Understanding Life’s True Expenses

When I started using You Need a Budget (YNAB), I kept hearing the term “true expenses.” Rule 2 of YNAB’s philosophy is actually “Embrace your true expenses.”

For non-YNABers, true expenses is a foreign concept. It’s not taught anywhere, but it’s single-handledly responsible for the biggest mindset shift I’ve had in months.

True expenses are those things you know are going to happen eventually. You might not know exactly when they’ll happen or maybe they happen every few months, every year, or every few years.

Amazon Prime is due next April. Your oil will need to be changed. Your cat will have an unexpected vet bill. Your windows will need to be replaced. The list goes on and on.

The point is they’re definitely going to happen someday, and if you know they’ll definitely happen you might as well start planning for them.

The problem is despite knowing these things will happen, they usually catch us off guard because we aren’t taught to plan for them. They throw a perfectly planned budget into chaos because suddenly you have to account for an extra $500 to cover that car repair. But let’s face it, there is no perfect month. There’s always something extra that happens above your normal month.

With YNAB, I quickly got into the habit of setting aside money monthly for those true expenses. Mom’s birthday’s in a month? No problem, I’ve been setting aside a few bucks every month and the money’s there waiting for me to buy her a gift.

True expenses not only help keep you from getting thrown off course when something out of the norm happens, they help you establish a baseline for what is actually the norm. I no longer think of my my yearly Disney+ subscription as a $70 email reminder that catches in me off guard. Instead it’s just another $6.36 that I set aside each month for expenses.

Seeing a clear breakdown of what your life actually costs per month including your true expenses is a real eye opening experience. Being able to see exactly how much my lifestyle costs allowed me to cut out subscriptions I no longer needed because I could see the true cost.

That being said, the lesson of true expenses doesn’t stop at budgeting. The real power is extending it to other areas of your life.

Working at a university, I understand that the start of the semester is a busy time, whereas other times are less busy. When I think of that in terms of “true expenses”, I can start to figure out if there are things I might be able do differently or spread out to other less busy times of the year so that I’m not quite as stressed during that first week or so.

And with that, it is the start of the semester for us, so I may be absent from the blog for the next few weeks, but I will be back with new content. I promise.

Thank you for all the kind words you all continue to send in, and if there’s something you want me to write about (Things, YNAB, productivity, tech, anything really), let me know!

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