If you are like me, you have scratched your head and wondered how it’s going to work out. You’ve stared at your bank account and see things crumbling around you. You realize that there isn’t enough money to last until the end of the month.
About 8 years ago I stumbled into Dave Ramsey and his baby step program. I tried very hard to stick to that plan. It works miraculously if you can stay on it. I found that I needed something a little more interactive than the envelopes. I do so much digitally now that cash just didn’t work properly for me, and that is okay. I found YNAB in 2015 and never looked back.
YNAB stands for You Need A Budget. You really do! A budget is a way of telling your money what it’s job is. I was an adoptee if YNAB version 4 and loved it. I had to manually import transactions which made it very interactive and I always knew what was going on in each account. When following Dave’s plan, I ended up opening a bunch of checking and savings accounts to set money aside and allocate it to bills and savings goals. a proper budget sees through that so you don’t need extra accounts.
YNAB has been around for several years and they recently released an updated subscription model which auto imports your bank transactions. You still have to approve them so the interactive piece isn’t missing.
YNAB is more than just a budget software program, it is a process of money management. The idea is to break living paycheck to paycheck by using last months income on future items. Basically having an emergency fund built up so you don’t have to live paycheck to paycheck. They have their own rules to follow and everything!
YNAB has four rules. Each of these rules are simple to follow and allow you to configure your money around your life and not the other way around. You have to do something different if you want to change the results.
Give Every Dollar A Job
Giving every dollar a job is the fundamentals of a Zero Based Budget. This means your money has a job to do and you tell it exactly how to do it. This rule enables you to make decisions without sweating it out at the end of the month. You can look at your budget and quickly decide if you have the funds to eat out, buy that latest book, or pay those pesky bills.
Embrace Your Expenses
Let’s face it, bills and expenses are part of being an adult unfortunately. That doesn’t mean that they have to rule your life. YNAB gives you the ability to plan for your expenses ahead of time. Christmas happens at the same time every year. You should be ready for it. Having those funds set aside ahead of time is a load of stress off your shoulders.
Roll With the Punches
Things happen. When you budget, ultimately you will overspend somewhere. Something will happen whether the car breaks down or your kid gets sick. Unforeseen expenses will happen and you need to deal with them. Deal with them as they come. You can roll with this hits. Move money around in your budget to cover it. You will have less to spend elsewhere but its on your mind now.
Age Your Money
Rule four used to be called live on last months income. Which is basically what this is saying too. As you build your budget your account should grow, and you will have more money set aside for emergencies and planned expenses. Thats good! It means you are no longer living paycheck to paycheck. YNAB wants your money to be at least 30 days old. If it is older than that, its even better. What it means is you are not spending every penny as soon as it comes in and you are creating discipline!
YNAB allows you to track your money and give it a job. The budget is as easy as creating a category and assigning money to it from your income. Then as you spend, you choose to deduct the amount spent from that category. You then have a real time view of how much you can spend on any category in your life.
Utilize the iOS and Android apps to take your budget anywhere and share it with your family. Keep your expenses on track anywhere you go and update your purchases as they are made.
YNAB creates that ability too but even more. You can run interactive reports on your spending habits, income and even your net worth. These are great for those who need to see numbers and patterns.
If you have read my bullet journal article, you know that I am a big proponent of doing what works for you. While I enjoy Dave Ramsey’s teachings, they are very basic and not for everyone. While I agree with the discipline and the behavioral issues, his plan for money is not truly a budget. Instead it is a forecast and makes it harder to adapt when you overspend on accident.
YNAB allows you to roll with the punches by moving money freely and easily, something that is harder with a paper budget.
The new ability to set goals and in YNAB is a great feature to save money from the start and do the things that you love. The baby steps are great and especially good for those people who can follow a rigorous routine to make something happen. I get bored easily and having very little play money or having a long time to meeting my goals is an issue for me. Dave doesn’t say to not have fun, but to reduce what you spend on fun while getting out of debt. YNAB tells you to live your life according to your priorities.
Very similar messages if your priorities are to get out of debt. With a family your priorities may be to make memories, so you put off paying down the debt to nothing over the next year and instead take a vacation and pay off the debt over two years. Thats Okay! It has been a change in mindeset for me, but I still follow a lot of Dave Ramsey’s principles while using YNAB to track my spending, and goals.
WIN A YEAR OF YNAB
This was a question I struggled with. I had bought YNAB4 which was a one time fee, not a subscription. I gave the new YNAB a shot and it was so much better. The redesign and additional features over YNAB4 was worth every penny. Their support team is fantastic and when you have an issue, they are right there to help. You can even budget for the renew every year using YNAB. It is something around $6 a month, about a cup of coffee at starbucks.
Use this link: http://bit.ly/2KVSy4v to sign up and get a 34 day free trial and a discount on your subcription if you sign up.
I would highly recommend that you give it a shot. 34 days and you can decide to keep or cancel, No credit card required for the trial period,