about it,
Jesse Mecham:
Yeah. Then you can sit there and say, “Well what are we going to do with this car? How are we going to do this?” You aren’t feeling like, “This has got to happen right now,” and that, that just helps you make better decisions. So, that rule four of aging your money, letting it sit, it’s about you stepping back from that financial edge. That’s a destressor right there, and then improving your decision-making
Pete Wright:
In order for us, my wife and I, to kind of wrap our heads around it, we were able to, we sort of allowed ourselves to let go of the metric, like do you have six months of savings, the emergency fund, right? We were constantly struggling with having this amount of money that we couldn’t quite figure out for six months of an emergency fund. We let go of that completely. We no longer have an emergency fund account. What we have is all of our expenses in YNAB, and when one is full for a current month, we move forward and start filling the next month. In the YNAB interface, there’s a little metric up in the corner it says what is the age of your money, and ours is right now, for the first time in our lives, it’s 147 days because we’re funding future months of actual expenses, rather than this just arbitrary six month number that we have no emotional connection to, right?
Jesse Mecham:
Yeah.
Pete Wright:
That was the value for us of that particular scorecard, score sheet of age of money. It makes sense hearing you talk about it, but for us, the practical application of filling categories ahead of time is stunning.
Jesse Mecham:
It also, to be quite frank, it makes the management of the whole system a little easier.
Pete Wright:
Sure.
Jesse Mecham:
When money comes in and you can just let it sit, and then once a week, once a month, you actually are funding all of your categories and kind of doing that at one time. When you first get started, and frankly my guess is if you suffer from ADHD more frequent would be better, kind of staying on top of it instead of having it loom, anyone would be better served that way. So, when you first start, you want to be in it regularly, daily, and kind of exercising those muscles that have lied dormant for a long time and getting used to that.
But the idea of just funding it in the future, throwing it to the future, it’s so powerful, and then as Nicki said, it makes it real because it’s not just some grobe emergency fund that’s like for an emergency. Well, what’s an emergency? When we got the car that got maybe totaled, was that an emergency? Well, no, it’s actually not. When the HVAC went out and I had money set aside for a home maintenance, is that an emergency? No. Car tires? YNABers tend to not have emergencies anymore because they’re ready which is a funny thing. We only really call it an emergency when we were caught not ready for it. You come out and there’s a rainstorm, you don’t have a rain jacket, you’re like, “Oh my gosh, what an emergency,” the guy next to you with the rain jacket is kind of like, “What are you talking about? Oh, I had the weather report already.”
So, in that way, you’ll find as you work the system, emergencies decline and you’ve given jobs those specific savings that make it more real and frankly more satisfying to be able to say, “This is for new tires and this is for new HVAC, and the roof’s going to go in 10 years, so we’re going to throw a little bit at the roof,” it gives it a real tangible job, so then you can’t so easily rate it and say, “Well, I want this thing right now.” Well, you want to be left not able to afford new tires? Most people don’t make that decision.
Pete Wright:
You have the word budget in the title. What do you say to people who hear the word budget and react, shall I say, negatively?
Jesse Mecham:
I agree with them. Yeah, I agree. We’ve literally, I’ve thought about just rebranding and just saying, “We’re YNAB.” “What does YNAB stand for?” “Nothing. Don’t even worry about it. Can we tell you about these four rules?” You know, that kind of a thing.
Nikki Kinzer:
Right, right.
Jesse Mecham:
When people hear the word budget, they think restriction. I’ll tell you, I spend money the least restricted of anyone I know, and it’s not because we have gobs and gobs of it. It’s just when I want something, I know the money’s there for it and everything else is covered. It is a joy to buy something for the wood shop and know that everything else is taken care of it. It adds the fun back into spending. Spending money needs to and should be fun. You spend all this time and effort converting your life’s energy into this dollar, and then when you want to use your life’s energy for something that you would enjoy, it’s just like, “Oh, well I shouldn’t have, or I can’t, or I…” Oh, what a shame. So, if a budget to you means restrictive and you can’t spend, then you’re right, you don’t need a budget. But what you do need is a framework for decision-making that will allow you to fall in love with spending your money and maybe even fall in love with how your spouse spends money.
Pete Wright:
One more practical question about how you think about and evolved this particular function because I know we have people in our community and as a recovering person with this challenge, how you think about credit cards and living with credit cards and using credit cards and keeping credit cards paid off is a particularly revolutionary thing for me. How’d you get there?
