YNAB opinions and hints?

[EmilyGF]

I'm thinking about trying out YNAB. I tracked all our spending last month and am doing the same right now. I'm currently just writing a list, but I'd like to be more purposeful. I've heard good things about YNAB.

Have you used it? Was there anything that helped you implement it well? We had an unexpected drop in income coupled with an unanticipated house repair and are trying to be more purposeful about spending.

Thanks for the help, Emily

[ktgrok]

I LOVE YNAB!! It works the way my brain works, and it has helped me pay down thousands in credit cards rather than the money just sort of disappearing. I never pay bills late anymore, etc. My DH can't figure it out, so I'm the only one that uses it, but that's fine. His brain works differently, that's all. 

[fraidycat]

I have been using YNAB since 2010. Not that I haven't fallen off the wagon a time or two in the past 11 years, but... on the 1st of this month, I finally broke down and opened another savings account because it didn't seem to matter how expensive some months were with lots of high dollar outflows, our chequing account earning ZERO for us would not stay below five figures. It kept creeping higher and higher.

So, the extra savings account adds one little layer of complication to my budget, but it's a good problem to have and it's all thanks to YNAB.

[ktgrok]

Oh, tips - 

Biggest thing is to realize they use the word "budget" in different ways than most people or programs. What most people think of when they hear budget is what YNAB calls "goals". They use the word "budget" to mean "funding". 

So, if you picture a physical envelope system, the number written on the outside of the envelope is your "goal". You don't HAVE to set goals for categories, but you can. 

Then when you assign money to a category, they call that budgeting, but it means you are funding that "envelope". 

I tell people to just use the word "fund" or "assign" not "budget" in their own head. 

Definitely watch some of the videos they have!

Also, the other place people get confused is credit card spending. There are two components to this.

1. If you already have an existing, revolving balance on a card that you are trying to pay off, you can budget/assign money to that credit card category directly. That is money you want to use to pay down the card. 

2. When you spend money going forward, using that card, you will assign money to cover that cost by categorizing the transaction. So, for instance, I have $200 in my transportation category. I spend $50 on gas at the gas station using my Chase credit card. I will enter that transaction with the category of transportation and the account as Chase credit card. At that point, the program automatically moves $50 from the Transportation category to the Chase Credit Card category. My transportation category now shows $150 available, and my Chase Card shows $50 available to send as payment. You can Imagine that you took $50 out of your envelope of money set aside for Transportation, and put it in the envelope marked "credit card payment". You also will have a category called "interest and fees' that you will fund, and that covers any interest on the previous balance. By doing it this way, you will never charge more on your credit card than you can afford to pay off at the end of the month and your balance will never grow. You just will pay the credit card company the amount shown in the Chase Card line. 

Now, I have previous balances i'm paying off, so when I would assign/budget/fund my categories I would put some money directly into that card's category. So let's say I'm paying it down by $100 a month. In the above scenario, after the transaction at the gas station, my transportation category would show $150 like before, and my Chase Card category would show $150 - the money for th eprevious balance plus what I spent on the card. 

 

[fraidycat]

I forgot to add the hints part:

I, and many other, "old school" YNABers hate the credit card feature so set up cc's as chequing accounts vs. credit cards. It makes life much easier if you have returns, overspending, cash back rewards, etc.

Also, keep your categories as complicated as necessary and as simple as possible. Trying to be "too perfect" and granular was a large part of my falling off the wagon. If I get cat food and groceries, it all goes in groceries instead of splitting receipts, for example.
 

If finances are joint, your spouse doesn't need to use YNAB, but they must be on board with YOU using it, open to following category limits and delaying purchase gratification, and open to answering your questions about "what did you buy at xyz store?" - not because you care what they bought, but so you can categorize it in YNAB.
 

I am happy to answer any and all YNAB questions.

[ktgrok]

2 minutes ago, fraidycat said:

I forgot to add the hints part:

I, and many other, "old school" YNABers hate the credit card feature so set up cc's as chequing accounts vs. credit cards. It makes life much easier if you have returns, overspending, cash back rewards, etc.

Also, keep your categories as complicated as necessary and as simple as possible. Trying to be "too perfect" and granular was a large part of my falling off the wagon. If I get cat food and groceries, it all goes in groceries instead of splitting receipts, for example.
 

If finances are joint, your spouse doesn't need to use YNAB, but they must be on board with YOU using it, open to following category limits and delaying purchase gratification, and open to answering your questions about "what did you buy at xyz store?" - not because you care what they bought, but so you can categorize it in YNAB.
 

I am happy to answer any and all YNAB questions.

