Rule Two basically says that you need to give every dollar a job. It helps you clearly establish your priorities, cut wasteful (no value added) spending, and focus resources where you really care.

Rule Four basically stipulates that what you overspend this month will be deducted from next month’s available funds. It’s called ‘Rolling with the Punches’ and it gives you actual consequences you’re forced to deal with — instead of some useless budget variance report.

Rule Three is to Save for a Rainy Day. You set aside monthly amounts for expenses that happen less frequently (but are usually larger). For example, Christmas, property taxes, car insurance, etc. These can be both known (property taxes) and unknown (car repairs) expenses infrequent expenses. Following Rule Three lets you smooth out your cash flow and avert most crises before they ever start.