Two things we’re always trying to improve: Getting in shape and getting our financial house cleaner. We’ve talked about Peloton, which can help shed some pounds; now let’s talk about the application You Need a Budget, or YNAB for short. Sure, it might be a bit ironic to talk about budgeting on a blog that focuses on buying not-so-cheap things. But, the only reason we can buy all of these things is because we budget for them.
Our budgeting skills and methods have evolved—and greatly improved—over time. We started off using spreadsheets to track our financial goals and expenses. Spreadsheets are a pain to maintain, so we turned to applications such as Mint. Mint was helpful, but we found it to be too backwards-looking. It was good at giving us a sense of where our money was going, but it didn’t let us plan where our money should be going. So, we went back to spreadsheets. While spreadsheets worked great for planning, the inability to link to banks or credit cards meant manual tracking, which was time-consuming and tedious.
Luckily, we found YNAB. In our opinion, YNAB is one of the best budgeting applications we’ve found. YNAB gives us the power to budget as a couple, review our financial situation before spending a dollar, and access our up-to-date budget from anywhere.
This article describes why we think YNAB beats the competition, highlights our favorite YNAB features, and provides links to resources to get you started. Take note, YNAB has a bit of learning curve and isn’t for the faint of heart. If you’re ready to take control of your financial life, give YNAB a try. It costs $11.99 per month or $84 upfront for a year (which averages to $7/mo).
But, you can use our referral link to try YNAB for a free month (and we get a free month, too!). A month is the perfect amount of time to see if the YNAB system works for you.
Why YNAB is the best budget app for 2020
We tried other budgeting tools before YNAB, including Mint, Personal Capital (which we still use for stashing some of our savings, but found the budgeting to be ‘meh’), and HoneyFi. None of them worked for us. While they helped with expense tracking, they weren’t flexible and didn’t help us with financial goal setting. We finally found this total solution in YNAB for the following reasons:
Assigns a purpose to every dollar we have and tracks it forever.
This has always been our approach for managing our finances. We start with the money we have in the bank and the money we expect to earn, and we create a budget based on this amount. Once we’ve identified this amount, we ‘assign’ the money to our (1) required expenses (e.g., rent, utilities, insurance), (2) savings goals, and then, with whatever’s left, (3) luxuries like travel and dining. We watch these categories as they grow (or shrink) from month to month. If we want to eat at new, trendy restaurant in Hollywood, we eat on the cheap for a couple months and let our ‘dining’ budget grow. Many of the apps we tried simply reset our budget every month, which didn’t work for us.
Bottom line is that our budget is always a reflection of the total amount of money we actually have—not just the spending limit we’re trying to stay under. And, since all of our other priorities are already funded with real money, we can enjoy guilty pleasures knowing our goals are being met.
Once every dollar has a job (budget category) in YNAB, we can start tracking our expenses against those categories. The budget then becomes our go-to before making any spending decisions. If we have enough money left in the category, we know that we can spend with confidence! If we don’t, but we really need or want something, we have to figure out which category we’re going to “steal” from. We label our savings as ‘DO NOT TOUCH,’ so that category is never an option to steal from, but other money is free game.
YNAB makes us reconcile any overspent categories each month. Rather than simply thinking we’ll try harder next mont, we’re forced to figure out what other category will suffer from spending too freely. This is super helpful in keeping us accountable to our goals.
Plans for irregular and future expenses.
In addition to giving every dollar a job, we wanted a tool that let us plan ahead. We needed to save for ‘known’ and ‘known-unknown’ future expenses. We wanted to make sure we’d have enough money for car registration due every June and that we were putting aside money for inevitable-yet-unexpected expenses like house repairs.
YNAB helps with this type of planning. For every category, we can set a goal contribution. For fixed expenses, such as rent, we include that value as a monthly contribution (i.e., rent is $3,000, so we have a goal of $3,000). For expenses that are variable or occur in the future, we include a monthly target to add to that account. For bills due by a certain date, we create a target balance that must be met by a certain date. The app will then determine how much we need to fund that category every month to meet our goal. For example, car registration is $500 and due in June, so YNAB automatically sets a goal of $42 per month, so we’ll have enough money available when that bill comes due.
Gives deeper insights into our spending.
By forcing us to reconcile our categories at the end of each month, we found that some of our budget categories didn’t reflect the reality of our expenses. We also found that unplanned expenses that don’t fit neatly into a budget category happen every month. We always thought next month would be more ‘normal,’ but we haven’t found a ‘normal’ month yet. Instead, we decided to plan for these monthly unknowns by creating and funding a ‘stuff we forgot to budget for’ category that gives us some planned flexibility each month without having to steal from our other goals.
We have the worst memories and kinda freak out over expenses, especially when we forget details. With YNAB, we can add notes to every expense (e.g., ‘We took this cash out of the ATM to pay for XYZ.’). We can also add notes to our categories (e.g., ‘On January 15, we agreed to save $1,000 for this category and based this spending assumption on XYZ.’). If we’re thinking about stealing from a category that has money leftover, these notes remind us why we still need that money.
Has secure, automated (but not too automated) imports from banks and credit cards.
When we tried programs like Mint, the software’s algorithm never quite categorized our expenses the way we wanted. YNAB has the right balance, in our opinion, between automation and control. When we make a purchase, YNAB keeps it in a ‘new transactions’ folder for us to import, approve, and categorize. YNAB makes a category suggestion for each transaction to save us an extra click, but it never categorizes something without our approval. Similarly, when we have inflow, YNAB adds the money to a ‘to be budgeted’ category that waits for us to make a decision on how that money should be split across our spending categories.
