In today’s episode, we’re diving into YNAB's Five Questions that transform how you budget. Think of these questions as building blocks in your financial pyramid. We’ll start at the base with your present reality and work our way up to the top, where flexibility and your biggest, wildest dreams live!

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YNAB Disclosure: I am a YNAB Certified Budgeting Coach, which means that I have been trained to coach people on using YNAB software and the YNAB budgeting method. I have met select requirements of You Need a Budget LLC in order to receive this certification, which means that I have the ability to competently coach YNAB to others. I am not an employee of YNAB, and all non-YNAB related opinions and recommendations are my own. My views do not reflect the views of YNAB and its employees or affiliates.

If you've been in my world for any

amount of time, you likely know that

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YNAB a is my favorite budgeting tool.

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And for years, YNAB has taught its

four rules as the cornerstone of

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using their software effectively.

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Rule number one, give every dollar a job.

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Rule number two, embrace

your true expenses.

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Rule number three, roll with the

punches and rule number four.

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Age your money.

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We went through those four rules

in last week's episode, episode 14.

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So go ahead and go take a listen if

you haven't already done so these

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days YNAB has refined its guidance

into more of a question-based

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framework, and those five questions

are what we are diving into today.

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Speaker: Welcome to the

Money Clarity Podcast.

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I'm your host, Lindsey Ciarrocca.

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I'm a YNAB Certified Coach

and a Certified Money Coach.

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And I am here to help you stop

feeling stressed about money.

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Together we'll get your finances organized

so that you can finally feel confident

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about not only spending and saving,

but using your money as a tool to go

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after your biggest, wildest dreams.

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Let's dive into today's episode.

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So I want you to think about

these five questions as

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building blocks for a pyramid.

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So a pyramid of.

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Financial clarity, if you will, that

needs to be built from the ground up.

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You might find yourself focusing

intently on the first question

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initially and gradually progressing

through the others as you gain more

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control and awareness over your money.

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As you make your way through these

questions, each time, you will be

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able to add another block to your

pyramid, making it and your finances

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even stronger every single time.

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So what are these questions?

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Question number one, the reality question.

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What does this money need

to do before I'm paid again?

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At the base of our financial

pyramid lies this reality question.

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This is the most immediate and crucial

question you need to ask yourself

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every time money hits your account.

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What are the absolute necessities?

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what bills are due, what

spending is unavoidable before

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your next income arrives?

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So think about this in terms of

something like your rent or mortgage

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payments, groceries to keep you fed,

transportation costs to get you to work.

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Essential utilities like

electricity and water.

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these are the dollars that have a

non-negotiable job to do right now.

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So the way YNAB excels at helping

you answer this is by allowing

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you to categorize your income as

it comes in and assigning those

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dollars to specific categories.

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And you give every dollar a

job, which might sound very

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much like rule number one.

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This ensures that your immediate

obligations are covered.

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So forming that.

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bed rock of a stable budget.

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It's about understanding your

present financial reality before

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you can plan for the future.

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Question number two is about stability.

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What larger, less frequent

spending do I need to prepare for?

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So once you have a handle on your

immediate needs, the next level of

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our pyramid focuses on stability.

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This involves looking.

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Beyond your next paycheck and

considering those larger, less frequent

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expenses that are still predictable.

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These are the costs that if

you're not planning for them, can

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often lead to financial stress.

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So these are things like car

maintenance, insurance premiums,

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if they're not paid monthly, so if

they're paid annually or quarterly,

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for example, things like holiday gifts.

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Back to school shopping or an

annual software subscription.

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While these things don't occur

every month, they are a reality,

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so ignoring them could be a

recipe for budget disaster.

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The way YNAB helps with this is it

helps you answer this question by

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setting up these categories that are

effectively act as sinking funds.

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So this is where you can allocate

a small amount of money towards

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each category every single month.

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So that when the time comes,

the funds are already there.

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This proactive approach builds

financial stability and prevents

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those, whoops, surprise expenses

from derailing your budget.

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Question number three,

the resilience question.

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What can I set aside for

next month's spending?

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So as you gain control over your immediate

needs and then you start to plan for those

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less frequent expenses, you can begin

to build resilience into your budget.

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This question is about creating a

buffer between the time you get paid

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and when you actually spend that money.

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Another way to think about this is

as setting aside money this month

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to cover next month's expenses.

