WHY you need a budget. How to get started.

Episode 20 - WHY you need a budget. How to get started. 

Alysia Dicks, certified YNAB coach and budgeting expert, joins the Money PIG Podcast to discuss the topic of budgeting. They explain what YNAB is and how it helps manage finances. YNAB is the budgeting app of choice and the one Goodwin Investment Advisory staff members use as well as recommend to clients. Alysia shares her personal journey with budgeting and how it transformed her own financial situation. Budgeting is seen as a way to align spending with priorities, rather than restricting oneself. 

Some people tend to avoid budgeting due to various reasons such as ignorance about their financial situation or fearing limitations on spending. Overall, budgeting can lead to less stress and more financial freedom. Reid and Alysia discuss the importance of both budgeting and prioritizing expenses. They highlight how unexpected expenses can set people back if they haven't planned for them. They emphasize the need to make a plan for every dollar you earn and allocate it to specific categories in order to have financial freedom and avoid impulse spending. They both share personal experiences and provide tips on managing money effectively. 

Some questions Alysia answers about budgeting:

What is YNAB and how does it help with managing money?

How did Alysia become involved and interested in budgeting?

What are some common misconceptions about budgeting?

How can budgeting help align financial priorities?

If you are looking for an hourly rate advisor to help you with budgeting check out our hourly financial consulting webpage which shares about how one of our Wealth Advisors helps clients outside of normal work hours from 5:00 pm - 6:00 pm on Tuesdays and Thursdays for $275.00 an hour. He can help with managing debt, budgeting, helping you choose your investments, assess your current assets, provide tax strategies and even guide you in retirement planning. 

The Money PIG podcast is hosted by Reid Trego. Goodwin Investment Advisory is a Registered Investment Advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with securities laws and regulations. Goodwin Investment Advisory does not render or offer to render personalized investment or tax advice through the Money PIG podcast.  The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.

Transcript

Forgive grammar errors.  This transcript is provided by AI.

Welcome back to the Money Pig Podcast, brought to you by Goodwin Investment Advisory, where our mission is to lead people to financial peace, independence and generosity. And I'm your host, Reed Tree Go. I want to remind you, if you're enjoying the show, please rate and review our show wherever you get your podcasts. And if you have question you want us to address, you can email us at moneypig@goodwininvestment.com. Today on the show, we're joined by a friend of Gia, Alicia Dix, who is a certified YNAB coach and general budget nerd, for a discussion about one of the most exciting topics. People love it. Budgeting. 



They love it. 



They love it. Alicia, thanks so much for being here. 



I'm really excited to be here. Thanks for having me. 



Yeah, it's super exciting. Yeah. Budgeting not always the most exciting thing, but we're going to make it exciting. 



I have a math degree, and so math and budgeting bad rap. 



Yeah. 



And I think it's unwarranted. 



It's unwarranted. Totally unwarranted. All right, so I introduced you as a certified YNAB coach. Some people are not going to know what that is. So help us understand what YNAB is. Y-N-A-B. 



You pronounced that and articulated that very well. Most people think it's wine app. What is this wine app you're talking about? And how does it help you manage your money? 



There should be plenty of wine apps, as well, but this is YNAB. 



That's right. Y-N-A-B. You need a budget. So YNAB. I am a certified winap coach. It is an app that helps you manage your money, make a plan for it, and everyone who uses it calls it Winab. 



That's right. And it's not a cult. It kind of is. There's a lot of content online about Winab. So we should initially here disclose that you are a certified YNAB coach. You're not paid by YNAB to sell their product. 



I am not. 



And YNAB does have, like, a fee month, $11 a month or something like that. 



That's right. 



To use the app for budgeting. Also, as a disclosure, alicia is a client of Goodwin Investment Advisory. 



I sure am. 



But you're not employed here. 



I am not. 



All right, good. And you were not paid by Gia for this appearance? 



No, we had chipotle lunch. 



We did provide a Chipotle lunch. So semi compensated. Right. Okay. That's disclosed we're good. And we didn't pay for the Chipotle endorsement. No, we're not endorsing them. 



We're not endorsing them. Although it is my favorite. 



