Budget Rules

Rule One: Give Every Dollar a Job

Spend your money with confidence. You’re the boss. The drill sergeant. The maestro. When you earn money, you prioritize how you’ll use it, and then simply follow your plan.

How It Works

As soon as you get money, you’ll decide what it needs to do—based on whatever is most important to you. Then, instead of deciding to buy something based on your mood, or the big (or small?) pile of money in your checking account, you’ll follow the plan you made.

Rule One In Your Budget
  • Get some dollars.
  • Prioritize those dollars (give ’em jobs!).
  • Follow your plan.
Why It Works

You’ve already mapped out a plan, so instead of stressing over every little (guilt-inducing) spending decision, you’re just following your own instructions. No raise, windfall, or inheritance required. (Though all of those would still be nice.)

Picture this…
Life Without Rule One

Your $500 account balance leads you to believe you’re flush with cash, so you spring for sushi. (And you go big.) But a few days later some bills come due and you don’t have the money. (Because you ate it.) You’re officially stressed.

Life With Rule One

You have $500 in your account and assign every dollar a job by dividing the $500 into various categories. When a friend invites you to sushi, you consult your Eating Out category (with a $10 balance) and suggest your friend come over to your place to split a pizza instead. A few days later, some bills come due–and you just pay them.

Rule Two: Embrace Your True Expenses

Make your money boring. Did the car break down? No big deal. Are the holidays coming? You’ve got a Santa-sized pile of money stashed away. No credit card necessary. Imagine never (ever) dreading the arrival of a big bill.

How It Works

Take those large, less-frequent expenses (that usually send you into a financial tailspin) and break them into manageable, monthly “bills.” Step off of the Financial Crisis Roller Coaster and enjoy the view from the top of the Carousel of Prosperity Progress!

Rule Two In Your Budget
  • Find a big, infrequent expense.
  • Create a target to fund it monthly.
  • When that expense arrives, just pay it!
Why It Works

You’re being more realistic about your finances by planning for larger, less frequent expenses while keeping your dreams and goals in sight. By anticipating big expenses and breaking them down into more manageable monthly amounts, you’re making fully informed spending decisions based on immediate needs and future obligations.

Picture this…
Life Without Rule Two

You just bought concert tickets and you can’t wait to go. The very next day, you’re surprised by a $600 bill for your insurance premium. Now you have two choices: sell your concert tickets or rack up more credit card debt to cover the bill…and neither option feels good.

Rule Three: Roll With the Punches

In boxing, you move your body in the same direction as your opponent’s punch to lessen the blow. Same rules apply to budgeting. Be flexible and address overspending as it happens.

How It Works

When you overspend in a budget category, just adjust. No guilt necessary. If you plan to take the kids to the beach but it’s pouring down rain, do you still go? Of course not! Circumstances change and plans change with them. Your budget is no different. If you overspend in one category, free up money from another category and move along. Remember, you’re the boss!

Rule Three In Your Budget
  • Choose a category with overspending.
  • Move funds from another category to cover it.
  • Move on with your life—no guilt!
Why It Works

You don’t need to be perfect! You just need to commit to the process of planning what you’ll spend (Rules One and Two), and then, follow your plan. Oh, that’s right, and then adjust the plan as needed. Rinse and repeat.

Picture this…
Life Without Rule Three

When you overspend, you feel like a failure. Budgets don’t work. This whole idea of trying to “guess” what you will spend, is a complete waste of time. You don’t “need a budget,” you “need a raise.” If you only earned just a bit more money, everything would be fine! (Those last two sentences are dripping with sarcasm.)

Rule Four: Age Your Money

When you are spending money you earned last month, you will have nothing to stress about money-wise. because you have a built-in buffer between earning and spending. The goal is to be spending money that is at least 30 days old. It might not happen overnight, but stick with it—it’s a game-changer!

How It Works

With the help of the other three rules, you’ll be more purposeful about your spending, consistently spend less than you earn, and be more than prepared for the future. Eventually, you’ll be able to cover May’s rent with dollars from April. Your money will be at least 30 days old and you’ll wonder how you ever lived without the Four Rules.

Rule Four In Your Budget
  • Be purposeful in your spending.
  • Consistently spend less than you earn.
Why It Works

You aren’t stressed, because you’re not living on the financial edge. No more wasting time and energy timing bills to a specific paycheck. When a bill comes, you just pay it. The result? Breathing room. Less focus on today and more on tomorrow means bigger thinking, better decisions, and chiseled abs (it’s possible!).

Picture this…
Life Without Rule Four

John knows the date of his next paycheck well in advance and has a stack of bills he’s timing to go out as soon as the paycheck hits his account—a stressful juggling act. He’s habitually anxious and frantic, and can’t stop thinking about how much he needs a vacation. But who has money for that?