About 6 years ago, when I was making decent money at my job, my husband was bringing in a part-time salary as a teaching assistant, and we had relatively low expenses because we had only one child, I budgeted monthly, but my budget was fluid, to say the least.
Of course, I made sure to set aside money for irregular expenses like car repairs, car and renter’s insurance, etc. However, I didn’t regularly set aside money to grow our emergency fund or put additional in our retirement fund beyond my work contributions. Sometimes we spent more eating out than we should, but everything always worked out because we had a budgeting surplus.
Four years ago, our income plummeted, and we went into debt. The last 2.5 years have been tough ones financially because our income, while steadily increasing, has remained low. We’re also spending money paying down debt.
Out of necessity, I created a budget we had to stick to. Still, because I didn’t have enough money to set aside for irregular expenses, we always fell behind.
This past January, I started keeping track of our spending old school style by writing everything down on a piece of paper. I thought this would help, but I still struggled, and budgeting and reconciling spending became a two hour affair every Saturday night. Not fun!
Enter YNAB (You Need a Budget).
YNAB Helped Me Find My Budgeting Flaws
YNAB is like an accounting system. I’ve been using it for 3 months now, and while there were some quirks I had to figure out (like how to move money in the YNAB system from checking to savings without showing the money as spent), I now love the system.
Here’s what I’ve discovered:
1. There’s no such thing as erase and start over.
Sometimes by the end of the month, I’d just say forget it, I’ll start the budget fresh at the beginning of the month. Of course, this is silly. Even though I may be frustrated trying to figure out where the money was spent, there is no real do over. I have to live with the consequences of overspending, even if I tried to ignore it in the budget. YNAB helps hold me accountable.
2. The state of my budget is available at a glance.
We only get $20 a month for spending money. If I’d like to pick up a treat for the kids out of my spending money, I just need to pull up YNAB to see how much I still have available. If the money has already been spent, that’s it, I can’t buy the treat. Or, I may see the full $20 available, so I can feel fine about spending the money.
3. I can set my budget based on the money I currently have available.
YNAB keeps a running total of extra money that was not budgeted the month before, how much was overspent the previous month, how much was earned for the current month, and how much is budgeted for the current month. At the first of the month, I can see at a glance how much money I have available to budget for that month. If I earn extra money during the month, I can add that money to categories that may be underfunded.
The Most Important Thing YNAB Is Doing For Me
Truly, the most important thing YNAB is doing for me is teaching me to say no. Even though I’m frugal in many aspects of my life, because we are working with a fairly low income, I still need to tell myself, “No, we can’t do X (or buy X) because we don’t have the money.” Learning how to behave within the confines of our budget requires a paradigm shift. YNAB is helping me do this.
If you’re interested in YNAB, it does cost $60 upfront, but in my opinion, the product is well worth that. I’ve only been using it for 3 months, but I can see my behavior changing as a result. I can’t wait to see how much better my budget is after 6 more months.
Have you used YNAB before? If so, what’s your opinion?
Peter Anderson says
We use YNAB at our house as well (as you know since you linked my review), and there are times where I absolutely hate YNAB – because it forces us to come to grips with just how much money we spend on a monthly basis.
It’s extremely easy to record all your transactions, and see right away how your budget is doing, if you’re on budget, or over budget. It has definitely opened our eyes to some of our problem spending areas in our budget, and helped us to plug those holes. After our move last month, we’ve stopped paying much attention to YNAB and our budget, and things have suffered. Time to get back to YNAB and regular budget meetings!
Philip Paradisis says
Keep an eye out on steampowered.com — they have had 2 sales on YNAB this year, the lowest price being $15. Although I missed that one, I put YNAB on the wishlist and received an email when it was back on sale again (although at a slightly higher price). In my opinion, $60 is a great price for a great product — but how sweet is the software on a sale price?
That sounds really good. Now if I could only figure out a way to get it for one of my grown kids without offending them! Thanks for making me aware of YNAB, Melissa. I’ll be looking for it on sale via steampowered.com (Thanks, Philip!).
Nice article. I’m always trying to decide if I want to buy YNAB or just keep using mint.com for free. Still unsure.
Peter Anderson says
I use both Mint and YNAB. Mint for me is more of a tool for doing a quick look or quick check-in to see how things are going. YNAB is a more in depth tool to get into the nitty gritty of your budget, and to really stay on top of things. I think they both have their place.
We’ve tried and failed at using budgeting software over the past fifteen years of our marriage. YNAB is the only tool that gets us both on the same page and able to approach our bank accounts without fear.
Ive been using ynab for 2.5 years. It seriously changed my life. I could not more strongly recommend it. I used to fritter away far too much money each month (usually at restaurants). By seeing those numbers in my budget and how i spent them, I was able to recoup the $60 in less than two months.
They also offer it free for a year at a time to college students.
YNAB has been great for me. I have been working the system for about a year and a half and it is amazing.
Budgeting never clicked for me before because they were all Dave Ramsey style “set your budget at the beginning of the month and don’t deviate even if your tires fall off your car and your house burns down.” Then of course stuff would happen and I would just give up and say budgeting doesn’t work.
YNAB is a flexible no-guilt, roll with the punches way of dealing with your money. That’s what I love about it and what makes it work for me.