Yes. It's very good. All right, good. Okay, let's go back to budgeting. 



Okay. 



We like to begin with why, right? 



Yeah. 



So what in the world got you so involved and interested in budgeting? 



It was the fall of 2018. My husband Tony and I had been married for a little over 18 years. When you get married in 2000, it's very easy to know how many years you've been married. So we'll be married 23 years next week. 



He's a lucky man. 



That's right. I'm really the lucky one. But we had been married a little over 18 years. We made pretty good money, and were way behind in our financial planning for the future and our retirement investments. We made some really stupid decisions financially early on in our 20s. We joked that we made too much money to be in our twenty s and just blew it all. 



By the way, you're not alone. 



No, people do that. Totally. And so if I could help people not do that, then I would love to be able to do that. It was the fall of 2018. I knew that we had some margin. We paid everything on credit cards, but we paid it off every month. So we had gotten out of debt years before, but weren't making significant ground from all of the bad decisions. We had a lot of work to do to be able to retire at 65, so were pretty far behind. So I started doing some research and was just looking for what's? An app we had been using another one that's free. That's really popular online. It's free. And it was a budget tracker. I could look back and see where we spent our money, but it wasn't helping us proactively make decisions. 



So it wasn't naming dollars as they came in and giving them jobs. 



That's right. It was more just a look back to say, how did we do? We didn't do so well. Okay, let's do better next month. And we did that for about ten years. 



Nice. You stuck with it. 



We did, but didn't make up much ground. 



Okay. 



So we felt like were out of debt, were doing well, but I also knew we could do so much better. So that was November of 2018. Found Winab and I tend to go all in when I try things. 



We've noticed that about you. 



So I went all in, because if I'm going to do it really well. At least until I get burned out on it. So went all in. I asked my husband Tony, hey, let's just try it. Let's go all in on it and let's see how it goes. And about two months later, Tony came downstairs. I was sitting on the couch and I had my laptop open and he said, why do we have so much money in our checking account? I think it's because of YNAB. And so were hooked. So that was almost five years ago. And now I have helped countless people get started with YNAB. I became certified with them, and I am still all in on their budgeting method. 



Yeah. That's amazing. That's amazing. So budgeting has a bad name. You mentioned something about budgeting to someone and a lot of them hear even the clients I meet with sometimes they say, oh, I don't want to tell myself no I don't want to have to cut everything out. I know I shouldn't eat out as much, but budgeting just has this bad name. What is your take on that? 



Yeah, my take on budgeting is it's really a way to name what's important to you. So let's make a plan that aligns with your priorities. So it's not up to me to tell you what you can and can't spend your money on. If going out to eat is one of your top priorities, then you need to make a plan for your money so that you can go out to eat as much as you want to. For us, were going out to eat just about every meal, literally in 2018. And once we saw how much of our income was going to dining out, we decided that was not the priority that we had been placing on eating out. And so were able to make decisions, okay, what's our top priority? 



And as we move down our priorities, we would allocate our money based on those priorities that we set. 



This is not different than eating. 



True. 



As you have said to me before, you can eat anything you want, you just can't eat everything. 



That's right. There's a lady that I follow, Paula Pant, she's got a great podcast, financial podcast, and she says, you can afford anything, but you can't afford everything. And I love that because it's true. Whatever is most important, that's what I'm going to prioritize. And when I'm not making a plan, then things just kind of happen and I have to be more reactive than proactive. And so I'm going to make some really stupid decisions that are going to lock me in and obligate my future self to a dumb decision that I made 510, 15 years ago. And so we want to be proactive, we want to have control over our finances. And I think budgeting enables us to have control, to make plans, prioritize what is most important to us. But what's most important to me is not what's most important to you. 



And I think that's oftentimes where we get the shame associated with how we're managing our money because there's a right way and a wrong way is our perception. And I would say to the people that I help, hey, this is about your priorities and so I want to help you prioritize the way that you see fit. Now, I have an opinion, but that doesn't mean that my opinion is what you should do. So I just want to help people align their money to their priorities just like we do with our time. 



