YNAB4 or “You Need a Budget” in it’s current iteration is an online budgeting tool. I know, an utterly and insanely boring topic but budgeting, and in this instance, YNAB is something I think every one should discuss.
Budgeting is oddly still a bit of a taboo subject for many people and being intrinsically tied to money means it’s also a likely cause of many arguments for financial co-dependants. So why I am writing this? I’ve tried numerous ways of trying to budget but always fell back to the somewhat chaotic and constantly re-written good old fashioned spreadsheet and YNAB has been the only thing that is not only a success but something that I and my wife can work with.
So what is YNAB? On a very base level, it’s an online budgeting tool that can be accessed via your web browser or ,in my opinion more importantly, by the free phone apps. How it works however is so simple, that you’ll wonder why you didn’t think of it before.
At the heart of the YNAB Ethos are 4 rules:
Give every Dollar a Job – Don’t panic UK readers as it works with pounds as well, but simply put when you get income, assign it to a category or spend. That way you are saying to yourself, here is £100 and I’m going to stick £40 to my going out category and £60 for shopping. This way you can glance at the app at any time and know you’ve earmarked £40 to go out without having to worry about it since you’ve already covered the essentials. Knowing things are covered avoids unnecessary conversations about money and avoids stress. The phone applications can be used to add any transactions as you do them so that you are up to date as well. Budget as you go.
Embrace your true expenses – Another simple yet effective rule, break down those larger less frequent expenses. For example if you have a big expense in a few months, consider it a bill each each month and put the money to one side.
Roll with the Punches – I personally found this the most important part, if you don’t quite get it right then that’s ok. Took me a couple of months to get a proper idea of what I actually spend and so eventually you have to roll with the punches less and less.
Age your money – This is the long term goal of YNAB. The idea is that eventually you only have to spend money that you earned over 30 days ago. So January’s bills get paid by Novembers pay packet. Watching that little “Age” counter is actually….exciting. Gamifying your budget appeals to my inner geek.
The rules are all well and good but the important thing is always usability. I don’t want to spend a large amount of time doing a budget so YNAB is great for that. Come payday, you enter your income into YNAB and then following that first rule, divvy up the dollar between various categories of your making. This includes bills and things like socialising, holidays or even birthdays. You are creating a picture of what your money needs to do for you over the month.
Now the part both myself and my wife have found great is the mobile application. To me the worst part of budgeting is keeping track of things, the mobile app takes the pain out of it. For example, I’ve earmarked £60 for petrol for the month, I fill my car up and it comes to £30. I tell YNAB I’ve spend £30 on petrol via the App and it will take £30 off the petrol budget showing £30 remaining. It does this for every category so, at a glance you can see exactly how much is left in each “pot” of money. Fancy a takeaway? You told YNAB at the start of the month you have X amount of money for takeaway/eating out, look at the app and it can tell you straight away you’ve got money in that pot. No trying to figure out what’s left to come out. The whole point of budgeting is to take the stress out of controlling your cash flow and YNAB does it beautifully in my opinion. When you hear your spouse say “Oh we get to do YNAB tonight” in a positive light you know that it’s actually working.
So why am I Jibbering about a Budget application? Because it works. I hear friends and colleagues grumble about this or that unexpected expense and although YNAB can’t take that away it can make dealing with it easier. If my wittering about such a mundane topic convinces at least one of you to at least try it or at the very least take a look at your finances then I’ll consider it a win.
YNAB is a paid for service, costing $5 monthly(less if you pay annually) but there is a free 34 day trial for you to play with and the tutorials and help are massively helpful. It even has it’s own <ahref=”https://www.reddit.com/r/ynab”>Subreddit on reddit.com which is also full of helpful souls. Also don’t just take my word for it, the subreddit has various “Rave” posts which are essentially success stories thanks to YNAB. You won’t miss that couple of quid a month as once you get a handle on things, you’ll likely find you have more money available. I know, the only explanation is voodoo!
Be Excellent to Each other!