We discovered You Need a Budget (YNAB) a few years ago when we first moved to Oregon. With less than $1,500 in our pocket after our move and two weeks until my husband’s first paycheck (and no job prospects for me yet), we found that we needed a way to track and control expenses to avoid any surprises any time we checked our account.
We found YNAB through Steam, an online catalog and gaming community. It was $60, an expense we rationalized through our need for structure (and that it was a one-time, evergreen purchase).
In the two and a half years of our on-again, off-again relationship with YNAB, we’ve always found it to be a valuable and helpful tool in helping us stay on track with our expenses and make us feel better when money gets tight. It’s helped us discover that we could afford to buy a house and made us comfortable with less income when I decided to quit my job to follow different career paths.
Pros of You Need a Budget:
- Infinite categories: A budget not only allows you to find a bottom line, but make sure you’re keeping that bottom line by staying on track with your spending in different categories. The standards are, of course, your bills, groceries, and entertainment, but these are very broad categories. With YNAB, you can break these categories down as deep as you want, as well as adding more categories that better match your needs and spending habits, but also savings goals. For example, I have a personal category dedicated to funding my next tattoo, which I know will be pricey. I can put in a little bit each month and save up for it.
- Inter-receipt categorizing: With YNAB, you can break each receipt into multiple categories, if needed. This is very helpful in a world where you can go to the same store for your groceries, household cleaning supplies, and alcohol.
- Understanding reset options: If you’ve fallen behind in your tracking and receipt entering, you can reset YNAB with a “Fresh Start.” This allows you to start exactly where you are now. You can enter what your bank account currently looks like and then go from there. It’s best to do this at the start of a month to truly start fresh.
- Non-subscription model: The $60 one-time purchase that you keep for life is a nice reprieve from the subscription models many companies have moved to. It can sit in your toolbox for when you need it, without the anxiety of constantly paying for it if you don’t use it for a month or two, or five.
- User-friendly and simple: YNAB uses a very simple interface that only has what you really need. It’s easy to use, allows for keyboard shortcuts similar to Excel for quick receipt entry, and looks clean.
Cons of You Need a Budget:
- $60 up front cost: In many cases, people find themselves needing a budget when they are low on funds and need a way to organize. A $60 expense can feel a little steep when you’re already struggling, especially since there are other free or less expensive options. If you can justify it for the sake of organizing your finances, it’s worth the investment.
- Hard to anticipate late-month expenses: This might just be us using it incorrectly or not to its full potential, but because YNAB uses a in-the-moment look at your bank statement based on what you’ve put in, it’s hard to budget for expenses that are coming in later in the month, after your second paycheck. If you put in what you’ve budgeted for that expense before you have the funds for it, you end up with a negative overall budget balance, which can be anxiety-producing just to see. One way to get around this is to not put in your budgeted amount for that expense until you have the money, but I think that kind of defeats the purpose of a budget. You might just have to deal with the red warning until you have the funds to account for it.
- Hard to balance credit card statements: We charge many of our expenses to our credit cards, mostly for the cash back. These expenses include everything from our bills to our groceries. This means that, instead of the actual amounts of our receipts coming out of our bank account, we instead see the couple-hundred dollar chunks come out that we pay off to our credit cards every week. And it gets difficult if you pay your credit card balance the month after the charges take place when you get your statement.
Like most budget programs, it’s important to realize that YNAB does not track your bank account. It tracks what you’ve budgeted for and what expenses you’ve entered. It’s kind of like a calorie counter: it tells you roughly how many calories you should be consuming and knows what you’ve entered, but it has no idea what you’ve actually eaten unless you’ve entered it. A budget program is only as good as what you put in and how strictly you stick to it.
Still, it’s nice to have guidelines sometimes. Being able to see exactly where you stand and know whether or not you’re able to survive between paychecks can be a nice relief, or an added stress if you find you can’t. A budget a tool: a highly adaptable tool and a teaching tool. You know exactly where you went wrong and exactly where you need to switch things around.
When doing a budget, it’s so important to be honest with yourself and your spending to better understand areas to improve. Numbers don’t lie, but they can change. Be realistic with your categories and you’ll know exactly where your money is going and where it can go with a little diligence and the right program that fits your needs. For me, YNAB is that program.