I'll give you a great example of this. It's me. Okay? My wife and I, we have prioritized traveling over some home maintenance. Yes, we've just made that a priority. It's probably been a mistake. Now that I look at it, I'm like, you know, I really need to paint my house, stuff like that. But going to Cancun is so much fun or going on whatever trip. 



But it was a conscious choice that you made. 



It was. 



So you may say it might be a mistake. You probably don't regret the trips you've been on, but you also made that choice. You didn't accidentally make the choice to go to Cancun. Some people do, but you made a conscious choice to go to Cancun instead of paying your house. So I'm not going to tell you I don't think that's right or wrong. It's just about your priorities and your budget is the plan to align your money with your priorities. 



Oh, man. So I meet with clients, and I oftentimes just meeting with them, asking them, so how do you track your cash flow? And some of them are like, well, some of them are really intent and diligent about creating their budget. And some are like, I don't really like telling myself, no, I love them too. I love them all. But what are your experiences? Like, why do people avoid this idea of making this important of budgeting their money? 



I think it's different for different people, but oftentimes there's one perspective that says, I don't make enough to have a. 



Budget, so I'm going to be in the hole all the time anyway. I just don't want to see it. 



And yeah, ignorance is bliss. I think there's a few people that they think they make too much money to make a plan that's probably rare. I'm not sure how many people accidentally have too much money. 



Some of the clients I meet with, it's actually a fair amount. They're like I'm like, yeah, you have a very typical rich people problem. You make enough, you don't really have to worry about your air conditioning and how much you spend on the grocery, and it just all works out at the end of the month because they're making enough money. I think it's a lot of people, actually. 



Yeah. And so I think for others, it's instant gratification and it's more denial. Hey, I don't want to tell myself, no, it's exactly what you said for most people. And for a lot of people, it feels daunting, and they don't even know how to do it. So maybe they just don't even realize there is a better way, and they could experience less stress and more freedom financially. 



Yeah. I feel like I see this a lot, where I have people with great intentions, and this is not all the people we meet with. It's just kind of the people who are struggling every once in a while in our personal experience, because we've both dealt with people who are struggling with budgeting, but they're like, yeah, I tried to start that emergency fund, trying to get $1,000 or three to six months or whatever that emergency fund is. But then always something happens. I needed new tires on the car. My radiator went out. My son needed travel ball uniform, things like this, and it sets them back. And I kind of think tires on your car aren't really an emergency. 



That's right. You should expect that you're going to need tires on your car. 



They don't last forever. 



No. Too bad. 



So I feel like people feel like these things are emergencies when really it's just they've got to figure out prioritize that's right. In their budget for those things that are going to happen. 



Yeah. When we're not making a plan, the money kind of falls through the cracks. Right. We make spending decisions because it's usually a spending problem, not a savings problem, but we make spending decisions based on how much money is in our checking account. And so when I'm at Costco and there's an endless this is not endorsed by Costco disclosure, but when I'm at Costco and there are endless number of things I can buy at Costco and I'm debating about if I'm going to purchase new cookware for $299. Right. I really need new cookware. And I just look at the balance and the checking account and I say, oh, I've got more than $299. But I'm not in that moment thinking about all the other things that I've already obligated myself to financially. 



And so I'm just operating behind when I'm only looking at the bank balance to make a purchasing decision. So I follow a lady named her Instagram account is lazy genius. And she says, decide once, and that's kind of what budgeting is. So you make a plan. I'm going to have this much money come in this month, so let me go ahead and decide once. What is this plan for the money that I have coming in? So instead, when I'm at Costco and I really do need new cookware and that's a significant amount of money, almost $300, right. In that moment, if I've already decided what my priorities are, then I can look at my budget because now we have technology. So you can carry your budget around in your pocket. 



And I can see, okay, based on what my priorities are, is purchasing new cookware actually within my priorities? I may need it, but do I need it? And is that a higher priority than the other things that when I was removed from the emotion of being right in front of the cookware at Costco, was that a priority for me when the emotion was taken out of it? So it's that kind of overcoming that instant gratification mentality that we have as a culture. It's like, I see it, I want it, I can have it here by tomorrow. So when I'm making a plan for it, I'm kind of protecting myself from that instant gratification mentality that I'm so used to. 