Ha, I actually LOVE how it does credit cards! I will say, I choose to get cash back rather than a bill credit to make tracking easier, on my card that does that. That way I just track it as income. Returns have not been an issue. 

over spending CAN be an issue if you don't remember to FIRST cover any overspent categories, THEN check the credit card line. Fixing the overspent categories should fix the credit card line as well. 

[fraidycat]

@ktgrok With the new update, I think they removed a lot of the "budget" confusion. Money is Ready to Assign, Assigned, or Available (to spend) now.

[ktgrok]

6 minutes ago, fraidycat said:

@ktgrok With the new update, I think they removed a lot of the "budget" confusion. Money is Ready to Assign, Assigned, or Available (to spend) now.

Oh, that's right! Hadn't thought of that. I barely noticed, other than that "to be budgeted" was different. 

[VickiMNE]

Long-time YNAB user here.  Love it.  Another thing that is different is that, when first setting up your YNAB budget, you mentally count up all your cash money sitting in your checking/savings/piggy bank (but not investments or retirement accounts as those are typically not touchable).  You consider it one big pot of money.

You make a list of your categories (expenses).  Some are monthly, some weekly, some yearly, some wishful.  You take your big pot of cash and assign dollar amounts (stuff their envelope) into each one.  When you run out of money, you do not assign any more--not the paycheck you are expecting next week, the tax return, the child credit, nothing more. (This initial counting all the moola and assigning all of it is just at the start.)

This has the advantage of helping you to see clearly your priorities.  Some things must be paid (mortgage, for example).  Others have wiggle room.  Maybe less into groceries and more into clothing as Jimmy needs new rain boots.  No borrowing from the future; we live like our grandparents (great grands?) within the money we actually have.  

Additionally, we try to be proactive about upcoming expenses.  So, we don't spend ALL our money this month but we save purposely:  for auto maintenance, new tech, job loss fund, Xmas time, summer vacation, concert tickets, whatever you want (the "personal" aspect of "personal finances").  YNAB eschews generic "savings" and encourages you to save within your categories.  Again, this really brings clarity to how we want to use our money.

When we started with Ynab, we were not in debt, but never getting ahead.  Our net worth has quintupled because we are far more mindful of our money, not because we actually have more money (income.)

Edited October 13, 2021 by VickiMNE
clarity I hope

[fraidycat]

3 minutes ago, ktgrok said:

Ha, I actually LOVE how it does credit cards! I will say, I choose to get cash back rather than a bill credit to make tracking easier, on my card that does that. That way I just track it as income. Returns have not been an issue. 

over spending CAN be an issue if you don't remember to FIRST cover any overspent categories, THEN check the credit card line. Fixing the overspent categories should fix the credit card line as well. 

Many people do love it. It's mostly those of us who used YNAB3 and YNAB4 who are "stuck in our ways". 😂 When I tell people about YNAB, I explain that there are two ways they can use it, and that there is a choice, because CC line not matching balance is still the most often asked and answered question that I see. Multiple times per month, if not week in YNAB FB groups.

[Excelsior! Academy]

We use it and like it.  I don't like the switch they made from encouraging you to get a month ahead on your finances.  The software is still set up to show the age of your money, but the interdictory videos don't explain this feature as well.

[EmilyGF]

You guys are awesome, as always! Thanks for the help so far!

[theelfqueen]

I use and like Mint. 

It's more of a budgeting system. And it tracks your accounts well. 

Edited October 13, 2021 by theelfqueen

[fraidycat]

43 minutes ago, Excelsior! Academy said:

We use it and like it.  I don't like the switch they made from encouraging you to get a month ahead on your finances.  The software is still set up to show the age of your money, but the interdictory videos don't explain this feature as well.

This is another thing I tell newbies to ignore. It is neither intuitive, nor useful and really not measurable outside of their algorithm gimmick. The old Rule 4 of "live on last month's income" is much easier to understand and wrap your brain around knowing when you've "made it".

[ktgrok]

51 minutes ago, fraidycat said:

Many people do love it. It's mostly those of us who used YNAB3 and YNAB4 who are "stuck in our ways". 😂 When I tell people about YNAB, I explain that there are two ways they can use it, and that there is a choice, because CC line not matching balance is still the most often asked and answered question that I see. Multiple times per month, if not week in YNAB FB groups.