Jesse Mecham:
Well, one is the easiest way to stay out of credit card trouble at first is just to get rid of them and forget everything about, “Oh, my credit score, this or that.” Your credit score’s probably not that great, to be honest, so maybe a little pause would do well. So, the quick and dirty way is just get rid of the credit card. Personally, and I ranted about this in the podcast just recently, personally, I’m not a huge fan of credit cards because the only player in there that seems to be winning no matter what happens is the bank, and so I’m always like… I’m fine that every business is trying to make profit. Believe me, I’m all for that. I just wish that they wouldn’t make profit all the time, no matter what, regardless of what happens to everyone else, and credit cards do that for them.
So, we have to be aware of just how bad banks want us to use them and just know that, okay? This person really wants me to use them. So, that being said, stop using them if you have a problem with them. Don’t make them accessible. Remove them from your autofill in your browser. Get rid of them. YNAB, however, is agnostic in the sense that we really don’t care if you’re spending cash that you have on your debit card or if you’re spending a credit card. We’ve figured out a way to make it seem like and behave the same as if you were spending cash all the time. YNAB is essentially a cash accounting system for your decisions to be made, and when you make a credit card swipe at a grocery store, no cash has left your system. The bank sent the credit card or the cash to the grocery and you just stood there, swipe, you’re on the hook for it. But no cash changed hands involving you.
What we do is we say, “Okay, Jesse set aside a hundred dollars of cash in his grocery category, but he used a credit card.” We’re going to take that a hundred dollars from his grocery category as if it were cash and we’re going to move it over to his credit card payment category. So, in my mind, as I’m making decisions and looking on my phone and seeing in groceries, I see I have zero money left, but my credit card payment category, the cash I’ll use to make the credit card payment now has a hundred dollars in it. And so, we’re doing this little sleight of hand, the software’s doing it all, but if you just stick to I’m going to make decisions based on what money, what cash is in my categories, you’ll be fine. And so, we kind of do it sneaky, but it works.
Again, if you got a real problem and you need, you’re like, “Jesse, I have a bandaid, I’m a drunk with a drink,” I would say don’t go near the bars, throw away the drinks, we got to do that. But once you’ve figured out and you got the behavioral things shifted, which I know people can do, then if you want to use a credit card for perks or work reimbursements, things like that, it works. It works very, very well.
Pete Wright:
That the thing is that it is so sneaky, it’s such a weird little shell game that I feel like I don’t lose this shell game ever. Because I’ve budgeted, it is such an amazing surprise every time I go into the end of the month to make a credit card payment and there’s like thousands of dollars in that, that’s just cash that’s just ready to send it. It is. It’s extraordinary. I think understanding that model, even if I didn’t understand anything about the rest of the budget, when you talk about how the rules apply, whether you’re using YNAB or not, that was a central thing that got me out of thinking weirdly about credit cards, thinking in terms of I’m the loser in this game, and I feel like we’re actually… We do that. We have the cash back, and we’re actually making money. We save that money for trips. It’s pretty extraordinary.
Jesse Mecham:
What we did, Pete, was we made you cash-focused even when you weren’t using cash. That’s the whole trip.
Pete Wright:
Huge. It’s magic. It is magic. So, talking about getting set up, we have people who start YNAB, they try YNAB, they struggle with YNAB because it feels overwhelming. My sense is that getting over the hump for changing their behavior on top of learning new systems is really challenging. How do you guide people to start simply and not get overwhelmed, especially for people like us who it seems like either we’re overwhelmed and we abandon or we hyperfocus and get way too detailed. Can you go too far?
Jesse Mecham:
Yeah. Yeah, you probably can go too far. Probably you can. I would rather err people, people err on that side than the other. But one is just kind of high level principle is be realistic in your goals. So, people maybe have heard us say, you get a month ahead and so you’re able to fund a month with money that you’ve earned last month. Well, that’s amazing, but on average, it takes people about four months to get there. It’s not just a quick one-and-done kind of a thing. So, be realistic there. If you’re a foodie and you love eating out, then throw lots of money there. You’ve been spending that money already, so no harm to do it a little while longer, right, and see how things shake out. Just kind of track for a while, and don’t worry too much about the allocation of money. Just to get used to you’re at the grocery store, you swipe, you pull out your phone, you record the transaction. Just that little bit of awareness.