So if I have a category for like, household items and I've got $300 in that category, then I have the freedom to purchase the Costco cookware for $300 because I know everything else that my money needs to do and all the priorities that I've already set, those are already taken care of. So I can comfortably make a purchase for $300 without stressing about everything else that could come up. And if I need new tires, I've got a car maintenance category that I've been putting money into over a period of time. And so now my budget has kind of flattened out, and I'm no longer affected by those ebbs and flows and the cycles of life. 



It's brilliant. And you said some a second ago, freedom. Right. And we're recording this near Independence Day. 



That's right. 



So let's talk about independence. And people probably have heard this analogy a bazillion times if they've talked to me, but when you have a budget, it's sort of like we have a dog. A budget, it's like a dog. No, but we have a dog and we have a big yard, so it's not fenced. So we're nervous to just let her out in the backyard because we don't know. She could go willy nilly. Who knows? 



She'll cross the who knows where she's going to go? 



She could take off. There's a lot of deer back there and chasable other animals. But if we had a fence around our backyard, she would have way more freedom, because without a fence, she has to stay mostly on a leash in our backyard. If we had a fence, she can do whatever she wants within those boundaries. Like, your household budget is $300. I can do whatever I want in that boundary. 



That's right. 



Because it's allocated that way. 



That's right. 



And ideally, at least in my household, my wife and I would have had a conversation about how much is going to household and are we ready to buy new cookware. 



Right. 



She may not care. 



Right. 



She doesn't really like cooking. 



But you may. 



I do, yeah. New cast iron skillet. The independence and freedom. 



Yeah. I remember when I got into Winab and my daughter was in college, so she's a poor college student. Right. She was a sophomore in college at that time. 



She's a great student. 



She is a great student. She was very poor financially, and so I didn't want I don't want my children to make the same mistakes that Tony and I made financially. And so we've tried to show them how we're doing it, and hopefully they'll pick up some things. So of course I told my kids, hey, I found this new budgeting app. It's been really helpful for dad and me. I think it would be great if you want to try it. So Mary Beth said to me, I don't have enough money to budget. And I said, I actually think if you can learn how to manage what you have that's a little bit, then you're going to be set up when you have way more to manage. The principles are the same. 



I said, but I actually think you're going to feel like you have more money than you do now if you're making a plan for it. I said, do you feel guilty when you go to Starbucks between classes? And she said, Every single time. 



Every time? Yeah. 



And I said, If Starbucks is a priority for you not sponsored by the way, disclosure, then you need to have a category for Starbucks or category for coffee with friends. And then, you'll know, if you have money in that category, then you can enjoy going and getting a cup of coffee with a friend instead of stressing. What are the other things that I have coming my way that I'm not thinking about in the moment? I really want to have coffee with my friend. Now I feel guilty that I've had coffee with my friend because then I've got to put gas in my car and I ran out of laundry detergent and then I need more bread. All of the things that just come our way. So go ahead and decide once at the beginning of the month. Okay. 



At first you're going to have to guess, or you can go back and probably look at your checking account or whatever, how much have you spent at the grocery store but kind of guess and put money in the category, and then over time you're going to learn and you're going to need to make adjustments. But if going to have coffee with a friend is a priority, then prioritize money in your budget for coffee with friends, and then you don't have to stress about it. 



That's right. 



And so a couple of months later, she said, mom, you're right. I should have gotten a recording of that. 



You should have her sign that. Could you split your signature? 



But I loved it because she was a poor college student and she experienced financial freedom. And then when she graduated and got a job, she already had the skills to be able to prioritize and manage her money. So then when she got a job, she didn't go out and buy a brand new car because that wasn't a priority for her. She had other priorities, but she already had the skills and the principles in place before she had grown up money to manage. 



That's amazing. So I want to talk in just a second about YNAB's kind of methods and principles. 



Okay. 



But for people who are listening going, man, I'm sort of feeling this. I'm getting a little convicted here. Yeah, right. Is setting up a budget for somebody is never, like, super easy, right? 



No. 



You alluded to this a second ago. You got to kind of go back, see how much you were spending here and there. How long do you think it takes somebody to sort of get this right? 



