Jesse ran across a quote from one of his favorite authors, Nassim Taleb. In his book Antifragile, Taleb advises "invest in preparedness, not prediction," which also neatly describes the goal of YNAB. We cannot predict the future with any certainty, so it's folly to behave as if we can with our spending habits. What we can do, however, is prepare for the future by embracing our future expenses, and even though we don't know exactly when (or how much) those future expenses will occur, we can save up a pile of cash to handle them.
Jesse gives the example of an old car. As his early 2000's Toyota Camry aged, he started dutifully socking away $150/mo to cover inevitable repairs as well as a replacement vehicle. Years later, he had enough for a replacement, but the car was still humming along. So in this case he did not successfully predict the future. He could have held off on saving that money and directed it toward something else. At the end of the day, however, by preparing for the day he needed a new car, Jesse had a pile of cash in his bank account. When that day didn't come, he still had lots of options, because he had the cash. If he hadn't prepared, and the car died earlier than expected... then he likely would have ended up having to borrow money for the car.
This gets back to the idea of being "antifragile." Owing money is a state of fragility, because someone else has a claim on your future cash flows until you pay off the debt. It prevents you from using your cash to prepare for the future.
Got a question for Jesse? Send him an email:
askjesse@ynab.com
Sign up for a free 34-day trial of YNAB at www.youneedabudget.com
Follow YNAB on social media:
Facebook: @iYNAB
Instagram: @youneedabudget
Twitter: @ynab
Tik Tok: @ynabofficial
The Last $300
When Is Your Age of Money Enough?
Rule Three Happens BEFORE Spending, Not After
EP 18 Money Stories: Surviving Financial Abuse with Dr. Kerry Roarke
Ask Jesse: Is All Money Just Savings?
Budgeting for 8 Weeks Abroad with Chrissy Sebald
EP 17 Money Stories: Living Debt Free in Manhattan, Budgeting Wisdom from Mom, and More with Christopher J. Campbell
Simple Investing with Jeremy Schneider of Personal Finance Club
Breaking Down Student Loan Forgiveness with Ben the Dollar Scholar
Nail Back to School with the Four Rules
Ask Jesse: What Should You Do with a Life-changing Windfall?
Lessons from the Bookshelf: What Jesse Has Been Reading Lately
Ask Jesse: So You Just Started Your First Real Job...
That Magical Moment (When You Really Want Something)
Ask Jesse: Kids, Allowances, and Cringey Purchases
Budgeting for the Nomadic Life
Ask Jesse: What's the Deal with Whole Life Insurance?
Debt and Pay Later Plans: An Independence Day Rant
What If Your Coworkers Weren't Stressed About Money?
Ask Jesse: How Do You Move On... From Budgeting?
Create your
podcast in
minutes
It is Free
We Study Billionaires - The Investor’s Podcast Network
Money Girl
So Money with Farnoosh Torabi
Money Tree Investing
The Disciplined Investor