Be in it daily. Tie it to another habit that’s ingrained, like coffee or something where you’re like, “I do not miss coffee.” Well, don’t miss coffee and YNAB every morning. So, we have a lot of people that just marry those two together and that works very, very well. Leverage, like I mentioned, we have all these people that work at YNAB, leverage us, lean on, lean on us. We run classes all the time, live classes. There’s probably someone else with ADHD in the class. You could be like, “Hey, anyone else?” They’ll raise their hand. The teachers have taught millions of people at this point. You cannot ask them a question that they can’t finish asking for you. They’ve heard it all. So, they’re live. It’s not like a fake live prerecorded thing. They’re live. You can test them. Have them say a weird word, you’ll get it. They’re live, right? We’ve had that happen, like, say blarney in something and they say it.
Pete Wright:
Yeah. It’s like it’s all AI now, right? It’s [inaudible 00:40:06] now.
Jesse Mecham:
Yeah, it’s all AI. Yeah, but it’s like leverage Hannah on YouTube, she’s fun, but she’s teaching rock solid principles. So, lean into the support, lean into the classes, lean into our Reddit community if you need help there. There are people in our Subreddit, the YNAB Subreddit that have ADHD and are like, “Oh yeah, here’s what helped me.” So, yeah, just lean on the support.
Nikki Kinzer:
I have to agree. I know when I first started setting it up, and I’m sure I’m not the only one, I’m like, “I’ll just figure it out. It’s very intuitive. I can figure it out.” And then I had to close that one and redo another one. I think in any new system you really should pay attention to the tutorials and the videos and do the trainings because then it eliminates a lot of the time of trying to figure it out on your own. I definitely second that.
Jesse Mecham:
We have a feature built into the software called Fresh Start. We know, we know people dive in and then they’re like, “Oh wait, I did this wrong.” So, we start them fresh.
Nikki Kinzer:
Yeah, yeah, yeah.
Pete Wright:
Okay. I’ll just say from my experience setting it up, I did not have a problem starting and then abandoning because I went bonkers. I like didn’t sleep for three days.
Nikki Kinzer:
You hyperfocused.
Pete Wright:
I did. That’s what I mean. I feel like I really live on that. My life should serve as a warning for others.
Nikki Kinzer:
His favorite show is Chelsea’s show.
Pete Wright:
Yeah, Chelsea’s show and Hannah, I mean, I watched the whole YouTube channel. Let’s just say the YNAB YouTube channel is extraordinary, and I watched all of the videos and feel like I learned a lot about the software and set it all up. But my challenge is consistency, is making that leap from initial setup and getting all of our life into YNAB, and then making sure that I’m entering and reconciling and doing all those things.
I happen to be in a place where I live with somebody who doesn’t live with ADHD the way I do, and the balance between us, I can go in and do all the month end where it takes hours and I love getting in and reconciling transactions, and she is really good at the day to day, just making sure that hey, are we making those roll with the punches choices that we need to be making. If I were living with somebody else like me, it would be a different story. And so, I’m struggling. I guess I’m asking both of you in this case, ADHD coach too, Nicki, what do you think about splitting the deeds when you have two people living with ADHD in a tool that does require some pretty consistent attention?
Nikki Kinzer:
Well, something I would add to what Jesse has already said is that it has to become a habit, and if you can attach it to something else that you’re already doing, it can make it a lot easier to stay as consistent. But I think with ADHD, it’s okay to not be consistent because you’re not going to be. You almost have to just embrace that I’m probably not going to look at it every day. But if you can look at it weekly and have that be part of get ready for the week routine, or a lot of people will have a Sunday routine to get ready for the work week, somehow attach that to something, and you need the reminders, right?
Pete Wright:
Yeah. No worries.
Nikki Kinzer:
ADHD need reminders. So, they need to have those reminders set in place that, hey, it’s time to have that family meeting, it’s time to have, let’s look at our budget, let’s look at what’s going on this week, let’s plan our meals. I mean, do it all as a meeting type of thing can help. But I think with YNAB, one of the issues, and I don’t have ADHD and I got behind on it, and I think it’s just also going back in and being like, “Okay, I just need to spend some time on this.” I know I need to spend some time. And if it’s too overwhelming to try to catch up all at once, you break it down. You spend a little bit today and then tomorrow 10 minutes, and eventually you will get reconciled. But you do have to have the focus or the intentional focus that I’m going to pay attention to this and I need to get it caught up.
Pete Wright:
I made it my new tab home screen. When I open a new tab browser window, there’s my YNAB budget. It’s right there. Your thoughts on kids. When do you start teaching kids about the value of money and using the budget?
Jesse Mecham:
Oh, I thought you were going to say more generally, like, I like them for the most part.
