14. Guilt-Free Spending: Mastering YNAB’s Original Rules

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on today's episode of the podcast, I

am going to walk you through YNAB's

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original four Rules for Simple Budget.

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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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Alright, so if you've been around

my world for any amount of time,

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you probably know that YNAB is

my favorite budgeting software.

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Not only do I use it personally and.

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By personally, I mean I have our

household budget in it, but one

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for each of our two businesses.

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But I have taught the majority of my

clients how to use it as well, and

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I found that once they're able to

learn the ropes YNAB can be a total

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game changer for their budgeting.

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But why is that?

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It's because YNAB, while Yes.

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It's a piece of software that

helps you see your numbers.

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They also have a system.

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And they originally

started with four rules.

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So YNAB has actually been around for

25 years, I believe it has been now.

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And so they started with these four rules.

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And you know, rules sound a

little restrictive, right?

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So, but they're really meant to

guide your budgeting success.

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So here are the four rules and how I

interpret them into my own budgeting.

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And then next week we'll

talk a little bit about.

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Uh, the shift that they've moved into and

the five questions that they now follow.

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All right.

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Rule number one, give every dollar a job.

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So you've likely heard me say

this if, again, you've been around

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here for any amount of time.

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Rule number one, give every dollar a job.

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So, while the sounds simple than

it is, this is really also the key

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to taking control of your money.

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It means.

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It just means giving

every dollar a purpose.

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So by doing this, you gain clarity

on where your money's going, and you

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can eliminate any wasteful spending.

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So the way, the way YNAB helps you

do this is by letting you divide your

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checking account balance into categories.

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This is crucial because mental accounting.

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It's a real problem, right?

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We've all been there.

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We think we can afford something.

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We have a couple thousand dollars in

our checking account, and then boom,

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a bill hits that we totally forgot

about, and you're a little on edge.

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YNAB helps prevent this by

showing you exactly what you have

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available in every single category,

and sometimes that's nothing.

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So here's how it works.

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So you are shopping.

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You see a shirt in YNAB.

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You go to your clothing category

and you see 20 bucks, your shirt

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costs 18, you're good to go, right?

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Maybe even it's on sale for $14.99.

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Even better.

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I love a great sale, so you can go

ahead and buy that shirt guilt free.

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So why giving every dollar a job is key.

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Again, mental accounting add

just unnecessary complexity

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to managing your money.

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You can simplify your finances

with YNAB and its first rule

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of give every dollar a job.

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YNAB provides a user-friendly tool that

allows you to see exactly what your

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money is doing with a quick glance,

making your budget straightforward

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and eliminating that overwhelm of

trying to remember everything because

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we can't all remember everything.

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All right.

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Rule number two, embrace your true

expenses so beyond your immediate needs,

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those bills, mortgage or rent, cell phone

bill, electricity, things like that.

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Effective budgeting involves preparing

for the unexpected expected expenses.

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So this is where YNAB's second

rule of embrace your true

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expenses comes into play.

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This tackles those irregular costs

that often catch us off guard and

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end up feeling like an emergency.

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So those could be things like holiday

shopping, car repairs, vet bills back

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to school shopping, home maintenance,

any of those types of things.

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We know they're going to happen,

we just don't know how much

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they're gonna cost and when.

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But by consistently setting aside

a small portion of your income.

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You can take those potential

financial surprises and turn them into

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manageable events, it's totally fine.

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Why planning for the

unexpected is important.

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Don't let irregular expenses

derail your progress.

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It's so common to be going along.

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Things are going great, and boom,

that expense pops up and it feels

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like everything is off the rails

by following YNAB's second rule.

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This encourages you to plan for those

true expenses, and it gives you a

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format to do that right within the

software by setting up categories

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for things like car maintenance.

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Annual subscriptions, holiday bills.

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You create a reliable system that replaces

those popup reminders on a post-it

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note that you forget about, right?

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This helps you get clarity

and control, right?

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That's what we're after,

clarity and control.

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Not only over the expected things, but

the things that will come up eventually.

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Rule number three, roll with the punches.

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So it's super common that many people

think that budgeting is restrictive, but

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rule number three allows you to remove

that thinking so it acknowledges that.

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Monthly spending fluctuates.

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Right?

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That's kind of where this budgeting,

myth of budgeting is restrictive because

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you would normally sit down and put

yourself in a box and say, this is where

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I'm gonna spend it every single month.