Yeah, I never came from that so never thought to look there. That line item is how much I can pay towards my card. On the left, where all the accounts are listed, is the balance. (although I STILL get confused sometimes about positive/negative stuff - that's in all banking stuff, not just ynab. can't tell you how often I freak out when I see a text from the bank saying I have some big transaction, only to realize it was a paycheck deposit, lol)

[ktgrok]

3 minutes ago, fraidycat said:

This is another thing I tell newbies to ignore. It is neither intuitive, nor useful and really not measurable outside of their algorithm gimmick. The old Rule 4 of "live on last month's income" is much easier to understand and wrap your brain around knowing when you've "made it".

I didn't know they got rid of that. 

[fraidycat]

22 minutes ago, ktgrok said:

Yeah, I never came from that so never thought to look there. That line item is how much I can pay towards my card. On the left, where all the accounts are listed, is the balance. (although I STILL get confused sometimes about positive/negative stuff - that's in all banking stuff, not just ynab. can't tell you how often I freak out when I see a text from the bank saying I have some big transaction, only to realize it was a paycheck deposit, lol)

I just look at the balance and know that I can pay all of it, because every transaction is entered, cleared, and reconciled in YNAB. The cash was in my bank account and assigned to a category before I made the purchase. The category amount to pay the card adds an extra step, and when there are extra steps, there are more chances to mess something up. If there is more of a chance to mess something up, I will find a way to make it happen. 😂😂 So, I keep everything as simple as possible.

If I were paying an old balance while still using the card, I might use the cc feature as designed until it was paid off to be able to account for interest and additional payments. But for paid-in-full and redeeming rewards, I like the simplicity of keeping accounts separate from the budget because "YNAB doesn't care where you keep your money". To me, paying the cc is the same as transferring money from savings to chequing. It's an account transaction (transfer), not a budget transaction (inflow or outflow). Budget transactions happened at the time of purchase, at payment time, I'm just moving money from one account to another. Back in the old YNAB days, transfers on the accounts side never affected the budget side - this was drilled hard into us in the early days. Then, they changed it. 🤷🏻‍♀️
 

But, this is probably only serving to add confusion for OP, so I should probably just leave it at: there are two ways to handle credit cards in YNAB. If you use credit cards and one doesn't work for you, try the other. 😁

Now, based on this post I guess I shall go back to yelling at kids to get off my lawn and reminiscing about the "good ol' days". 😂🤣😂

 

[fraidycat]

45 minutes ago, ktgrok said:

I didn't know they got rid of that. 

It used to be "Live on last month's income" (specific, measurable, goal oriented). Now, it is "age your money" (vague, only measurable if you know their algorithm, and confusion causing for many). 
 

These two minor complaints in this thread are not doing justice to show my love and adoration for YNAB, though. Despite the cc function and vagueness of "age your money", I wholeheartedly believe that everyone should use YNAB. It is anxiety-reducing, life changing, taking control of your money that no other program can even hold a candle to, IMO.

[Soror]

1 hour ago, VickiMNE said:

Long-time YNAB user here.  Love it.  Another thing that is different is that, when first setting up your YNAB budget, you mentally count up all your cash money sitting in your checking/savings/piggy bank (but not investments or retirement accounts as those are typically not touchable).  You consider it one big pot of money.

You make a list of your categories (expenses).  Some are monthly, some weekly, some yearly, some wishful.  You take your big pot of cash and assign dollar amounts (stuff their envelope) into each one.  When you run out of money, you do not assign any more--not the paycheck you are expecting next week, the tax return, the child credit, nothing more. (This initial counting all the moola and assigning all of it is just at the start.)

This has the advantage of helping you to see clearly your priorities.  Some things must be paid (mortgage, for example).  Others have wiggle room.  Maybe less into groceries and more into clothing as Jimmy needs new rain boots.  No borrowing from the future; we live like our grandparents (great grands?) within the money we actually have.  

Additionally, we try to be proactive about upcoming expenses.  So, we don't spend ALL our money this month but we save purposely:  for auto maintenance, new tech, job loss fund, Xmas time, summer vacation, concert tickets, whatever you want (the "personal" aspect of "personal finances").  YNAB eschews generic "savings" and encourages you to save within your categories.  Again, this really brings clarity to how we want to use our money.

When we started with Ynab, we were not in debt, but never getting ahead.  Our net worth has quintupled because we are far more mindful of our money, not because we actually have more money (income.)

We've just been using ynab 1 yr but I wholeheartedly agree with all of this!!!! So much.

We also started ynab with no debts (house paid off years ago and the cars many more). Accruing debt wasn't an issue. I started ynab because we really stunk at saving for irregular expenses and those little emergencies that come up. We always had enough cash to pay for things (because we lived below our means) but (1) there were times things were way more stressful than I liked and (2) we weren't making progress near like we wanted to- precisely because we didn't plan enough for those things. 

