You Need a Budget: 13 Parallels Between Money and Productivity

I recently read and took notes on You Need a Budget (YNAB-Affiliate Link), a popular book on personal finance and budgeting (with accompanying software for managing budgets) by Jesse Mecham. My interest in this book is three-fold:

  1. I’m terrible at budgeting and need help
  2. I want to borrow principles and methods for managing money to help people manage their time and productivity
  3. YNAB has built an incredibly strong brand and community, and I want to learn from them as I write my own book

As I read and digested the YNAB approach to personal finance, I began to sense a deep connection to principles of productivity. I’ve concluded that there is a series of fundamental mindset shifts required to manage both money and work. It isn’t the particular tool or method you use that makes the difference. It is a shift in perspective and attitude.

I’ve briefly summarized the YNAB approach below, and you can view my 1,000-word notes here in a downloadable Evernote note. After that, I’ll outline what I believe are the key shifts in mindset shared by personal finance and personal productivity.

YNAB Summary

Here’s a quick summary of the overall method, as I understand it:

  1. Rule 0: Identify your top priorityfor your money (growth, supporting your family, freedom, hobbies, fixing the house, security, retirement, learning)
  2. Rule 1: Give every dollar a job, by creating accounts for each of the goals you want to fund (buying a house, saving for a wedding, buying a car, going on vacation), and assigning a portion of the money you currently have to each of them, until they are fully funded
  3. Rule 2: Embrace your true expenses, by creating accounts for each infrequent, but predictable expense (car repair, doctor’s bills, new computer, Christmas gifts) and assigning a portion of the money you currently have to each of them, until they are fully funded
  4. Rule 3: Roll with the punches, adapting to each month’s unique circumstances by pulling money from lower priority accounts to fund higher priority ones
  5. Rule 4: Age your money, by waiting as long as possible from the moment money comes in, to the moment it is spent, which creates a cash buffer for riding out fluctuations in income and expenses
  6. Engage with your money consistently, by making intentional decisions whenever money comes in about which accounts it should fund
  7. Once all accounts have been funded, do whatever you want with your money!

Parallels to Productivity

The parallels between managing a budget and managing time/tasks are striking.

It makes sense that they would be: each one requires managing a flow of a valuable, but finite resource. They are both complex domains with many relevant factors to consider, that also have a tremendous impact on our quality of life and future. They both can be partially automated, but not completely, requiring us to make decisions to achieve the outcomes we want.

Here are the principles underlying the budgeting method described in this book, that I believe apply equally well to managing our work:


Mecham recommends sitting down with your spouse or partner, and really taking the time to answer the question, “What do I want my money to do for me?” Everything else depends on the answer: if you value freedom and autonomy, your decisions will look very different from someone who values security and stability.

It’s likewise very valuable to ask yourself, “What do I want my work to do for me?” Besides the obvious answer of “provide a paycheck,” the conclusion you come to has profound implications for where, when, and how you work.

If you value creativity and self-expression, but an ever greater proportion of your to do list is filled with administrative tasks, you will eventually experience dissatisfaction and burnout, regardless of how many hours you work or how much it pays.

And this isn’t a one-time effort: both your purpose and your work are constantly shifting, so revisiting and realigning them is probably the most important thing you can do for your long-term progress.


With both money and time, the less confident and sophisticated one’s thinking is, the greater the tendency to frame decisions and actions as black and white, yes or no, good or bad.

I think this is because the fear, uncertainty, and other emotions surrounding the topic make every decision feel dramatic and risky. The riskier a decision feels, the less likely we are to take action until everything is just right (which often never happens).

YNAB recommends replacing closed-ended, binary questions, such as “Am I within my budget this month?”, with open-ended ones, such as “Where can I pull funds from to balance my budgets this month?” This inquisitive attitude activates your curiosity, opening up new options you may not have previously considered.

Likewise, a more sophisticated way of working replaces black and white questions, such as “Did I get enough done today?”, with more nuanced ones, like “What could I have done differently today?” This trains you in viewing your tasks not as good or bad, but as subtle tradeoffs between priorities that you can learn to navigate skillfully.


