When it comes to budgeting, a hands-on approach typically yields the best results. If you consider yourself a type-A person who likes to have a say in details of your personal budgeting journey, then YNAB is an excellent option for you.
Hey guys, before we get started, I wanted to let you know that I am not an affiliate for this program. I found their tool extremely useful and it made a big difference in my financial life, and I thought you’d find it useful too!
You Need a Budget (YNAB) is a personal finance software and mobile application that helps you identify and reach your budgeting goals with a long list of features and customizations. Essentially, YNAB is a tool that helps you prioritize and make spending decisions based on your goals – down to the very last penny.
This app only takes a few minutes to get started and offers workshops and budgeting advice along the way to simplify the learning. Basically, you’ll start with the free 34-day trial to see if YNAB is the right budgeting app for you, and then you’ll pay a small monthly fee after that. YNAB puts you in control of your budget and encourages you to set spending and savings goals that are proactive and practical. Let’s dive into the details.
💰The YNAB approach to Budgeting
With YNAB, every dollar has a job. Assign each dollar you earn to an expense in your life based on the priorities you set. Consider all the ways you spend your money now (mortgage/rent, food, bills, debt) and how you would like to spend your money in the future (vacation, new car, your dreams!). YNAB aims to get you on track, so that you can start saving for your future.
The structure of this app will put you in control of your own money so that you can work towards your dreams without the burden of debt.
This does not let you forget about those larger, less-frequent expenses that come up from time to time (something we’re probably all guilty of, am I right?). Those sporadic expenses like Christmas shopping, car repairs, insurance premiums, or a new computer add up. They’re painful!
But, YNAB gives you space to plan for them so you don’t panic when they happen. Essentially, it makes budgeting easy to help you change your habits and start spending within your means while saving for the things that matter most.
💵 Getting Started
This is a zero-based budgeting app, which means you will only work with money that you actually have. When getting started with the app, have your cards and bank account information ready. Upon creating an account, you will be asked to link all of your financial accounts.
On average, new budgeters save $600 their first two months, and more than $6,000 their first year.
YNAB
Link Your Accounts
Once you link them to the app, your expenses will automatically be updated and included into your budgeting summary (although this step is entirely optional, you can also input all expenses and income manually). Or, you can choose to do both! This is the kind of freedom and hands-on control we were talking about when we said this is ideal for the type-A budgeter.
Once you set up your account to automatically import income and spending transactions, you’ll be able to monitor your accounts in real time. This app allows you to manually import cash transactions as you make them.
Monthly Expenses
You will also need to create a general idea of your monthly expenses. Gather your monthly bills (and the dates they are due) so that you can input this information into your budget. Be sure to also consider the bills that may not occur every month, even if you don’t know exactly when they will happen or how much they will cost.
We recommend using this as a fresh opportunity to push all old ideas of budgeting and money management out of your mind. This will dramatically change how you manage your finances, with the ultimate goal of giving you more financial freedom than ever before.
A big part of the journey to financial freedom that this offers is the ability to gain some serious insight on your spending tendencies – and in the long run, this awareness will help you save BIG.
Overall, the app is ultra user-friendly and uses a strategic system based on successful financial planning principles that help you budget more effectively than ever.
🏦 Create a Budget and Set Goals
YNAB comes with a number of default budgeting categories to help get you started. You can create and add your own categories, or rename and reorganize them to design a budget that works for you.
Once you have organized and personalized your categories, set some financial goals within the app. The goals you set for yourself will serve as visual reminders throughout each month of budgeting.
Some sample categories include:
- Groceries
- Gas & auto expenses
- Utilities
- Rent/Mortgage
- Fitness
- Internet
- Medical expenses
- School expenses/shopping
- Quality of life: vacation, dining, weekly fun
Add goals to each category you use, or at least to the categories you would like to focus on (such as setting aside a monthly contribution towards next summer’s vacation!).
For example, if you’d like to set a budget of $250 for grocery shopping each month, YNAB will track this category and will notify you to let you know if you have gone over or under your budget at the end of the month. If you are under, the remainder of the budget will roll over to next month’s grocery fund.
There are quite a few category options for “fun money” as well. You can choose categories such as dining out, concert tickets, and road trips to also be a part of your monthly budgeting.
Curb Overspending
Brilliantly, if needed, you can even decide to curb your own spending habits by blocking certain sites that can be very tempting (such as Amazon, etc.) when your “fun money” budget has run out for the month. Simply customize your notifications from YNAB to help curb your spending and to reach your goals.
There is also an option to set a time limit for your goals. This structure allows you to set money aside each month until you reach your goal by a certain date, which can be super useful for saving up for gifts and big expenses. For example, if you were to start in January and set aside $100 per month for Christmas shopping, by December you will have reached your $1,200 goal!
Savings Goals
The good news is, you can set goals to build your savings as well. Set monthly contributions and target balance goals. If you would like to have a reserve fund for those things you “might” need one day in the future (a new car or a down payment on a house), set an amount that you have in mind and YNAB will send you reminders for how to budget monthly to stay on track towards these savings.
When each month is finished, any leftover dollars will roll over to the next month, remaining in their respective categories. If you happen to overspend in certain categories, that amount will be subtracted from the same categories for the next month.
💲 Guide Your Spending and Savings
Start by assigning every dollar you earn to a job that you need it to do for you. Start with your immediate obligations (rent/mortgage, utilities, groceries, car payments, etc.). Then consider other expenses that don’t always happen immediately but you know will eventually come up (car insurance, medical expenses, gifts).