Prior to ynab I'd budgeted plenty of times and had a good grasp of regular/fixed expenses. What I didn't have a great grasp of was those irregular expenses. Things like appliances breaking, cars needing repairs, medical bills etc- irregular expenses- like cmas, taxes, insurance etc. Things will break and those irregular bills are coming. Because of the way ynab stresses true expenses we realized that we needed to live on even less  because we had to save some towards these things every month. You can't have your bills to where it eats up all your cash because sooner or later shit will happen and you will be caught without the money to pay for it. It is so incredibly obvious. Something you know intuitively but something I did not account for in previous budgets. I had a generic emergency fund but that didn't cover enough. Sometimes many things happen all at once or one BIG thing will happen. So, now I have sinking funds for things like- yearly house and car insurance, Christmas, bdays, property tax etc and savings funds for- medical, home, and vehicle expenses. Then my savings for a new car, house project, and vacation. With ynab you don't need separate accounts (I actually closed a savings account that I thought I needed before) it is easy to keep track of what money is for what. Now, some months a bunch of crap comes up and you have to put it all towards that thing(that happens less as time goes on and you can build up those funds) BUT some months are good months- when those happen you put aside all you can to prepare for those rough months sure to come. Before we'd get a nice amount in our checking accounts and think- ya we can afford that- when we really needed to save it- it is really hard to keep track of everything coming up or possibly coming up to know how much money you need to spend and how much to save- I don't have to guess anymore. I know exactly what is coming up and have funds for the unknowns too.

Another ynab philosophy I LOVE is the - Roll with the punches. I'd make budgets and then feel like I failed because they'd end up changed. It is not a failure for a budget to change. It is life. Things happen. Now, as you go along this will happen less but it is not a failure. But you don't just say forget it I failed when you overspend- you have to figure out- where is that money going to come from? Spend less in another area to make up for it and move on. Then if it keeps happening reassess- why is this always happening? Am I being realistic with my budget?

When I budgeted before with a spreadsheet dh HATED it. So we then went with MINT, that went ok but it is not designed the same. It works more as a tracking program than a budget program because it lets you budget money you don't have- you can't do that with ynab. Now, dh still doesn't really do ynab- he's too busy anyway- I keep track of everything. At first I had to really push for ynab- I straight up told him for my peace of mind I needed something. So, he went along with it. In the last year, he has come to be a huge ynab fan and is always preaching about it to his friends.  It is not me telling him that we cannot afford/buy this or that he looks at the budget and can see- yes we do or don't have the money (of course we discuss goals and priorities and I fund things according- I check in with him regularly with him to assess where we are). He also loves, loves, loves seeing all our little funds build up and knowing- hey if my phone breaks I got a fund for that. We have generally not fought a lot about money over the years but there would be times when our money personalities would not match up- that is not an issue anymore. I prefer to save more and be more of a miser. Dh is fairly frugal but thinks I go too far (I do at times). With ynab I'm not nearly as miserly because I have so much more security knowing that various things are covered and accounted for- because I know this I'm not quite as much of a tightwad. Dh is much more amenably to saving more as he can track our progress in YNAB and sees where it is going. He sees it is not sacrifice for nothing but merely deciding that we have other priorities. Now, when we first started using it I still had stress because I hadn't prepared enough for those irregular expenses and we had a crap ton of things hit in our first 3 ynab months (3 root canals, $1k+ vehicle repairs, cmas, taxes, house insurance, hot water heater breaking, college classes (that were supposed to be reimbursed for)). But we made it through it all and each month the stress has gotten less and less as we pushed further ahead. 

10 minutes ago, fraidycat said:

It used to be "Live on last month's income" (specific, measurable, goal oriented). Now, it is "age your money" (vague, only measurable if you know their algorithm, and confusion causing for many). 
 

These two minor complaints in this thread are not doing justice to show my love and adoration for YNAB, though. Despite the cc function and vagueness of "age your money", I wholeheartedly believe that everyone should use YNAB. It is anxiety-reducing, life changing, taking control of your money that no other program can even hold a candle to, IMO.

Yes!!! For years I thought it was a waste. My tight ass thoguht why would I pay for something when I can use something for free. But, no, it is nothing else is the same and it is worth it. 10000% I wish I had started using it years ago. In fact, I tried a few years back but couldn't wrap my brain around it. This time I watched some Nick True videos and it clicked nearly immediately. I highly rec. his videos--

 

Edited October 13, 2021 by Soror

[prairiewindmomma]

One of my favorite features about YNAB is average expenditures in a budget category.  Helping me see those as monthly averages helped me realize I was over budgeting in some areas by quite a bit, and underbudgeting in others. 