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Now you probably know, living paycheck

to paycheck can be incredibly stressful.

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This resilience question encourages

you to break that cycle by

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intentionally allocating funds

to next month's categories.

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You give yourself breathing room imagine.

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Imagine knowing at the

start of, let's say, June.

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That your essential July

expenses are already funded.

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Trust me, it is a great feeling.

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So the more you can set aside for

the future, the more resilient your

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financial situation becomes, the more

options you start to give yourself.

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And these options are what allows you

to weather those unexpected expenses.

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With clarity and ease.

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Question number four,

the creation question.

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What goals, large or small

do I want to prioritize?

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So now that you have this solid

foundation, you're starting to build

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stability, growing that buffer,

now we can start thinking about.

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Creation or aligning your budget

with your goals and dreams

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and your biggest aspirations.

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So this question moves beyond just

covering basic needs and starts

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to focus on what you actively

want to achieve with your money.

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And this is what I like to refer

to as living your greatest life.

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What does your greatest life look like?

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Let's work towards those big dreams.

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So this is where you get to start

thinking about your financial

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goals, both big and small.

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So what do these goals look like for you?

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Maybe you are saving for a

down payment for a house.

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Maybe you're planning a 40th

birthday vacation like I am.

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Maybe you're paying off debt or investing

for the future YNAB's targets and goals

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features allow you to visually track

your progress towards these priorities.

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Then by asking yourself this question,

you can start to intentionally direct

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your money towards what truly matters

to you, making your budget a powerful

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tool for creating the life you envision.

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And finally, the fifth question

is the flexibility question.

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What changes do I need to make, if any?

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So at the top of our

pyramid is flexibility.

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Life is full of change and your budget

should easily allow for adjustments.

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This question encourages you

to regularly review your budget

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and make adjustments as needed.

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So did an unexpected expense pop up?

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Did your income change?

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Did your priorities shift win YNAB's

strength lies in this flexibility?

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You can easily move funds between

categories to reflect your current

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reality based on whatever new

information you have at this moment.

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By asking yourself this flexibility

question regularly, you're able

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to ensure that your budget remains

a relevant and useful tool.

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It's about staying engaged with your

money, making conscious choices, and

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continuously optimizing your plan.

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To meet your evolving

needs and circumstances.

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This ongoing process is key to

long-term financial mastery.

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Flexibility and change is absolutely key.

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So here you have it.

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Those are the five questions.

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And while the five questions may

sound very similar to the four

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rules, they are, but they aren't.

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Five questions.

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Provide a powerful and intuitive framework

for taking control of your finances.

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Instead of thinking of them like

strict rules, another way to think

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about them are just guidelines or

questions, right, that are there to help

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guide you along your financial path.

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They take you from meeting your

immediate financial needs to planning

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for the future, building security.

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Achieving your goals and staying

flexible along the way because the last

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thing we need or want is a restrictive

budget where there is no room for

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fun, no one's gonna stick to that.

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Both the rules and the questions

are there to guide you.

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So whichever one resonates

with you more, go with those.

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I learned YNAB on the four rules, so

I definitely reference those a ton.

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But you also hear the YNAB community

referencing the five questions.

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So here they are again for you.

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Five questions.

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What does this money need to do before

I'm paid again, what larger, less frequent

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spending do I need to prepare for?

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What can I set aside for

next month's spending?

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What goals, large or small

do I want to prioritize?

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And finally, what changes

do I need to make, if any?

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By consistently asking yourself

these questions and utilizing the

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features within YNAB, you'll be

able to gain a newfound clarity and

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confidence in managing your money.

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And while the journey to financial

wellbeing is ongoing, it's a journey.

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It's a process.

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YNAB's five questions are here

to help provide you a roadmap

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to navigate it effectively.

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Because as I always say, your biggest

wildest dreams are within reach.

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Let's go make some money moves

so that you too can start to

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experience financial freedom.

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That's all for this episode

of the Money Clarity Podcast.

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My hope is that today's conversation

gave you a little bit of clarity and

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confidence to take the next step.

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If you're ready to dive deeper into

your relationship with money, you

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can find more resources both free

and paid at theexuberantelephant.com

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/everything.

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You can also find that link in the

show notes, and if you're enjoying the

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podcast, please leave a rating interview.

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It really helps the show reach

more people just like you.

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I will talk to you next time.