I've been doing this for four and a half years, and I would say for the first year, I was constantly changing the budget. Tony and I would talk about it, hey, what's the priority for you? What's the priority for you? And that can be difficult too, especially if you're budgeting with a partner for you both to have the same priorities. And I talk with people about how to navigate that as well. But every month it was a learning. And for that first year, honestly, there would be an expense that would come in that I didn't anticipate. That was, quote unquote, unexpected. I had just forgotten about it. And so whenever something came in that first year that I hadn't budgeted for, I would ask myself, hey, is this going to be an ongoing expense or was this just rare? 



It is what it is, so it's going to be unexpected. I can't even name something that would truly be an unexpected one time expense. So when that subscription comes in that I forgot that I had put in place automatically, I have a decision to make. Do I create a category for it and do I allocate and assign money on an ongoing basis to cover that subscription going forward, or do I cancel it? So we did a lot of canceling in that first year, but it was also adjusting the budget, changing how much each category needed based on what our priorities were. I like going to the grocery store and not stressing about which groceries I'm going to buy. So for me, it's a priority to have enough money in the grocery budget to cover our groceries and me not having to cut coupons. 



I tried cutting coupons years ago. That is not for me. I would rather spend more on groceries than cut coupons because it's all a trade off with our time and our money, right? 



Yes. There are no solutions. There's only trade offs. 



That's right. 



Yeah. You trade one problem for a different problem. You're hopefully trading for a problem that you would prefer to have exactly over the one you already had. It's amazing. Okay, so talk to us a little bit about what are YNAB's? Just kind of some basic methods, principles, things that like your black belt maneuver tips. 



Yeah. So YNAB has what they call four rules. So the first rule is to give every dollar a job. And that's really a principle that the budget nerds call zero based budgeting. So oftentimes when we're not kind of educated in how to manage our money, we want to have a buffer. Right. And so you're going to make a plan for your money when you're trying this thing out, and then you want to just leave an extra like $200 laying around, like, what if just leave it in the bank, just leave it sitting there, right? Sure. Not actually name what that $200 is for. We kind of want to have a little bit of wiggle room because what if I don't get it, right? 



The problem with not naming every dollar is that it is so much easier to blow those extra $200 when you haven't named what they're for. So Winab's first principle is you have a certain amount of money in your checking account, in your savings account, right now. Every single person has a set finite amount of money in their bank accounts right now. So YNAB says, how much do you have? And let's go ahead and name what every single dollar is going to do before you get more money. So instead of forecasting and saying, okay, this is how much I bring in every month, this is how much I have going out every month, do those two things equal out? Great, I'm good. 



The problem with forecasting and just taking a big idea of how much income, how much expenses is what if your cash flow is off? Like, what if when the money comes in and when it needs to go out is kind of backwards? That creates a lot of stress. And so Winab's method actually wants you to budget the money you currently have and to ask yourself, what does this money need to do before I get paid? Again, that helps you feel the urgency to prioritize. Because our goal is to create margin. We want space. We don't want to be living paycheck to paycheck. Paycheck to paycheck is very stressful. Tony and I in 2018 were making way too much money to live paycheck to paycheck. But were, and we thought were doing it right because we didn't have debt. 



And that was a unique circumstance for our culture, right? We had thankfully gotten out of debt, but weren't gaining ground because weren't making a plan and prioritizing. Our only priority was not going into debt, but were still living paycheck to paycheck. And so number one is to give every dollar a job. Name it. What is this money going to do? And some of those jobs is for the money to just sit there. But what is it sitting there for? It's sitting there for an emergency fund. It's sitting there for a new air conditioning unit. So instead of just naming it, quote unquote, savings is kind of nebulous. Like, what are you saving for and when can I use this? But if you name it, you're less likely to use it for something else. 



And you can actually have permission of when you want to spend it. Like, what is that savings for? Name it. So it does take you asked, how long does it take to figure this out? I would say give yourself a good six months to a year and just expect there are going to be things that come in that you totally forgot about and your budget should be flexible. And that's something else that I love about Winab, and we'll get into that in just a second. So rule number one, name every single dollar, give every dollar a job. Rule number two is to plan for your true expenses. So true expenses are things that are really, truly expenses that you have, they're just not monthly. So the monthly expenses are the ones that we typically think about when we make our budget. 