My other favorite feature is how easily the phone app and website synch. I love being able to add receipt amounts at the register while the transaction is occurring. (I don't use auto synch or have anything hooked up to our accounts because I'm paranoid like that.)

[ktgrok]

1 hour ago, fraidycat said:

I just look at the balance and know that I can pay all of it, because every transaction is entered, cleared, and reconciled in YNAB. 

If I were paying an old balance while still using the card, I might use the cc feature as designed until it was paid off to be able to account for interest and additional payments.

That is likely the difference. When I started all the cards had balances. ALL of them. So just paying the balance wasn't an option, lol. The amount I could afford to pay and the amount I owed were vastly different things, hence the different places to look. I think most people starting out are in that situation. 

I was often just paying the minimum on cards, without FULLY recognizing that the interest alone ate up a good part of that, so that plus any new spending meant I was increasing balances, or at minimum treading water. By FIRST budgeting toward the amount I want to pay it down by, then having to fund interest and new purchases separately, out of cash, means I really am making progress. We've paid down thousands, and I now have 3 cards to fully paid off and a fourth will be paid off in a few months. By the end of next year all will be paid off. 

[ktgrok]

Also, although in theory I knew that spending more in one area meant reducing spending in another...it never really clicked in my brain. Having to actually move the money from one place to another if I overspend is totally different and makes is feel real to me. 

Before, I'd see a bunch of money in the bank account and be like, Oh, I can spend! Now I can have a bunch and say, "oh, man...we better watch the spending!" They call it being "YNAB Poor", lol. Where you have money, but it is all accounted for already. 

[VickiMNE]

9 hours ago, Soror said:

Prior to ynab I'd budgeted plenty of times and had a good grasp of regular/fixed expenses. What I didn't have a great grasp of was those irregular expenses. Things like appliances breaking, cars needing repairs, medical bills etc- irregular expenses- like cmas, taxes, insurance etc. Things will break and those irregular bills are coming. Because of the way ynab stresses true expenses we realized that we needed to live on even less  because we had to save some towards these things every month. You can't have your bills to where it eats up all your cash because sooner or later shit will happen and you will be caught without the money to pay for it.

And, once you DO start accounting for these things, it is amazing how even a little bit set aside adds up.  We've been putting aside $100 for car replacement.  Not very much in the scheme of things, but obviously our 2004 car is going to die someday, so we need to be proactive.  And, bit by bit, that category holds nearly $10,000 smackers now, accumulated rather painlessly.  Thus, an unexpected car failure will be unpleasant but not disastrous.  I *love* the peace of mind (even more than the increased net worth) of using YNAB.

Because the converse is that now I can enjoy what we *do* spend our money on.  We *can* afford a weekend getaway.  We *can* splurge and get the fancy cheese for a delightful mezze & wine meal.  So, we end up spending less (overall) and having more enjoyment.  Definite win!

[Soror]

2 hours ago, VickiMNE said:

And, once you DO start accounting for these things, it is amazing how even a little bit set aside adds up.  We've been putting aside $100 for car replacement.  Not very much in the scheme of things, but obviously our 2004 car is going to die someday, so we need to be proactive.  And, bit by bit, that category holds nearly $10,000 smackers now, accumulated rather painlessly.  Thus, an unexpected car failure will be unpleasant but not disastrous.  I *love* the peace of mind (even more than the increased net worth) of using YNAB.

Because the converse is that now I can enjoy what we *do* spend our money on.  We *can* afford a weekend getaway.  We *can* splurge and get the fancy cheese for a delightful mezze & wine meal.  So, we end up spending less (overall) and having more enjoyment.  Definite win!

I can't wait to get there. It is like the sinking funds. Some I had to fund very heavily at first because they were too close. Now it has been a year the budget has went down because I've been saving for all of those irregular expenses for a year (ie when we came in and I had an annual expense I hadn't saved for and it was 6 months out I had to save double to get caught up). Same with cars. We've not been saving for them and they are both older so I'm putting back a whole lot now. I can't wait to get them replaced so I can move to a much smaller replacement fund, that will be much easier to manage.

[VickiMNE]

18 minutes ago, Soror said:

I can't wait to get there.

You are doing great, considering you are only one year in!  The first year (or two) is all about realizing TRUE expenses.  And for each one that you "bring up to speed", the going forward gets that much easier. 

[EmilyGF]

Wow, thanks @Soror for the video link. That was great! Working on things today.