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And when something goes wrong,

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it feels like you've lo lost.

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It feels like you failed.

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Maybe you might budget $500 for

groceries this month, but then.

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Spend less next month.

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Maybe the following month

you'll spend slightly more.

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That's okay.

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YNAB provides the

solution with flexibility.

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Not only is it easy to move money

between categories, it's encouraged

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if needed, so you don't have to stress

over small overages like an extra

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$20 spent on groceries this month.

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YNAB lets you quickly

move those funds around.

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From one category to the next,

but maintains your overall

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budget so you can still see where

everything else is accounted for.

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It's this ease of moving money around

that keeps you in control and positive

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about your financial progress.

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Again, flexibility is the key

with YNAB by following Rule three

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of rolling with the punches.

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This allows for dynamic budgeting, so

it means you're not locked into that

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rigid box, that plan that says you can't

spend more than X amount of dollars.

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YNAB gives you the real time

information that you need to be

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able to make adjustments once

a month or even day to day?

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And this proactive approach helps you

manage your money more effectively.

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Making small corrections before

they become big problems.

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And finally, rule number

four is age your money.

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Imagine this for a second.

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Imagine a life beyond the

paycheck to paycheck struggle.

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That's the power of YNAB's* Rule four.

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Basically what we're doing is

we're creating a time buffer

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between when you get paid.

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And when you spend that money, this

will help you build a financial

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foundation that allows your money

to work for you, and it helps you

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relieve some of that stress, really.

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And that's really the one of the

biggest things we're looking for, right?

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Because the ultimate aim is to

reach the point where you can live

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comfortably on last month's income.

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So you, so the paycheck that came

in last month is what is what you're

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using to pay your bills today.

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So if you get paid tomorrow, it's not

turning around and being spent, it is

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being budgeted for next month's expenses.

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That's where things start

to get really great.

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So again, breaking that paycheck to

paycheck cycle, if you're tired of

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what I lovingly maybe refer to as.

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Banking roulette.

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You know that nerve wracking

game of which is gonna hit

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first your paycheck or the bill.

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I've been there.

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It's not a place that I recommend

anyone being, it's not where we

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want to be, it's, it's not Provide

a stress free financial situation.

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YNAB's Rule Four offers that solution

by creating that financial cushion.

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Y NAB helps you avoid those close

calls and those fears of overdraft

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fees, providing you the financial

peace of mind that you're looking for.

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All right, let's do a quick

recap of the four rules.

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Rule number one, give every dollar

a job know exactly where your money

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is going by assigning a specific

purpose to every single dollar,

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whether that's $50 or $5,000.

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Give every dollar a job.

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Rule number two, embrace

your true expenses.

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This rule emphasizes planning

for the irregular but predictable

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expenses and helps prevent them

from derailing your entire budget.

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Rule number three, roll with the punches,

acknowledging that life is unpredictable.

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This role encourages flexibility and

adjustments to your budget as needed.

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Again, it's okay.

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It's not a failure.

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You are making informed

decisions with new information.

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And rule number four, age your money.

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This rule again, focuses on building

a time buffer between earning and

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spending, allowing you to move away

from living a paycheck to paycheck cycle

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and start gaining financial stability.

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Of course this process takes some

time and de dedication and achieving

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financial mastery with these rules

requires consistent effort and time.

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However, I promise you the

reward is well worth it.

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The increased awareness of your

spending habits, which often relate.

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Actually leads to reduced

spending and increased savings

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for your long-term goals.

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Those greatest life things

that we always talk about.

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What is it that you truly

want more money for?

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Those things that creates that

positive cycle of financial growth.

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So instead of fearing these guidelines,

take a moment to let them digest, and

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then embrace them as a starting point for

your journey to financial freedom, because

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with patience and commitment, you can

build a more secure and prosperous future.

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There you have it.

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Those are our four original

YNAB rules, like I mentioned.

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Again, next week we will talk about

the new five questions they share.

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If any of this resonated with

you, I would love to invite you

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inside my membership on school.

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It is a supportive place to heal

your relationship with money.

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Get practical help using YNAB, and finally

feel confident in managing your finances.

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You can check it

out@theexuberantelephant.com

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slash e mc for Empowered Money

Circle, and I will leave that

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link in the show notes below.

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Thanks so much for joining me today.

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I will talk to you on

the next episode soon.

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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.