Do you need a budget? This Lehi company can help
Jesse Mecham, president of You Need a Budget, stands for a portrait at his offices in Lehi Thursday, June 20, 2013. MARK JOHNSTON/Daily Herald
Jesse Mecham, president of You Need a Budget, stands for a portrait at his offices in Lehi Thursday, June 20, 2013. MARK JOHNSTON/Daily Herald
LEHI — With just 12 full-time employees, one Utah Company has made Utah Valley BusinessQ magazine’s fastest-growing company list for two years in a row.
Established as a one-man company in 2004, You Need a Budget has grown to making $2.7 million in 2012.
Jesse Mecham said 10 years ago he was a young, married college student looking for a way to manage his money better. He said most of the other budget systems focus on creating a budget and doing damage control at the end of the month — a system that creates stress, guilt and debt.
“Our method gets people to be more proactive,” Mecham said. “If you were to write down everything you spend for a month and not judge that spending, your spending will drop. It’s not magical; you are just more aware so you spend less.”
Mecham created a budget system focused on four rules. He said the goal of YNAB is to educate people about the budget rules via free online classes, and if they choose to buy the software to go along with it that is an added bonus.
Rule No. 1: Give every $ a job.
Mecham said every single dollar has to have a purpose, be it a RedBox DVD, groceries or savings.
“Only budget the dollars you have. A lot of people want to budget money they are going to earn,” Mecham said. “Look at the money in your bank account and say, ‘What does this money have to do before I get paid?’ and when you get paid again ask yourself the same question.”
Mecham said giving every dollar a job helps align your spending with the things you really want. Mark Butler, an employee a YNAB and new user of the system, said this rule puts you in control.
“The method makes you proactive with your money. You budget the things you want and the things you need so nothing falls through the cracks,” Butler said.
Rule No. 2: Save for a rainy day.
Mecham said this doesn’t have to be an emergency fund but can be saving for annual bills, like car insurance or registration, Christmas or any other large bill that doesn’t come around often. This allows you to take those bigger bills and goals and break them into monthly budgets.
“People often make monthly budgets based on their true monthly expenses but forget the less frequent bills, meaning their real budget is much higher,” Mecham said. “They make spending decisions based on the lower number and frivolously spend away money for less frequent expenses.”
Mecham said even the most prepared people will overspend or hit bumps along the way, but giving up on money management won’t make things better.
Rule No. 3: Roll with the punches when they come.
Mecham said people are naturally good at managing money; studies show that if given $10,000, ninety-five percent of people will do responsible things with it, but when unexpected spending comes along many people give up.
“Just adjust the plan, nothing bad was done. Just roll with the punches and adjust. Don’t throw the whole budget away,” Mecham said. “You are still operating in the confines of the overall budget. A budget is just a plan and it can be changed.”
Butler said the plan works because all people overspend, but YNAB provides tools to deal with it better by adjusting the budget for the next month or moving money from a different category.
Rule No. 4: Learn to live on last month’s income.
This is literal. Mecham wants users to spend in July the money you made in June. Mecham said it takes the average person or family four months to save enough money to do this, but it lowers the stress that often comes with money management.
Highland resident Jessica Bybee has been using YNAB for nearly five years and said it has given her complete control over her money and has removed most of the stress that comes with budgeting.
“I love the peace of mind of living within my means,” Bybee said. “It is so much less stressful to know the money is there instead of panicking at the end of the month and trying to fix it.”
In addition to the free online classes offered daily, YNAB has budgeting software and a mobile app that allows you to track your expenses and update your budget on the go.
Mecham said having a budget and following the rules gives you freedom to spend money without stressing about it.
Butler agreed, saying that since using YNAB he hasn’t had to worry about money.
“For me the biggest goal I had was to not worry and have to think, ‘Can I do this and buy that?’ That mental burden is removed,” Butler said. “YNAB tells you can spend money but you’ll only be spending money on the things you actually want.”
And people around the world are buying into the system and helping YNAB grow. The company was No. 17 on the Utah Valley BusinessQ magazine’s UV50 list in 2013 and No. 13 in 2012.
YNAB offers a 34-day free trial of their software, and Mecham said that gives people a chance to get through a whole month using the system.
“If you are wishing you could get a little more out of your money or reach a few more of your financial goals, give it a trial run,” Mecham said. “I always had a goal of paying off my house before I was 30 and with the budget it helped us do that.”
All the rules are outlined and classes and software are available at www.youneedabudget.com.