Your $500 account balance leads you to believe you’re flush with cash, so you spring for sushi. (And you go big.) But a few days later some bills come due and you don’t have the money. (Because you ate it.) You’re officially stressed.

You have $500 in your account and assign every dollar a job by dividing the $500 into various categories. When a friend invites you to sushi, you consult your Eating Out category (with a $10 balance) and suggest your friend come over to your place to split a pizza instead. A few days later, some bills come due–and you just pay them.

You have $1000 in your account. After some quick (probably faulty) math, you tally your bills. Total (in your head): $770. You’re flush with cash! $1000 minus $770 = $230 of free money! But you forgot about your insurance premium ($600), so now you’re stressed. Credit card to the rescue—and just like that you’re even deeper in debt.

You looked ahead six months ago. You’ve been budgeting $100 every month for the insurance premium. Now it’s due, and you have $600 ready to go. Where did the “extra” $100/month come from? When you follow Rule One and start giving every dollar a job, your money starts to obey. It lines itself up with your priorities. It’s not magic, though it feels that way. So, that cRaZy month, that would have sent you into complete and utter panic mode, was no big deal. Kind of boring, actually.

When you overspend, you feel like a failure. Budgets don’t work. This whole idea of trying to “guess” what you will spend, is a complete waste of time. You don’t “need a budget,” you “need a raise.” If you only earned just a bit more money, everything would be fine! (Those last two sentences are dripping with sarcasm.)

You overspend (it happens) and your budget nudges you—in an überfriendly voice—“Whoops! You overspent on Groceries. No worries! Just move over some surplus money from your Travel category. Good to go!” You don’t feel like a failure or tempted to quit. Budgets do work. You’ve just never budgeted like this before.

John lives paycheck to paycheck. He knows the date of his next paycheck well in advance and has a stack of bills he’s timing to go out as soon as the paycheck hits his account—a stressful juggling act. He’s habitually anxious and frantic, and can’t stop thinking about how much he needs a vacation. But who has money for that?

John has at least a month’s worth of paychecks budgeted before the month even starts. Lots of money, just sitting around, waiting to do its job. When bills arrive, he pays them—actually, he put them on autopay a couple months ago. He’s habitually happy and content, and can’t stop thinking about the money he plans to invest and next summer’s vacation.