Product Review – YNAB (You Need A Budget)

 

Have you been thinking about starting a budget? Or looking for a better budgeting tool than what you currently use? Let me introduce you to YNAB. Funny name, serious budgeting software. I’ve been using YNAB for about a year now, and I recommend it to pretty much everyone. Before I found YNAB I had tried almost everything, including Quicken (for 10 years), Mint, Mvelopes, Adaptu, Yodlee, and others that I tried and dropped immediately. The difference is not in the feature set as much as in the mindset.

What Attracted Me Initially

For years I maintained a standard budget in Quicken. I tracked all my expenses (downloading them from the credit card company) and categorized them. It worked well, mostly. I kept up with “normal” transactions using Quicken’s built-in budget feature, but since I wanted to keep up with some of my categories using the envelope method, I had to track those using Excel. Those were mainly savings-oriented categories like vacation, car savings, etc. A painful point came in 2012 when my wife and I started getting a little “loose” with our spending. No matter how much we conversed about our spending habits we always seemed to go over in certain categories with several days left in the month. The worst part was that we didn’t feel like we had enough “warning” during the month before we got to that point, so the blown budget would almost always come as a surprise. I started hunting for a better method.

Simple Yet Effective

I found a forum talking about the best way to facilitate using the envelope method, and MANY folks recommended YNAB. I downloaded the 30-day trial and was hooked! I discovered that it had all the features I needed, but excluded some that I didn’t (although I would have thought them essential before). Features like smartphone access, Dropbox sync, and a simple, clean layout were very refreshing. But the biggest difference, in my opinion, is the way the software makes you think about your budget. The standard budget (that I normally see) consists of setting a monthly or annual budget amount, entering that into the software, then tracking your transactions to see if they match up. Go over-budget that month? Ah well, we’ll get ’em back next month.

Simple, at-a-glance budgeting lets you keep a close eye on where things stand. (click to enlarge)

Simple, at-a-glance budgeting lets you keep a close eye on where things stand. (click to enlarge)

YNAB really helps you to think ahead instead of glance behind. Your budget is totally custom month-to-month, so you can tweak things as you go. Headed over in a category that month? Add some more funds from another category! If you know you have something major coming up, you can apply funds towards that in preparation. The best part is that it’s built on the envelope method of budgeting, so if you don’t use all the funds in a given category, those funds roll to the next month and are available for use. There’s no “oh well” with YNAB; it keeps you honest.

Primary Features

One of the things that YNAB does really well is encourage you to budget in such a way that you live on last month’s income. The way the budget screen is laid out makes it easy to see if you’ve “funded” your next month’s budget or not, and it’s very satisfying to see when you’re not living paycheck to paycheck anymore. I love this feature, and even though we were not budgeting this way, it only took us 2 months to save enough in order to satisfy this (wise) suggestion that the software makes. Another subtle (yet really nice) feature for me is the way they color the numbers when looking at your budget. Everything is nice and black when things are going well, but the minute you go over in a budget category you’re going to notice it, because it turns bright red. You won’t find yourself missing things or having to run reports to check on where things stand with your budget. It’s right in front of you.

A Missing Feature Or A Benefit?

When I first started using the software I hoped that they would soon add the feature to automatically download transactions from banks and credit card companies. I had been using that feature in Quicken for years, and it seemed like an inconvenience to have to log into my bank manually to download them. But the more I used the software the more I saw the benefit of tracking our spending using our smartphones as purchases were being made, instead of returning to the software later to download and categorize them. It really helps us to see the category balance in the moment. I still download the transactions from the bank, but YNAB easily matches them up with the ones I’ve already entered, so it’s really a function of checking off the cleared transactions at that point.

Summary

YNAB has a unique feature set, one that I think lends itself very well to FI thinking. It’s well designed, has several modern conveniences, and is still being very actively developed. YNAB is available for PC or Mac, and can be used on as many computers as you like with only one purchased license. It’s a great deal on great software, I highly recommend that you check it out! www.youneedabudget.com Or, you can save $6 (and I will get $6) if you use this referral link instead.

 

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