When we are stuck, whether in budgeting or productivity, it is most often because we simply don’t have the information required to make a confident decision. Instead of judging the feeling of stuckness or overwhelm as our fault, we can view it as a valuable indicator that more information is needed.

In the YNAB approach to budgeting, not having any remaining funds in a “splurge” category doesn’t mean you’re being restricted or deprived. It means that you’ve chosen to use those funds to fund higher priority accounts. You and your true priorities are the source of your finances, instead of being victims of it.

At work, we’re often seeking more “clarity” before moving forward on something. But there is always a clear next action available to you: any time you’re not sure how to proceed, surface more information. This can include reviewing your emails for the latest updates, talking to colleagues or your boss, or stepping back to make a plan.

The trick is to perform these actions without getting sucked into dealing with them. You want to move quickly and touch lightly, staying at a high elevation and looking for only the information that will help you make better decisions about what to do next, postponing any heavy work until after you’ve made those decisions.


Both money and productivity boil down to a relationship between your present and future self. It is the existence of a desired future that necessitates planning and decision making. We are extracting value from the current flow of money/time, to provide our future selves more freedom, wealth, or happiness.

Whether you are sitting down to review your budgets, or review your priorities for the week, anything you can do to strengthen that relationship is valuable. Reflecting on the current month’s spending and whether it is in line with your budgets is really about fine-tuning your expectations and behavior. Doing so non-judgmentally allows your two selves to influence each other without fighting each other, encouraging them to follow through on each others’ promises.


Both money and time can be consumed by “unexpected” events. A death in the family requires a barrage of last-minute funeral expenses. A client threatening to walk away requires a flurry of unscheduled meetings and calls.

But the truth is, the unpredictable is totally predictable. We know that life will throw these curveballs at us nearly every month, so it falls to us to prepare for the inevitable. YNAB recommends creating accounts for each of the “emergency” expenses we are likely to encounter at any point in the future, and to fund them up to a reasonable level. This ensures that when your dog needs a vet appointment, you have funds ready and waiting, instead of scrambling for cash.

The same is true of managing a to do list. Many weeks it may seem unnecessary to perform a Weekly Review – emptying your email inbox, clearing your computer desktop, closing browser tabs, etc. But if we don’t do these things regularly, they tend to blow up right at the worst possible moments. Your computer runs out of space just as you need to download a large file. The new tab you open for an urgent task is exactly the one that crashes your browser.

Preventative maintenance is what allows you to ride out the crises and emergencies, without being completely thrown off track from your priorities. It can mitigate the greatest risks with a minimal investment of time, freeing you to take on more creative risks.


Managing flows of money or time is a never-ending process, which means there are few built-in stopping points. We can often feel starved for a sense of completion, for that celebration at the finish line.

YNAB recommends funding an account only until it has enough funds, and then stopping. Instead of one giant “emergency savings” fund that is never quite big enough (and so tempting to “borrow from”), you have a series of smaller, more targeted savings accounts designated for specific purposes. Once all your accounts have been funded, you’re free to spend anything left over however you want!

The same mechanism is valuable in productivity. Punctuating the never-ending flow of tasks with milestones – project completions, weekly reviews, and finishing the to do list – are not nice-to-haves. They are absolutely necessary for providing closure and fulfillment. After reaching a milestone, you are free to spend your time and energy as you want.


Implicit in the YNAB philosophy is the idea that there is no such thing as a failure, only a reprioritization. A budget for a specific category of spending is a plan, but like all useful plans, it is designed to change. If you go over your grocery budget for the month, that is neither good nor bad. It is a useful signal – your past self communicating to your present self that she has needs and priorities different from what you expected.

What you do with that information is up to you. If it happens once or twice it can be treated as an anomaly to keep an eye on. If it happens month after month, it is probably a sign that you need to either change your expectations, or change your behavior.