Nikki Kinzer:
They’re okay, you know. They have their moments.
Pete Wright:
How do you make use of children in your life?
Jesse Mecham:
Pluses and minuses. I’ve only ever been a parent one time and we’re still working through it. So, this is kind of one experimenter talking to another perhaps.
Pete Wright:
Yeah, truly.
Jesse Mecham:
But I’ve found a couple things. One is kids are, young kids are really good at using those four rules we talked about. If you go to a kid and you say, “Here’s a hundred bucks,” and you take them to a store, they’ll figure out what they want to do with the money and they won’t overspend.
Pete Wright:
No, they’ll spend it to the penny, yeah.
Jesse Mecham:
There’s no concept of, oh, well. They’ll maximize it, you know?
Nikki Kinzer:
Right.
Jesse Mecham:
Or, if you say, I’ll walk them through when they’re eight years old is when I set them up with their own budget, and we just released a feature called YNAB Together. So, you can add your kids to the same subscription and see their budgets, but they can’t see yours. So, that’s a nice to have.
Nikki Kinzer:
That’s cool.
Jesse Mecham:
I think up to like five members maybe in that group.
Pete Wright:
That’s fantastic.
Jesse Mecham:
It handles a lot of people. If they’re in college or whatever or for a close friend, it works. But what would happen is I would set them up to fail. When I first go on the budget, I’d be like, “What do you want, Rose? What do you want?” And she’d be like, “Oh I don’t know.” And you’re like, “Well, no, don’t you love…” and I would just feed the machine. I would start to really stoke the fire and then she would get going, she’d be like, “Oh, I do want new this, and oh, I want a new jacket, and I want this, and I love this.” And so, I would just make this laundry list of categories. I would try and get to 20. 20 was a good number. She’s just exhausted her desires, and I’m just stoking the flame the whole time.
And then we would say, “Okay, well in your account you have,” I don’t know, whatever, “and let’s figure out what we want to buy.” And immediately she would just be like, “Oh, these 18 I don’t really care about, but that one.” She prioritized like that, and she didn’t have any… The kids very rarely want to spread out all of their money over lots of goals. They want to focus and they’re like, “I want it as fast as I can get it.” Right? That’s interesting.
Pete Wright:
Yeah. These other things can wait. It’s like there’s a line. There’s a queue, and they’ll take one at a time until they get there.
Jesse Mecham:
Yeah. They don’t want see them all marching shoulder to shoulder toward them and take forever. They want them to line up the other way and get there quickly. They just, they get the trade-offs. They get it. As adults, somewhere along the way we lose it, and we’re like, “Well, I should have that too. I should have that too.” It’s like, well, no, you shouldn’t. You don’t have any money for it. You absolutely shouldn’t have that, and that’s the bit.
So, when they’re eight years old is when I kick them off on this, and then every first Sunday of the month, because in our religion, it’s distinct, it’s where we fast, so it’s in my mind different already, I’ve attached where I can go into my kids’ budgets with them and sit down and reconcile. As they get older, I have them drive. When they’re first younger, I do all their reconciling, and there’s barely anything to do anyway, and we just talk about, “Hey, has it changed? Do you want anything else? We still want to put money here?” The only thing I make sure that they’re touching the keyboard for when they’re little is adding the money to their category and hitting enter, like, “Yes, this part’s fun.” Whoa.
Nikki Kinzer:
Yeah. Something that we did, because I mentioned this last week, my husband is very great with money. He’s very good with money and-
Pete Wright:
It’s obnoxious. He’s really so good with money. He’s [inaudible 00:48:23].
Nikki Kinzer:
He really is obnoxious.
Jesse Mecham:
I’ve never met him, but I already kind of don’t like him a little bit if he is, with money.
Nikki Kinzer:
Yeah. We’ve had some pretty heated arguments, but that’s what it is to be married over 20 years, right?
Jesse Mecham:
[inaudible 00:48:38] out. Yeah.
Pete Wright:
Yeah.
Nikki Kinzer:
Yeah. But one of the things that we did with our kids when they were very young, started when they were very young, as soon as they wanted stuff, I would take them to the grocery store and they would ask for something, and I would say, “You know what? I understand you want that, but I don’t have it in our budget. We only have so much money for groceries and that’s what we have to pay our money for is our groceries. We just don’t have the money for that.” And they can’t argue.
Jesse Mecham:
Yeah.
Pete Wright:
Yeah.