This forward-thinking way of budgeting will be a lifesaver on those surprise days when your car breaks down or when you remember your mother’s birthday a day too late. Don’t forget to set aside some money for the fun stuff! Build your budget so that there is some money left over for doing the things you enjoy.
Zero Based Budget
Continue to structure your budget within the YNAB app until your “to be budgeted” amount is at zero. Once you reach zero, you will have a great idea of where your money goes each month. From the beginning you will get a better idea of your spending habits as the app sends you alerts regarding your budget and the goals you set.
Once you have set your budget, allow the app to help you stay on track. Prior to making a purchase, check the app and see how much you have set aside for spending in that category. You’ll guide your decisions based on this information.
Regardless of your bank account balance, you assigned each dollar to a job so you can track your behavior. That money you set aside for Christmas presents or a new car someday already has a job, so you shouldn’t use it for something else. Stick to the monthly budget you set and you’ll achieve your goals!
As you use YNAB and learn more about your financial behaviors from a budgeting perspective, your monthly spending will inevitably change. It is okay to move money around, change your categories, and shift your goals. Stay flexible and adjust your budget when things don’t go exactly as you had planned.
💸 Why This App
Why YNAB when there are so many options for budgeting and finance apps these days? It gives you flexibility and encourages you to be proactive about your budgeting. It requires you to plan ahead and be mindful of every dollar which will raise awareness of your own spending, putting you in control of your finances and your life.
YNAB helps you change your spending behaviors, give yourself goals, and shape your spending and savings towards a more financially stable future.
Although it may be challenging at first, taking a look at your finances will help to put things in perspective. You may not like what you see at first, but this may be the best first step you have ever taken towards organizing your finances. It gives you structure to organize your financial life so that you can make better decisions to achieve your goals. ‘
Other Tools
Other personal finance apps, budgeting apps, and spreadsheets may have helped you track expenses in the past, but this:
- Lays it all out for you
- Categorizes your spending habits
- Helps you to set goals
It will change the way you spend and save! This is why an open mind is crucial when embarking on the budgeting journey. Think big about your future and set realistic goals using this unique system for monitoring and updating your budget.
Learning Curve
It’s noteworthy to mention that there is a slight learning curve with YNAB but taking the time to navigate the app is well worth it. Shortly after you sign up, a YNAB coach will actually be in touch with you to offer a 15-minute intro session to answer any questions you might have.
The best part is that you can try YNAB for free, so there’s no risk from the start. The app comes with a 34-day free trial so you can give it a shot before committing (no credit card required).
How Much Does it Cost?
If you become hooked, YNAB has a monthly ($11.99/month) or annual pricing plan ($84/year). Yes, it might seem pricey, particularly considering that you are trying to save money. However, according to the YNAB site, on average, new users saved $600 within their first two months and $6,000 within their first year of budgeting with this app. It also comes with a no risk, 100% money back guarantee in case you change your mind a few months into it and offers a full refund with no questions asked.
Pros & Cons
| Pros | Cons |
| Great customer service | Learning Curve |
| No Advertising | Some Technical Issues |
| User-Friendly | There is a Cost |
| Encourages Goal Setting | |
| Tutorials & Support | |
| Hands-On Budgeting | |
| Customization |
📱 Unique Features
YNAB also offers some great features including a proven four rule method, budget sharing, goal tracking, reports, personal support, and secure data.
The four rule method is a basic system that helped many users get out of debt and start saving money.
Four Rules
- Give every dollar a job. For every dollar you earn, assign it to a prioritized task and stick to the plan.
- Anticipate large and less-frequent expenses. The app calls these “true expenses.” They are those pesky surprises that can really put a dent in your savings. With YNAB you will set money aside for these so that you are not sidelined when they arise.
- Keep your budget flexible without guilt. Pay attention to any overspending and “roll with the punches.” Review your categories and move money around as needed. The original job that you assigned to a dollar may change, and that’s okay.
- Age your money encourages consistently spending less than you earn so that you are spending money that is at least 30 days old. Think: pay your mortgage for the month of May with the income you earned in April.
Keep Track
You will have real-time access to your information from any device. This makes budget sharing simple and allows you to keep your partner in the loop.
The goal tracking feature keeps things light, so that rather than focusing on how to restrict yourself, you are focusing on the goals you want to reach. These goals become possible when you get a birds eye view of your spending habits with the reports feature. Watch your progress and get an idea of where you’re improving and where you could still use a push.
Support
YNAB offers plenty of support through direct customer service and several online workshops per week. There are also many blog posts on virtually every topic to help you navigate the app and optimize it for all of your budgeting needs.
There is an online forum where you can ask questions to other YNAB users and even request new features or report bugs. Finally, your data is secure. Since it was launched in 2004, security has always been a priority and all user information is encrypted. It is available for use with Windows and Mac, including Apple watch and Alexa.
💵 Plan for the Future
Are you ready to take full control of your finances? If you’ve found yourself living paycheck-to-paycheck, want to get your family out of debt, or simply aspire to change some of your spending habits, this may be the solution for you.
Even if you have never used a budgeting app before, the simple user-friendly interface and unlimited access to customer service and informational resources will help get you started and on your way to saving more and spending less.
Sign up for You Need a Budget
Even with the few cons listed above, it is still worth signing up for the free 34-day trial to explore the possibilities. With time and with the help of the tool, budgeting will feel natural and your habits will begin to reflect the financial future that you dream of.
It encourages financial responsibility through learning more about personal finance in a friendly way. Managing finances does not have to be intimidating or complicated and YNAB simplifies the process, making it accessible for everyone. It will give you insight to help you meet your financial goals and create habits to keep you living within your means.
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