Utilities, phone, car payment, rent, gas. 



Yeah, exactly. 



Groceries. 



Right. 



Okay. 



So they're the things that happen so frequently that we can't help but think about them. But you mentioned tires. Tires are not an emergency. If you own a vehicle, you have to replace the tires. So that is not unexpected that you're going to need to replace tires. 



I feel really good right now because I've been saying this to clients for a long time. I'm just glad I'm on the right track. 



So we need to plan for the non monthly expenses because one month you're going to need new tires, another month you're going to need to fix the water heater. If you have a water heater, it's not going to last forever. Now, if you rent, good for you, because then you don't have to worry about when the water heater goes out. But if you own your own home, you got to replace the water heater. But all of us have expenses that are non monthly that really are part of our expenses. 



I think about HOA dues. 



Yeah, those are yearly. 



Annual, usually. 



Yeah, usually. And so those annual expenses, or they're not even at a set time, but you know they're going to come. Okay. 



Christmas it is at a set time. 



I can't believe I forgot about Christmas. That's a huge one. You know, Christmas is coming. You actually have the date. Okay. So we need to treat it like it's a monthly expense because that's what levels out the budget. And instead of us having these wild swings and feeling like, oh, my goodness, this month I have to pay for camp, you knew camp was coming. Camp is every summer for your kid. 



You also knew your child's birthday was coming. 



That's right. So I remember Christmas of 2019. That was the first full year that we had been using Winab. So we created a category for Christmas, and we actually wrote out, who are all the people we're buying Christmas presents for? How much do we want to spend for them? So instead of just flying by the seat of our pants, seeing something in the store, buying it, whatever, we'll pay. 



It off in January. Pay it off. 



Hopefully. We actually made the plan. We said, who we're buying for, how much were spending on each person. And that was our budget. And started setting aside money every single month in the categories. It's kind of like a digital envelope system, and we started setting aside every month for Christmas. So in July, when a large online retailer had their kind of Christmas in July sale, there were things that I knew my kids wanted for Christmas that I went ahead and bought in July because I had money in my Christmas category. Just sitting there. And the great thing about planning for these non monthly expenses is our money just sits there. And when you can gain 4% interest right now, then the money is just sitting there accumulating interest. 4%, that's pretty good. Now, in 2020, it was like less than half a percent. 



But that's okay. 



Yeah, exactly. 



But it does give you flexibility, because if I were to have a true emergency, my priorities change. And so maybe Christmas, I'm not going to spend as much money as I thought I was going to, but now I just have money sitting in this category, and I'm going to change my priorities because I just lost my job and I've got to provide a roof over my head. I have to feed myself, I have to have gas to get to job interviews. But now I've got flexibility because I've been setting aside money for these non monthly expenses. So they also almost act like an emergency fund as well, and it just creates so much less stress and freedom. 



Lot of peace. 



That's right. 



Maybe you're going to get to this, but I guess we call it a prepaid future expense. Is that a thing that Weinate talks about? 



But they just call them these true expenses? Yeah. 



So we feel like a true expense now. Our priorities could change, but we want to go to the Australian Open in January 2020. So every month money goes into now, that pile of money is going to start getting pretty big. If something awful happened, there's an extra emergency fund if we need that's. Right, but if not, that's the problem. 



But you've also named it, so instead of just putting it in savings. It's like, okay, what is that you haven't named? Okay. Is this thing more important than us going to the Australian Open in 2027? And you really get to have the information to then make the choice. Right, because you've named it. 



So those true expenses, are not they're monthly? Yes. Annual? Yes. Maybe every six months? Yes, maybe. But they can be as long out as you as far out as you want. 



That's right. 



That's so much control. 



Yeah, totally. So those are the first two rules. Rule number three is to roll with the punches. 



Oh, I like it. 



