Roll With The Punches: Mastering YNAB’s Third Rule

Life loves curveballs. Just when you think you’ve got your budget on lock, the car breaks down, or a friend invites you to a last-minute getaway. YNAB’s third rule, “Roll with the Punches,” is about staying flexible and adapting your budget as life unfolds. It’s not just about managing your money; it’s about managing change.

Embracing Flexibility

Flexibility in budgeting doesn’t mean you aren’t sticking to your plan—it means you’re responsive to life’s inevitable changes. Drawing inspiration from boxing, YNAB’s third rule, “Roll with the Punches,” teaches us to adapt rather than resist. In boxing, rolling with a punch reduces the impact of the hit, keeping you on your feet and in the fight. Similarly, adjusting your budget as needed helps you handle financial surprises with less stress and keeps you moving toward your priorities. This rule allows you to adjust your budget categories without guilt, ensuring that your financial plan remains relevant and practical, no matter what surprises come your way.

Pro Tip #1 Use YNAB’s mobile app to make real-time adjustments. It’s empowering to see how shifting funds from one category to another can keep your overall budget balanced. I recommend moving the money before you make the purchase. See what your categories look like once the money is moved and see how it makes you feel. If it doesn’t align with your priorities, you can always move it back.

How to Implement This Rule

Expect to Make Changes: Begin each month knowing that adjustments are likely. This mindset prepares you to adapt rather than react. Adjust values accordingly as the month progresses.
Adjust with Intention: When you overspend in one category, consciously decide where to pull back. For example, if you splurge on a spontaneous concert ticket, you might decide to dine out less that month or move money from a category that is less of a priority right now.
Review Regularly: Make it a habit to review your budget daily. This keeps you in tune with your spending and savings, making adjustments less daunting. Checking in for 5-10 minutes each day can save you hours at the end of the month.

Pro Tip #2 Consider a buffer category within your budget (I have one for “Impulse spends” that I use infrequently, but I’ve also seen “I know myself,” “I couldn’t say no,” “But it was on sale,” and “Oops” options). Having a small amount set aside for unexpected adjustments can smooth out the need for more significant shifts. It’s good to review a category like this regularly, as it can quickly become a big expense if not managed responsibly.

Why Flexibility Matters

A rigid budget breaks, but a flexible budget bends and rebounds. By allowing yourself to adjust categories as needed, you prevent small discrepancies from ballooning into big problems. It also reduces the stress and guilt often associated with strict budgeting, making the process more enjoyable and sustainable.

Try YNAB For Free While the YNAB rules can be implemented with pen and paper or a fancy spreadsheet, the YNAB app has been designed to make living out these rules easier than ever. If you’ve never tried it, you can get a 34-day free trial (and an extra month free by using my link if you sign up after the free trial). Give it a shot and start giving your dollars jobs today!

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Dealing With Overspending

When overspending happens, treat it as an opportunity to learn about your habits and refine your budget further. Analyze why the overspending occurred: Was it impulsive, necessary, or simply a lack of planning? Each situation provides valuable insights that can help you plan better for future months. With this knowledge, you can add categories, update target amounts, or decide that type of purchase isn’t aligned with your priorities for the future. I personally added an “Education” category because I learned I like taking certification courses and learning about a variety of topics. This saved my “Oops” category and made me feel better about choosing to intentionally invest in furthering my knowledge while spending intentionally on something I enjoy rather than continuing to see it as overspending when it happens because now it is planned.

Pro Tip #3 Always reassess your priorities. Sometimes what made sense at the beginning of the month may not be as crucial by the end. Stay honest about what's truly important to you and your financial goals, then move money between categories to align with those priorities and needs.

Rule 3 Is Also Rule 1

While Rule 1 of YNAB helps you assign every dollar a job, Rule 3 allows us to re-assign those jobs. In any business, job tasks can change as priorities shift and new orders come in. Our budget has to be able to do the same, so let’s use our Rule 1 skills of assigning every dollar a job to re-prioritize some of those dollars, sending them to jobs we didn’t initially plan for, but can easily accommodate without guilt and without blowing up our entire budget due to a small change in plans.

Wrapping Up

“Roll with the Punches” isn’t just a rule; it’s a resilience strategy for your finances and your life. By learning to adapt your budget flexibly, you’re not only maintaining control over your finances, you’re mastering the art of financial adaptability. This approach ensures that your budget is always an accurate reflection of your current needs, making it a powerful tool for achieving your long-term financial dreams.

Don't Know How to Roll With the Punches?

If the idea of flexible budgeting feels overwhelming, you’re not alone. As a certified YNAB coach, I’m here to help you navigate the ebbs and flows of personal finance with ease. Reach out today, and let’s work together to set up your budget to handle whatever life throws your way.