We prefer this semi-automated workflow in YNAB. Many YNAB purists (I’m looking at you, r/YNAB) will say we should only add expenses manually to really think about our budget before we spend. The purists still use the automated expense import feature, but only to double check that they didn’t miss anything manually. For us, that’s a tad too tedious, and we understand our spending pretty well at this point, so we rely solely on the automated import feature.
Includes a powerful mobile user interface.
We’re often out and about when we make spending decisions, so it was important that our budgeting tool has a powerful mobile interface that lets us see every aspect of our budget and do everything we could as if we were on our computer. YNAB’s mobile user interface is the best mobile budgeting app we tried. From our phone, we can quickly skim our entire budget. We can fund categories. We can categorize expenses. We can add notes. A simple color coding identifies what categories are on track (green), at risk (yellow), or busted (red). All of these actions with a clean and intuitive (while not dumbed-down) user interface. We primarily use an iPhone with the YNAB app, but their site says they also have iPad, Apple Watch, Android, and even Amazon Alexa.
Doesn’t inundate us with ‘special offers’ and other nonsense.
Because YNAB is a paid subscription service, the app focuses solely on providing users with a great experience and powerful tools. YNAB doesn’t make money from advertisements offering credit card deals or whatever other nonsense. Just clean budgeting. That means YNAB focuses on its users—what tools do they need, what helps them stick to their budgets, and how can they make those tools easy to use. Other budgeting apps are focused on what the advertising money wants. Those are not the motivations we wanted our budgeting software team to be focused on. While it costs a small fee each month, having a painless experience on the app and a product developed with the right motivations is worth the subscription fee to us.
Makes joint budgeting easy.
A joint budget is only useful if both people are actively managing and in tune with expenses. We needed something that would allow both of us to see our latest balances for every category. YNAB makes this easy by sharing an account and having the app accessible both in mobile and web.
Like most couples, we divide our income into a wide range of categories: The mandatory expenses spent on a monthly basis, such as groceries and rent; quality of life goals we save for and spend over longer periods, such as travel and hobbies; and our long-term retirement savings. Each of us also gets a stipend each month that we’re free to spend in whatever way we want, completely judgement free. YNAB is capable of organizing and executing our budget in this way.
YNAB makes it easy for us to have conversations about our budget. We implement a system to ensure we have regular discussions about our budget and financial goals. Each week, we categorize any remaining expenses that haven’t been categorized and then systemically look at the spend rates for each budget category. If we see, for example, that our ‘dining’ budget is low, and we have most of the month to go, we both know we can’t afford to eat out that weekend. We don’t even bring it up because we know we shouldn’t.
Also, at the end of each month, we take a deeper dive through all of our categories to make sure we’re on track and then we set up next month’s budget by adding dollars to each category. If we notice we’re having a difficult time sticking to a particular category’s limits, we have a discussion about what a realistic budget is for that category and where the extra money would come from. If we’ve had a lot of unexpected expenses, we look for a trend in the type(s) of those expenses to see if a new category should be created to better plan for them. These monthly discussions are critical to adapting our budget to our actual needs and to ensure our savings projections stay accurate and realistic.
Allows us to personalize budget categories.
We wanted a budgeting app that allowed us to describe budget categories in a way that is meaningful to how we think about our expenses. This sounds trivial, but for our long-term retirement savings, we’ve always labeled those accounts as ‘DO NOT TOUCH.’ There’s something about having those big, bold letters staring at us that keeps us from borrowing against these accounts.
YNAB allows us to keep that tradition alive with flexible category naming. While the tool provided a list of initial categories to help us identify our likely expenses, it’s super flexible in letting us create/re-name/edit every category. In addition to different categories, we can split categories into larger meta-categories that help us collapse and/or expand on different parts of our budget. For example, we have a ‘just for fun’ meta-category that captures our entertainment-type categories like dining, wine club memberships, and streaming services. We also have a ‘DO NOT TOUCH’ meta-category that captures our retirement and investment categories. When we have our weekly budget check-ins, we focus only on our monthly spending and ignore all of our long-term, ‘DO NOT TOUCH’ savings categories by simply collapsing them all down. This makes our budget review much more efficient.
Provides support from real (and nice) humans when we need help.
Great customer support wasn’t something we were actively looking for in a budgeting app, but now that we have it, it’s a must. YNAB’s customer support team is amazing. The couple of times we had issues figuring out how to use a particular function, the support team from YNAB has been friendly and effective. YNAB has a live-chat function that provides immediate support during working hours or outside of working hours email support that typically responds within 24 hours.
Fun banter along the way.
We weren’t looking for this feature either, but the little jokes YNAB hides throughout the application takes the edge off of an otherwise tedious task of budgeting. The writers at YNAB have an approachable style that makes reading about budgeting and using the tool a joy.
YNAB’s Budgeting Philosophy
YNAB is not only a great budgeting tool; it’s a system and philosophy on how to take control of your finances. The following video describes the ‘Four Rules’ that YNAB users live by and gives you some insight into how YNAB’s budgeting rules are put into action within the tool. If you’re curious about what it’s like to use YNAB, the video is worth a watch.
As you can see, there’s a learning curve to using the tool, but there’s also plenty of videos and tutorials to get you set up. And, if you run into any issues, the YNAB support team is only a chat message away.
YNAB Free Trial and Quick Start
Are you ready to give YNAB a try? Start by using this link to get a free, 34-day trial of YNAB. You can set up your budget and make sure it works for you before committing to a subscription. Once you create an account, we suggest you use YNAB’s Getting Started video courses to help you set up your budget, connect your accounts, and fund your categories. If you get stuck at any point, reach out to the customer support team before spending too much time researching. They’re super helpful and will get you the right answer right away.
Post Perks!Use our referral code to get a one month free trial of YNAB (and we’ll get a free month, too!) Enjoy!