My interest in this book is three-fold:
I’m terrible at budgeting and need help
I want to borrow principles and methods for managing money to help people manage their time and productivity
YNAB has built an incredibly strong brand and community, and I want to learn from them as I write my own book
As I read and digested the YNAB approach to personal finance, I began to sense a deep connection to principles of productivity. I’ve concluded that there is a series of fundamental mindset shifts required to manage both money and work. It isn’t the particular tool or method you use that makes the difference. It is a shift in perspective and attitude.
Rule 0: Identify your top priority for your money (growth, supporting your family, freedom, hobbies, fixing the house, security, retirement, learning)
Tags: favorite
Rule 1: Give every dollar a job, by creating accounts for each of the goals you want to fund (buying a house, saving for a wedding, buying a car, going on vacation), and assigning a portion of the money you currently have to each of them, until they are fully funded
Rule 2: Embrace your true expenses, by creating accounts for each infrequent, but predictable expense (car repair, doctor’s bills, new computer, Christmas gifts) and assigning a portion of the money you currently have to each of them, until they are fully funded
Rule 3: Roll with the punches, adapting to each month’s unique circumstances by pulling money from lower priority accounts to fund higher priority ones
Rule 4: Age your money, by waiting as long as possible from the moment money comes in, to the moment it is spent, which creates a cash buffer for riding out fluctuations in income and expenses
Engage with your money consistently, by making intentional decisions whenever money comes in about which accounts it should fund
Once all accounts have been funded, do whatever you want with your money!
The parallels between managing a budget and managing time/tasks are striking.
It makes sense that they would be: each one requires managing a flow of a valuable, but finite resource. They are both complex domains with many relevant factors to consider, that also have a tremendous impact on our quality of life and future. They both can be partially automated, but not completely, requiring us to make decisions to achieve the outcomes we want.
Here are the principles underlying the budgeting method described in this book, that I believe apply equally well to managing our work:
Start by aligning with the deeper purpose
ask yourself, “What do I want my work to do for me?”
Replace black and white decisions with tradeoffs
YNAB recommends replacing closed-ended, binary questions, such as “Am I within my budget this month?”, with open-ended ones, such as “Where can I pull funds from to balance my budgets this month?” This inquisitive attitude activates your curiosity, opening up new options you may not have previously considered.
Likewise, a more sophisticated way of working replaces black and white questions, such as “Did I get enough done today?”, with more nuanced ones, like “What could I have done differently today?” This trains you in viewing your tasks not as good or bad, but as subtle tradeoffs between priorities that you can learn to navigate skillfully.
When stuck, surface information needed to make better decisions
When we are stuck, whether in budgeting or productivity, it is most often because we simply don’t have the information required to make a confident decision. Instead of judging the feeling of stuckness or overwhelm as our fault, we can view it as a valuable indicator that more information is needed.
At work, we’re often seeking more “clarity” before moving forward on something. But there is always a clear next action available to you: any time you’re not sure how to proceed, surface more information. This can include reviewing your emails for the latest updates, talking to colleagues or your boss, or stepping back to make a plan.
The trick is to perform these actions without getting sucked into dealing with them. You want to move quickly and touch lightly, staying at a high elevation and looking for only the information that will help you make better decisions about what to do next, postponing any heavy work until after you’ve made those decisions.
Tighten the feedback loop between your present and future self
Both money and productivity boil down to a relationship between your present and future self. It is the existence of a desired future that necessitates planning and decision making. We are extracting value from the current flow of money/time, to provide our future selves more freedom, wealth, or happiness.
Whether you are sitting down to review your budgets, or review your priorities for the week, anything you can do to strengthen that relationship is valuable. Reflecting on the current month’s spending and whether it is in line with your budgets is really about fine-tuning your expectations and behavior. Doing so non-judgmentally allows your two selves to influence each other without fighting each other, encouraging them to follow through on each others’ promises.
Tags: favorite
Manage unexpected events by turning them into consistent routines
Create milestones to provide a sense of completion