Nikki Kinzer:
There’s not anything that they can argue. They can’t like, “Oh, but I really want it.” “Well, I know you really want it. I get that. But we just don’t have enough money budgeted right now. I can only buy the groceries.” But I really want it. “I get that.” I mean, it just ends up being the same conversation, but they can’t really argue with it. And I also think, because my kids are really good with their money and they’re 17 and 20 and they’re really hard workers and they save their money, and I think that a lot of it too, you do have to kind of see as a parent how are you role modeling what you’re doing.
Jesse Mecham:
Oh, absolutely.
Nikki Kinzer:
They see, and they’re very thoughtful in their purchases. I mean, I remember, my son was in kindergarten and we went to a Sesame Street show, one of those live Sesame Street shows, and I’m like, “Hey Jayden, what do you want? You can have anything you want. Do you want a T-shirt?” “No, I don’t need a T-shirt. I have one.”
Pete Wright:
Oh, love that. Love that.
Jesse Mecham:
Yeah. Perfect.
Nikki Kinzer:
And I’m like, “Okay, Kinzer blood. You are such a Kinzer.” Some of it is so inherited, I think too. He ended up getting some little toy. But it really is interesting to kind of watch them too, to see what’s important and what’s not, and like you said, Jesse, I think that they are much more capable of prioritizing than we maybe give them credit for.
Jesse Mecham:
I think they unlearn good money habits.
Nikki Kinzer:
Mm-hmm. Mm-hmm.
Pete Wright:
For sure.
Nikki Kinzer:
Yeah, yeah.
Pete Wright:
This is fascinating, Jesse. I’m telling you, super grateful for you for your time.
Jesse Mecham:
Oh, thanks.
Pete Wright:
Certainly very cool.
Nikki Kinzer:
Thank you so much.
Pete Wright:
You stepped down from running the place, right? You’re just teaching? What was behind that?
Jesse Mecham:
Just wanting to not have to worry about the day to day management and kind of the org structure and all those things. So, Todd is the CEO. He’s been at YNAB for a decade.
Pete Wright:
Long time.
Jesse Mecham:
And he’s been through all different parts of the organization, and so he’s well equipped, and he’s far better at that management stuff than I was. But I still get to have my hand in all kinds of things as far as just the product and where I want to though. It’s fun. I get to kind of cherry pick, and then I get to do these podcasts, and it’s just perfect for me. It lets me kind of move from project to project. I don’t have to belabor one thing terribly long, and I get to satisfy that need of context switching more regularly. So, I’ve loved it. It’ll be almost two years in the next couple months, and he’s doing a fantastic job.
Pete Wright:
Well, good.
Nikki Kinzer:
It’s amazing that an idea from a spreadsheet that you and your wife had has changed so many people’s lives, and just thank you. Thank you for bringing that out to the world. It’s not an easy thing to do, right, to say, “Hey, look, this is what I have,” and you built this wonderful tool.
Jesse Mecham:
Well, I was in my twenties, so I was super egotistical. It was easy.
Pete Wright:
Solving world’s problems.
Nikki Kinzer:
I know how awesome this is.
Pete Wright:
It was totally approachable at that point.
Jesse Mecham:
Yeah.
Nikki Kinzer:
That’s right. That’s right.
Pete Wright:
Well, we sure appreciate it. Thank you.
Nikki Kinzer:
Awesome.
Pete Wright:
Now, we’ve got a 34-day, the standard free trial’s 34 days at ynab.com and you should absolutely check that out. We’ve got links in the show notes to everything. But what is the most important thing for you that you want to pitch right now today?
Jesse Mecham:
Oh gosh. Well, you just did it. Yeah, just give it a shot. Be patient and gracious with yourself, and lean on us. Write in. Live chat with us. Go to classes. It’s like you said, Pete, once you realize that you can get rid of that unnecessary stress and just worry about all the other stress, it’s a good thing. So, yeah, just go give it a whirl. Maybe don’t tie it to the New Year’s resolution situation. Maybe recognize that this is a long haul. This is not a one-and-done, I’m going to go crazy for two weeks in the gym situation for now.
Pete Wright:
For sure.
Nikki Kinzer:
Good point.
Jesse Mecham:
Let’s adopt the long haul approach on this.
Pete Wright:
For sure, for sure. Thank you everybody for downloading and listening to this show. We sure appreciate your time and attention. On behalf of Jesse Mecham and Nikki Kinzer, I’m Pete Wright. We’ll catch you next week right here on Taking Control, The ADHD Podcast.
