One idea, one quote, one question. 90 seconds.
The Idea
Jesse Mecham is the founder of YNAB, a budgeting platform used by millions of people, and he described a moment on the podcast this week that I think most people will recognize. He said a typical YNAB user is around 35 years old, making more money than they’ve ever made, and they pull up their W-2 at tax time and think HR made a mistake. There’s no way they earned that much, because they feel exactly where they started. Maybe even a little worse off. And then they remember being 25 and telling themselves that if they ever made this much, everything would be solved.
That’s not just a feeling. Bank of America published data last year showing that one in five households earning over $150,000 a year is spending more than 95% of their income on necessities. A separate study by PYMNTS found that over half of Americans earning six figures reported living paycheck to paycheck. The pattern is called lifestyle creep, and it means that as your income goes up, your spending quietly rises to match it, so the gap between what you earn and what you need never actually opens up no matter how much more you make.
Jesse built YNAB around the idea that this cycle isn’t an income problem. It started as a spreadsheet he made for himself and his wife when they were broke college students trying to cover rent. That spreadsheet became a platform used by millions, a Wall Street Journal bestselling book, and a company Fortune named its #1 best small company to work for. And the core idea behind all of it is a phrase he kept coming back to in our conversation: you can have anything, but not everything.
What he means is that most people never sit down and decide what their money is actually for. So it goes out in a hundred directions and none of them feel chosen. He put it simply: when people are spending here and their values are here, that gap is where all the stress lives. All you’re trying to do is close it, so that when you spend the money you worked for on things you actually care about, the guilt and the worry go away. Not because you have more money, but because you made the decisions before the money started moving.
Quote
“Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” Mr. Micawber in David Copperfield, Charles Dickens, 1850
Dickens based Mr. Micawber on his own father, who went to debtor’s prison when Dickens was twelve.
Question
If someone looked at how you spent money last month, would they be able to tell what matters to you?
Listen
Jesse Mecham: The Man Who Made Millions Teaching People to Love Budgeting. The W-2 moment is what hooked me, but the conversation goes into territory I wasn’t expecting. Jesse tells a story about not being able to buy a 50-cent donut as a college student and realizing that traditional money advice had failed him. He gets into why spending feels shameful for so many people, why he needed a therapist to call him out on his own relationship with money before he could buy a car he could easily afford, and how his wife Julie has been the one constant through 20 years of building YNAB from a spreadsheet into what it is now.
Read
Happy Money by Elizabeth Dunn and Michael Norton. Dunn is a psychologist at UBC and Norton is at Harvard Business School, and they spent years studying why some spending makes people happier and other spending doesn’t. Their finding is that most of our intuitions about what to buy are wrong, and that small shifts in how you spend, like choosing experiences over things or paying for something before you use it instead of after, can change how satisfied you feel with your money without changing how much of it you have.
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— Scott