Okay, so roll with the punches basically means we've decided once at the beginning of the month what our ideal budget is going to be. I can't think of a month where it's been ideal, so things happen and we have to roll with it. And so our budget should be flexible. I think too often we set a budget, and if we have to adjust in the middle of the month when something happens that was unexpected, we feel like we failed at our budget. No, this is your budget. You get to choose what your priorities are. And we base our priorities off of the information that we currently have. But as we get new information. We can readjust what our priorities are, and our budget should be flexible to enable us to make adjustments when we get new information. 



So we're going to roll with the punches. And those punches may be great. It may be. I have an opportunity to go to this concert that I wanted to go to that I didn't know was happening or I didn't think I could get tickets. But now I've stumbled into this and somebody's got a crazy deal on it, and I wasn't planning on doing that. And so I look at my budget and I see, is the concert a higher priority than anything else that I've allocated money for? And if the answer is yes, then my budget should be flexible and I can change it, and then I can purchase the tickets. I'm not going into debt to do that. I've got the money sitting there. But it does give you freedom and flexibility so that you can adjust as your priorities change. 



I feel like you're the practitioner and I'm the patient here. So we see this, and this is a very practical scenario, I think. But we have groceries and restaurants. 



Yes. They're both food. 



Look, I know it could go into one, maybe, but we keep it separate. Okay. So if we sat down at the end of every month or the first of a month, and we planned out every meal for the whole month, where we're going to buy it? At the grocery, which ones we're going to go out? No, I'm not going to do that. So we put this money in there kind of probably about the same as last month in each category. 



Right. 



And then as we get closer to the end of the month, we might have to swap around some that's left over. Oh, we ended up going out a lot more of the restaurants. Okay. 



Did that in June. 



So it's not bad if we're doing that. No, we roll with the punches. 



That's right. And it's your money. You get to decide, so yeah, I mean, I think it's helpful to kind of have a best case scenario or what you think is going to happen. And you've got your grocery budget and you've got your eating out budget, but at the end of the month, if you've got money in both or you've got money left in groceries, but there's a few days left and you want to go out to eat instead, go out to eat glorious. So that's rule number three. 



Okay. 



Rule number punches. Rule number four is to age your money. Basically, we want to get away from living paycheck to paycheck. So aging your money just means when you get money, how long does it sit in your account before it leaves? And so it's just a metric of, hey, let's not live paycheck to paycheck. Based on the last ten transactions in your checking account, that money sat there for a certain number of days and YNAB keeps track of that for you. But really the principle is the same regardless of what method you use. Let's not live paycheck to paycheck, let's get ahead. So we have margin and we have the freedom and flexibility when new information comes in to adjust and reprioritize. 



And then the other thing I would encourage people to do is to automate the things that are most important, so that at the beginning, you want to be involved in your budget. You want to be sitting down and kind of feeling where your money is going, making a plan, seeing the transactions. How are we doing? Actively involved in it. And it may just take about five minutes a day, but building a habit of being engaged with your money and then it gets less scary and then you start to get excited because you see that changes are actually happening. But then you kind of get to a point where it's a little bit boring because you've automated the things that are most important. You've gotten pretty good at what is the cash flow situation, how much are we spending on these things? 



And so the little tweaks and changes, they're just minor adjustments, but it's pretty much set it and forget it when you get to a certain point. Yeah, and I kind of missed the days of, oh, I have more money to assign. That was really fun. But it's also great because looking back at kind of our spending reports, just in our investment accounts alone, our net worth has increased by 186 and a half percent in four and a half years. 



Really? 



That doesn't include our house because the housing market has gone up too. But just in what were able to automate with our investing in four and a half years, even with the downturn of the market. Right. So even in that, our investment accounts have almost doubled twice. 



Oh man, that's amazing. 



Yeah. So that's why I'm a winab evangelist. 



I can understand that. I can understand that. And you mentioned this age of money thing and this is where sometimes the YNAB evangelists get a little wild. But the opposite of paycheck to paycheck is this age of money. These people get really excited about how long they can age their money. 



Right. I'm like, Maybe you should be doing something better with that money. 



Yeah. I don't know what you've seen, but they'll see how long they can go without cashing a paycheck. 



