The Personal Finance community has some pretty strong views about budgets. About whether or not you need one, about the proper way to allocate money, and about what tool is best. Excel spreadsheet user? You should totally be using Personal Capital. No, you should use Mint. No, nothing beats a good old-fashioned spreadsheet! While I hate to add to the noise of the budget debate, I am a fervent convert of You Need a Budget (YNAB).
It has officially been one year since I started my free 34-day trial, and I can honestly say that using YNAB has changed my life. Without it, I never would have gotten my financial shit in order, and I never would have found the personal finance and FIRE community. I finally feel like I have control of my finances, and I want to shout YNAB’s praises from the rooftops. Conveniently, I have a blog now! Complete with virtual rooftops galore!
So here it goes. Reasons why I love budgeting in YNAB:
Credit Cards
I recently wrote about paying off my credit card debt. One of the things that I loved about using YNAB while doing that was that I could continue to use my credit card that was carrying a balance in the process. I only used it occasionally—the Capital One Quicksilver card is the Visa in my wallet. I would use it in places that Amex isn’t accepted, and overseas on personal travel when I didn’t want to pay foreign transaction fees. Using YNAB made it easy to schedule out my year-long debt repayment on the card while also continuing to use it for minor expenses. The budget template would tell me how much I had to pay in total, easily combining the approximately $300 of debt repayment each month with the amount I spent.
Some months, it would have been easy for me to do that myself, but others, especially when I was traveling, it made things simpler than if I had manually dealt with it. Then, when a payment was due, all I had to do was look at the nifty green button in my credit card section to know how much I had budgeted (and could afford) to pay that month. I knew that even though I still used the card, I wasn’t going to fall behind on my payoff schedule (and I wasn’t risking falling back into a cycling debt trap).
Accountability
My YNAB Budget has lots of goals in it. Some of them are monthly funding goals—each month, I want to put $85 toward veterinarian bills, even if I don’t have a scheduled appointment (because it feels like when I’m least prepared, that’s when everything goes wrong at once). I do the same with auto maintenance savings, but also with large spending that comes up infrequently: auto insurance, renter’s insurance, taxes. And irregular expenses that aren’t monthly: Christmas money, personal care (hair, etc), pet-sitting expenses, choir fees, etc.
I know my own habits with money, and if I didn’t have these line items in my budget (in bright orange when they haven’t been funded for the month), then I would find somewhere else for that money. And I wouldn’t miss it until those payments came up…So now, when my bank account is flush with cash, I know I can’t just go on a wild spending spree. That money all has a purpose and a job. It also let’s me be real about my spending.
For example, when I travel, I love to buy fun, unique souvenirs. Handmade jewelry, paintings, textiles, etc. Before finding my pseudo-frugal side, and before my budget, I’d buy these things with a vague sense of guilt, knowing that I really didn’t have that money to spend. Now? I just make sure that my vacation budget line item in YNAB can withstand a little shopping when the perfect necklace shows up at a one-day-only craft market in South Korea. The best part? For that particular trip, I over-padded my budget, so when I got home, I was able to move that extra money into the pool for my next adventure!
Monitoring Accounts
The other useful side benefit of YNAB: Because I’ve linked my bank accounts and credit cards to YNAB, I’m keeping an eye on charges that come through. That means that when something is off, I notice it immediately and not just when I get around to checking my accounts (which I know should happen once a month, but I’m a professional procrastinator). So when I get a large charge for renter’s insurance that I apparently didn’t cancel properly (on an apartment that haven’t lived in for 2 years), I can immediately dispute it.
As a side note, that means I probably paid that fee last year and didn’t even realize I was being double-charged…like I’ve said before, last spring was rough and I count it as a success that I stayed up to date on payments. And basic requirements like feeding my pets, showering, and keeping my job. Sometimes it’s about celebrating the silver lining and giving yourself slack for the things that slip through the cracks.
A Minute Awareness of Monthly Spending
Pre-YNAB Elizabeth was always shocked by how her money seemed to mysteriously disappear each month. Where could it possibly have gone? Now, I can quickly see what I spend each month, and on average, on dining out. And e-books…coffee…pet food. It makes it easy to identify which areas of my spending are in line with my values and goals and which need adjustment. I can live with spending $70 a month on dining out, but when it edges over $100 and I don’t have a clear reason, then I know I need to be more vigilant. Likewise, it’s easier to look at my budget and say that my cats probably don’t need another fancy cat bed, especially since they always sleep in the packing box instead when I do buy one.
An Awesome Online Community
YNAB also has such a great online community. I know that they recently started an online forum, but before that, they already had a strong unofficial Facebook group. You can ask whatever questions you might have about the budgeting process or getting control of your finances. When I started using YNAB, having that community was really helpful, both for answering questions I had, but also for providing support. Communities, online or IRL, are valuable because they confirm that you aren’t alone in your journey, whatever challenges you might be facing. And sometimes, people would be asking questions I hadn’t even considered yet! Bonus learning!
What About Tracking Savings/Net Worth/401(k)/etc?
This is the one area where YNAB is only okay. I use both YNAB and Personal Capital (don’t @ me). I love the level of control that YNAB gives me over my budget, but I think Personal Capital is fantastic when it comes to tracking the numbers on a broader scale. And that’s okay. I think it’s worth paying for YNAB annually, even though plenty of FIRE bloggers just use Personal Capital. Maybe I’ll get past the point of needing such a detailed budget breakdown, but right now, having that accountability and active involvement is important. I’m early in this journey, and it would be far too easy to slip back into some of those bad money habits if I don’t have something starkly laying out what those shortsighted decisions mean for my finances.
Using YNAB and the Learning Curve
If you’re going to try YNAB, I don’t recommend half-assing it. Take the time, watch the tutorials, read the articles, and if you end up going as deep down the rabbit hole as me, listen to the podcasts (I started at the beginning…I hear the Podcast music in my dreams sometimes). My absolute favorite part is the live webinars—you get online with an instructor and maybe a dozen other participants and spend 20 minutes talking about one aspect of using YNAB. You can sign up for the classes on their website, and I found the instructors to be great at what they do—they understand the software, but they also understand the psychology of money challenges you might be facing and what works for other people in similar situations. (Side note: if anyone from YNAB reads this, that seems like the best job ever; please hire me. K thx bye).
As a final note, if you’re interested in trying out YNAB for a month, I’d appreciate it if you’d use my referral link! It’s not an affiliate link (so I don’t get money if you use it), but I do get a month free on my subscription if you use it and sign up at the end of the trial. Another thing I love? YNAB doesn’t make you put in your credit card payment info upfront. If you want to keep using it after your trial is up, you have to actively subscribe. No shady automatic charges you didn’t anticipate! How classy is that?