Likewise with a to do list, which is a plan for which actions you will take in the near future. We tend to either meticulously plan and prioritize our to do list, and then stick to it slavishly because of these sunk costs, or we spend no time on it, and feel like the whole week is spent reacting to emergencies. There is a middle ground: put real effort and intention into the to do list, and then adapt and respond as the week unfolds.


There is a deeply seated human tendency, when things aren’t going how we believe they “should go,” to simply deny reality. We can make up justifications, rationalizations, and excuses effortlessly, and maintain them even when the impact on our health, happiness, and relationships becomes unbearable.

Simply knowing what is happening is half the battle when it comes to money or productivity. Getting a hold on the “current state” requires letting go of the lenses and stories we use to buffer reality and protect our ego. This is why making a comprehensive Project List is so powerful – it lays out the current state of affairs in objective detail, allowing us to make fully informed decisions.


YNAB introduces the idea of “aging” your money, i.e. increasing the amount of time between the moment it comes in, and the moment it goes out. This creates a reserve of cash that you can draw on to even out fluctuations in income or expenses, or both.

The idea is familiar in finance, but no less important in productivity. If tasks are arriving in front of you and immediately being executed, that looks like efficiency. But what are the chances that the thing landing in front of you is the most strategic or high-leverage thing you can do at this moment? Practically nil.

This is where “capturing” open loops is so valuable. It’s not just that you’re freeing up mental capacity by writing things down. You are also creating a pool of diverse tasks that you can draw upon when you’re looking for a next action. The larger this pool, the better, because it provides you more potential options for what to work on, and more strategic combinations of tasks.

This may seem counter-intuitive, because we’re taught that a small to do list is a good to do list. But as long as you can reframe each “task” from an absolute obligation, to a potential option, your freedom increases as your to do list grows.


YNAB contrasts with the “set it and forget it” approach, arguing that you don’t actually want your money to be on autopilot. Instead, you want to make it easy to get the current financial picture, and to route funds to various accounts that have been set up in advance.

Likewise with productivity, you wouldn’t want a “perfect system” to tell you exactly what to do each moment. There is at least as much creativity and intention required to decide what your work is, as doing it. As computers become smarter and smarter, this “meta-work” becomes more important, not less. Who will tell the computers the work that needs doing?


Mecham explains that what most people think of as budgeting is really forecasting – trying to predict how much money will come in, and how much money will go out, month by month and category by category. This not only is difficult and error-prone, it’s not really necessary for an individual’s finances. They can change their spending on a dime, so it’s more important to manage the money that’s currently in the accounts.

Similarly with productivity, long-range plans aren’t really necessary for individual workers or even small businesses. There aren’t millions of dollars on the line, or dozens of collaborators to synchronize, so the horizon of planning shifts to the present and very near future. Document what’s on your plate now, make a plan looking a few days into the future, and that will be enough most of the time.


Scarcity in either money or time is one of the constant scourges of modern life. But it can actually be a tremendous source of clarity. When funds dry up, that is the exact moment when you need to decide what’s most important, and what can go. Talking to a financial planner recently, he said the biggest mistake people make is waiting until they’ve “put their ducks in a row” to talk to a planner. The best time to talk to one is when you’re deepest in debt, with no income, because that is when a plan can make a difference.

The same is true of work – an abundance of time often leads to wasted effort, lack of direction, aimlessness, and unclear priorities. Having a full-time job or a family to take care of can be a beautiful constraint, forcing you to approach your goals from an unorthodox angle.


The greatest enemy of effective self-management is when we start viewing that self as an enemy. It’s so easy to start internalizing disappointments and frustrations, making them mean something about our character. Letting go of self-judgment feels scary, because it seems like the only tool we have to whip our selves into submission.

But self-punishment can only take you so far. It can help with the small things, but when it comes time to step into your greatness, to fulfill your potential, you simply cannot be at war with yourself. This is the connection between healing and performance: every harsh voice in our head is an echo of a wound or a trauma from our past.

Turning them into voices of support is the journey of personal growth. It involves forgiveness, of yourself and others. It can include accessing and releasing things in the body. It often needs to be done with others, seeing and being seen, reinterpreting your view of your own identity through the eyes of others.

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