A little over a year ago, I wrote a detailed review and tutorial of how to use EveryDollar, Dave Ramsey’s new budgeting tool. Initially, Ben and I really liked it But, over time, there were too many things that we didn’t like about it, so we decided to either go back to our budgeting spreadsheet (which you can download for free here) or switch to a budgeting program we liked better. Since I legitimately enjoy trying out new budgeting programs (nerd alert), I signed up for a free 34 day trial with YNAB (which stands for You Need a Budget).
We used YNAB several years ago, but it was recently turned from a downloadable software program into an online budgeting tool. Plus, YNAB now has a new feature of connecting to your bank account! So, I wanted to give it a whirl and see what all the fuss was about.
The fuss was about YNAB BEING AWESOME!
Seriously, YNAB is the bomb. Here are 6 reasons we use YNAB.
1. CONNECTS TO YOUR ACCOUNTS (OPTIONAL)
YNAB offers you the option of securely connecting to any type of account or just entering everything manually. We do all our spending on our debit cards which are connected to 1 joint checking account at a local bank. We have YNAB connected to our bank account and every few days, I login, click “import,” and categorize all the transactions into various budget categories. (If you want to know why you should track your spending, read this.)
If you prefer to enter your spending manually, I recommend getting professional help because no one should willingly submit themselves to such pain when an automated option is readily & inexpensively available. And this coming from a former manual-transaction-enterer. 😉
2. EASY TO TRACK SPENDING
Speaking of tracking your spending, YNAB has the perfect combo of automated and manual categorizing. The program learns your spending habits, similar to mint.com’s budgeting tool. If you choose to connect to, for example, your checking account, here is what a few new transactions will look like when they come in. They’re bold until you “approve” them.
As you can see, the program guessed a category for each of the transactions. It guesses based on your recent categories. Last time I went to Walmart, I categorized the transaction as “household,” so this time YNAB guesses walmart to be household. If the category they automatically chose is correct, you just click the little “i” and hit “approve transaction,” as seen in the picture below.
This is SO convenient for all the places that are the same category every time, which makes up 90% of your spending: rent or mortgage payments, utility bills, gas stations, cable, internet, phone, blah blah blah. The ones I usually end up changing are walmart and target trips because we get things from different categories at those stores (groceries, diapers, household, gifts, etc…)
If YNAB guessed wrong, it’s easy to change. You just click the wrong category, and start typing the right category. It autofills the rest of the category for you. Hit ‘enter’ on your keyboard, and voila! Approved. Y’all, I used to manually enter every single dollar we spent into a spreadsheet.
This is better. Trust me!
Oh, and you can, of course, split the transaction if you went to Walmart for diapers, toilet paper, bananas, and gardening supplies. Just hit “split” and fill in a few different categories and the amount you spent in each category.
I prefer this semi-automatic method of categorizing spending to a 100% automatic process like mint.com because it forces me to know what’s going on with our spending, but it’s obviously way simpler (and likely more accurate) than entering everything in by hand. Having to approve the transactions holds me accountable by reminding me of what we’ve been spending, and forces me to keep an eye on our accounts in case there’s any fishy activity.
Another option is using the YNAB app to manually enter your spending right after you spend the money. I usually have my kids with me and am scatterbrained enough as it is, so that doesn’t work for me.
3. COMPLETELY CUSTOMIZABLE
You can customize everything… the budgeted amounts, the names and orders of all the categories. There are suggested categories and sub-categories when you start your first budget, but you could delete all of it if you want and start from scratch. You can make the budget work however you want it to.
4. START WITH WHAT YOU HAVE
Whether you’re going to use the software manually or connect it to your accounts, you just start with whatever amount of money you have right now, and go from there. The best way to start budgeting is to… start. Just write down how much money you have right now and how you need to spend it until you have more money. This is called living paycheck to paycheck. It’s not the ideal, but if it’s where you are now, then it’s where you are now. So, accept it and just start. (You can sign up for your free YNAB trial here.)
5. FUNDS BUILD UP: I YNAB-ED IT!
In YNAB, your category surpluses roll over (unless you empty them – more about that in the next point). If you spend $1200 on Christmas gifts, you can put $100 into a Christmas budget category each month. It’ll automatically roll-over until December when you have $1200 in that category. I call this a “sinking fund.” (You can read more about how to use sinking funds here.)
YNAB makes sinking funds so easy. You could have a sinking fund for things as small as renewing your car registration. Does it cost $200? Just add a category and budget $16.67/ month. Then, don’t spend money from that category and watch it grow month after month. When you get the notice in the mail, cheerfully pay your $200 fee and say, “Bam! I YNAB-ed that car registration fee like a boss!!”
You can see an example of a couple different sinking funds we use below.
6. COVERING OVER SPENDING & MOVING EXTRA MONEY
This feature might be my favorite thing about YNAB. If you overspend in a category, you can cover it with another category that you have extra in. If you’re overspending in a category every month, you probably need to budget more moola into that category.
OR, if you have extra money in a category, you can move it somewhere else. At the end of every month, we go through all the green categories that ARE NOT sinking funds and move the extra money into our “extra debt payments” category. I love this feature. It makes spending less than we budget feel like a fun game. If we spend less, we get to click the fun green button and move the money to the debt category. Then we make a random extra bonus payment towards our loans. If you don’t have debt, move the extra money into a fun savings category!
Honestly, I could go on and on about YNAB. (I think I am… haha)
They have tutorials galore and great chat-help. Plus, the people at YNAB are really smart about money and offer lots of great articles and videos to help you get on track financially. (Check their learning page out here!)
It only costs $50/ year, which I guarantee you’ll more than make up for when you get control of your money by using their program.
It syncs with your phone if you download the app, so you can check your category balance on the way into the store.
You can basically make it do anything you want to! After exploring several of the main budgeting tools available, I’d highly highly highly recommend YNAB to anyone. (3 “highly’s”, people.)
Did I cover everything? Ask any questions you have or pitch in with your thoughts about YNAB in the comments below.
(Note: Some of the links in this post are affiliate links.Read my full disclosure policy here.)