Yeah. And that's kind of taking it to the extreme. Right. Like anything in the extremes is probably not helpful. Probably true. Because our age of money doesn't include our investment accounts because investment accounts are not actually in my budget. No, my investment accounts are separate. I just track them in YNAB. But I'm actually not assigning money in my investment accounts of what that money is going to do. That money's job is just sit there and grow, hopefully. Right. So our age of money does not even include the investment accounts, but it. 



Does include emergency funds. 



If it's in your savings account and your savings account is in your budget, then yes, it does. 



Awesome. Wow. 



I love it. I am such a budget nerd. I'm real big into credit card rewards, so I am not anti credit cards. But I also have it set up where it automatically pays the statement balance every single month. I don't even have to worry about it because Winab keeps track of assigning the dollars for me to pay my credit card in full whenever I want to. So that's freedom. And then I just get to travel for free on points. On points. And it's things I'm spending my money on anyway. It's just free money. Yeah, but you have that freedom and flexibility to be able to make the most of rewards like that when you're making wise decisions financially, you have better access to interest rates. If you are buying a new house, you get the lowest interest rates. 



If you're going shopping and you get credit card rewards, you get the best rewards out there. Insurance rates. Exactly. So it's kind of this compounding thing. It's funny because I think it was Albert Einstein said compound interest is the 8th wonder of the world. Those who understand it earn it and those who don't pay it. 



That's right. 



So you're either going to earn compound interest in your investments or you're going to pay it by not paying off your credit cards. 



Brilliant as he was. 



Very. Apparently they just discovered something that he had already realized on theory of relativity the other day. Really? I cannot even explain what the summary was because it was so far over my head. He was a smart man. 



Yeah. Well, that is amazing. Yeah. You are like a walking, talking testimonial for one. Just budget restraint and fiscal responsibility. 



Yeah. 



Right. And you're obviously a budget evangelist, which is fantastic. 



Well, and it's the long game. Right. It's hard at the beginning because it is a lot of work. You do at first feel like you're not getting it right. Probably there is a learning curve to YNAB. The most helpful budgeting strategy is the one that you're actually going to maintain, the one you're going to use. So if somebody already has an app or a method that works for them that they are experiencing all of the things we've talked about today with financial freedom and flexibility, I don't recommend that they change their system. It's working for them. But if your system or you don't have one isn't working for you or you think, gosh, I just think we could manage this better, then I would recommend that they try different approaches to see which one is sustainable. And for me it was Winab. 



But there is a learning curve at first, but I think it's worth it. 



Well, and YNAB has worked well for us, too. 



Yeah. 



And so it is kind of if you're on your own, if you're single, you might need somebody to help you partner with this. But as a married couple, man, we really hold each other accountable to, and we make decisions together anyway. Seems like a pretty healthy way to live. 



Yes. 



Awesome. Alicia, thank you so much for your words of wisdom today. 



Thank you. 



It's been great to have you here. Yeah. Hey, and as financial advisors, by the way, Alicia is not a financial advisor. She's our first non Gia staff member to join the podcast. 



I am honored. Thank you so much for having me. 



You are worth it. As advisors here at Gia, we manage and balance portfolios for our clients, but the unique value is that we work to understand our clients individual goals so we can have these types of planning conversations that are so personal and unique to each individual. Thanks so much again, Alicia, for being with us. Hey, one more shout out to our editor, Noah Davis, who does a great job for us. I think he makes us sound great, and so we appreciate it. Noah, keep listening. I know he's a young guy. His dad said we love that he edits your podcast because hears so many wise financial tips and topics. So that's great. Thank you, Noah. Hey, and if you're enjoying the show, please leave us a rating and review. 



Follow our show and ring that bell or whatever you do, wherever you get your podcasts. And remember, if you have a question you'd like us to address, you can submit that by emailing us at moneypig@goodwininvestment.com. Thanks for listening. We'll see you next time. 



The Money Pig podcast is hosted by Retriego, a financial advisor at Goodwin Investment Advisory. This Pod cast is intended to share information and perspectives, but should not be interpreted as legal, financial or tax advice. The opinions shared by participants are not necessarily endorsed by the company. Goodwin Investment Advisory is regulated by the SEC, and the company operates in compliance with applicable securities laws and regulations.