Hi, I'm kchoi. Welcome back to my channel. A couple of months ago I shared
how I saved fifty thousand dollars to go to grad school in London and several of
you asked if I could do a more general budgeting video, so here we are. Now, I've
always been really good at saving my money and following a rule of putting
aside a certain amount into my savings every time my paycheck would come in, but
I haven't always had the best handle on actually budgeting and spending my money.
I would always fall into this trap of getting my paycheck and putting aside
money into my savings right away, so I'm covered there, but then I would, you know,
spend money on shopping, dining out, gas, whatever it was and not really think
about it. then when the time came for me to pay my
credit card bills, I would realize that I didn't really have enough money and I
would need to wait for my next paycheck in order to pay those off. So the cycle
that I would get into was get my paycheck, put money into savings, pay off
the previous month's bills. Paycheck, savings, previous month's bills. And I was
just always trying to catch up. I tried using different budgeting apps like Mint
or Personal Capital, or even my own Excel sheet budgeting, but none of it was
really seeming to help me get out of that cycle until I was introduced to
this app/website called You Need a Budget, or YNAB, and it really did change
the way I thought about budgeting. Now, before we continue with the rest of the
video, I want to thank today's sponsor, which is not YNAB -- but hello -- it is Warby Parker!
The number one question I get on my channel by far is, "Where are your
glasses from?" and the answer of course is Warby Parker. I've been wearing Warby
Parker glasses since 2015, so over four years, so I'm so excited to be working
with them and to be sharing about them with you. I also think it's fitting for
this video about budgeting because prescription glasses can often cost
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including the prescription lenses which also include anti glare and anti scratch
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Parker. These frames are from Warby Parker; unfortunately this particular
color is discontinued, but there are lots of other styles that you can try on so
be sure to head to warbyparker.com/kchoi
to order your free home try on kit today. So thank you again Warby Parker for
sponsoring this video! let's get back to budgeting. My brother
is the one who introduced me to YNAB which is all about getting ahead of your
expenses and gaining total control of your money which, for me, being in the
cycle of always having to pay my previous month's bills, is exactly
what I needed. YNAB is a budgeting app and
website, but it's more of a method and it's based on four rules of budgeting.
Number one: Give every dollar a job. Number two: Embrace your true expenses.
Three: Roll with the punches, and four: Age your money. They actually have a lot of
free resources on their website like blog posts and virtual workshops that go
into more detail on all of these rules, so I will link where you can find those
in the description box below. For this video, I'm going to focus on two of those
four rules that I consciously use every day and have really helped me gain
control of my money, and those two are "give every dollar a job" and "roll with
the punches." Starting with "give every dollar a job," this is also called, or is very
similar to, the envelope method *struggles to pronounce envelope* Anyway, in this rule you create
an envelope whether it's figuratively or literally -- in my case it's figuratively --
and each of those envelopes is for a category of your spending. For example, I
have envelopes for savings, and then immediate obligations like rent and car
insurance, expenses like gas and groceries, and then things that are just
for fun like shopping and dining out. The way it works is as soon as you get your
paycheck, you give each of those dollars a job by placing them in a particular
envelope. Sounds easy enough, and I think everyone THINKS that they
follow this rule, but there is a slight but significant difference between this
method and more typical ways of budgeting. In other apps and methods that I've used,
you DO determine how much you'll be spending in those same categories, but
instead of allocating your current existing money into those categories, you
just track your spending and then look back at it at the end of the month. Then
when you're looking back at the end of the month, you realize, "Oh, I spent way too
much money on dining out and I need to cut down on that next month," but then at
that point, that money is already gone or overspent and you're catching up on it
that next month -- and then you don't have the money to pay off other obligations
or expenses. Tut with the envelope method, you know that you have the money in a
certain category so you can spend confidently and not feel guilty because
you've already given all of your dollars a particular job. There are a couple of
challenges with this method. The first one being the transition to even using
this method because if you're like me, you are in a cycle of catching up to
your previous month's bills, so that first month that you're trying to do
this method, you're not only working to pay off the previous month's bills, but
then you're also trying to allocate that present money for that month's bills, so
you have to be very very disciplined in the first month or two that you're
transitioning because you just don't have as much money to spend.
You're basically transitioning from paying your bills retrospectively to
preparing for them proactively so having to do those at the same time is really
difficult, but once you're able to go over that hump, then it becomes a lot
easier. The other challenge is that you need to track every expense you make in
order for this method to work because if you're not aware of how much money are
taking out of each envelope, then it kind of defeats the purpose. Again, this is a
really difficult transition -- or it was at least for me -- but it was the most
effective one when it came to managing my money and now I am never behind on my
credit card bills and I'm able to pay with the money that I have currently and
it feels really good. So the other rule I want to talk about is "roll with the
punches." This rule is all about being flexible with your money and with your
expenses and not freaking out when you overspend in a particular category. Again,
if you think about other budgeting apps, you kind of set what your monthly budget
needs to be every single month and you're supposed to stick to that or
stay below that every month, but that just isn't really realistic because
every month and every week even can be so different. Yes, you'll have certain
expenses that are always the same like your rent, and other things like
groceries and gas should have a general average amount, but still there are
things that can happen that really change the way that our expenses pan out
every month. For example, I travel a lot for work so on the days or weeks that
I'm traveling, I really don't spend much on groceries or on dining out because my
meals are covered while I'm traveling. Let's say I take a spontaneous road trip
one weekend with my friends and I spend more on gas than I normally put in that
envelope for the month. Well, since I have control of my expenses and know which
job each dollar has and where each dollar is, I know that I can pull from
the groceries envelope and use that to cover the overspending, and then I can
move on. So even though I spent more on gas in that situation than I had
allocated previously, I'm in control of my money know where all of it is, so I
can move things around if I need to -- and then you just don't have to feel bad
about it like you do with other methods where you see that you're in the red and
you're like, "Dang it, I overspent again." Of course, if you find yourself
moving money around all the time, then you might need to reconsider the jobs
that you're giving to every dollar at the beginning of every month or every
two weeks when you get your paycheck, but in general, being flexible and rolling
with the punches of different expenses that vary from week to week is really
helpful. Ideally you're looking ahead at these types of changes, and when you are
doing rule one and giving every dollar a job, you're keeping that in mind, but
having the control will help you when things that are unexpected come up and
again, as you gain more control and knowledge of where all your money is at
a certain time, this will become a lot easier to do. YNAB has a lot of free
resources online that you can use and these were just a couple of the things
that have helped me gain more control of my own budget and my money, and have
helped me save more and get ahead of my credit card bills. YNAB does have a
subscription fee -- it is $84 a year or $7 a month, but you can use my
referral link which I will link in the description box and you can get a month
for fre! Again, this video is not sponsored by YNAB -- it's sponsored by
Warby Parker -- but I love this program and it's helped me a lot, so just thought
that I would share it in case it could help you too. I want to reiterate that
the first couple of months can be really difficult and frustrating but it was
worth it for me to stick it out, so hopefully it can help you a lot too. And
even if you don't end up getting the subscription, there are lots of
free resources on their website that you can use. That is it for this video, I hope
it gave you some insight into how I manage and take control of my money and
I really hope that it helps you do the same. Please be sure to open the
description box for any referral links and resources that I mentioned in the
video and leave a comment with any other budgeting tips or stories that you have.
I would love to read them! As always, thank you so much for watching this
video, and I will see you in the next one. Bye!