Author Topic: How do you use YNAB?  (Read 6360 times)


  • Pencil Stache
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How do you use YNAB?
« on: February 15, 2014, 02:14:00 PM »
I have read many posts on this forum about You Need A Budget so I downloaded the trial version.  I've been using Excel since 2000 to do my budget which plans my spending but don't really do a good job of tracking expenditures so I think YNAB will help here.  Comparing the two so far I prefer my Excel sheet's usability for most of it.

So what I'm thinking is this:  use my spreadsheet to give me an amount for discretionary spending each month (after fixed bills, incomes, etc) and then track the discretionary spending by itself using YNAB to reach the goals that I set.

Anyone else doing this?


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Re: How do you use YNAB?
« Reply #1 on: February 15, 2014, 02:39:24 PM »
You can use YNAB for expense tracking but you don't get the same benefit using it unless you use the software as they suggest. Have you watched any of the live or recorded classes? I would suggest it's worth watching them and deciding whether the software is actually designed for what you need. Its main focus is budgeting, not expense tracking.
« Last Edit: February 15, 2014, 02:41:03 PM by Bored »


  • 5 O'Clock Shadow
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Re: How do you use YNAB?
« Reply #2 on: February 15, 2014, 02:58:23 PM »
Definitely watch the introductory webinar. It's a very different approach from traditional budgeting, and if you don't use it in the way it's designed to be used, I think the software is of limited value. I was using it completely wrong and didn't realize it until I did the webinar.

In essence, for the YNAB philosophy, you enter whatever of sum of money you're starting with - whatever is in your bank RIGHT NOW. Then, you budget that and only that money. When the next paycheck is deposited, you record it, and then budget THAT money. It's really not designed for forecasting, where you enter the money you *think* you'll be getting for the month and then guess at what you *think* you'll spend in that time.

I don't think the approach works for everyone - I'm still getting used to it as it's a total overhaul from my previous cash flow management mindset. But it's definitely worth at least trying for a month.


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Re: How do you use YNAB?
« Reply #3 on: February 15, 2014, 03:26:38 PM »
I've been using it for about six months now and absolutely love it. To make it work easiest, I ended up having our paychecks deposited in an "off budget" account, and on the first of the month, I transfer into my on-budget checking account the amount I want to spend for the whole month. (This records as "income" even though our income is higher.)

What I like so much is the planning part of it, and then the tinkering throughout the month. I actually feel better spending money on "unnecessaries" when I see the money is allocated for it, rather than feel guilty. Entertainment, restaurants, clothes. I don't put off maintenance of car, home, etc., because I have been adding to those categories monthly.

Up until this month, I broke down expenses into a TON of categories and systematically went through and tried to lower my expenses in each of them. Now that that's accomplished, I have consolidated many categories. i.e. "Food, Pet Food, Toiletries" and "Utilities" for phones, internet, Hulu, etc. While I like the anal breakdown, I need a break from it. 

Can all this be dome in Excel? Probably.


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Re: How do you use YNAB?
« Reply #4 on: February 15, 2014, 03:33:15 PM »
Budgets are a pain, so I don't do them.  Budgets also reinforce a poverty mindset, so I really don't want to do them.  I did try and follow some guidelines once by looking up typical percentage expenditures on various categories per income level.  Doing the paper exercise  indicated I could spend $15 a month at the bookstore.  Since I frequently came home with $80 a month from the bookstore, no way that budget was going to work.
  I did track my expenditures for three months.  Every time I spent money, I made sure I got a receipt.  Most people throw away their receipts, not I.  If I purchased from a vending machine, I wrote it down.  At night all the receipts went into the basket on top of my dresser (with a secondary basket by the coat closet).  Once a month I spent a day breaking down the receipts to their various categories on a spreadsheet.  At the end of three months I was able to determine what my discretionary income would be.
  I just looked at YNAB.  Step 4 I most heartedly agree with -- pay this month's bills with last month's income.  Sadly, I was a dipper.  I spent frugally.  However, if I saw a bling I just had to have, then he-he-he.
  I had to use the idea of out of sight leads to out of mind.  For me, I had to procure two checking accounts at two different banks.  The first bank received my fairly regular income as direct deposit.  After it accrued about a month and a half of income, I started to pay necessary bills by automatic online debit: rent, car payment, insurance, utilities and investment account.  The important part was to chose a bank that would agree to apply a small IRA I kept there to any overdrafts (never happened) instead of charging overdraft fees.  This bank was also a bit distant, so a bit hard to get to. 
  The money that was left over each month per my spreadsheet analysis became my discretionary funds.  This same amount each month was auto transferred to the checking account of the second, and local, bank.  From it I drew each week's pocket money (I think about $30), and paid the credit cards I used for gasoline, groceries, social.  I no longer had to worry so much about my money.  If I wanted to do something I looked in my wallet or at my secondary checking balance and then decided.  I did become a much better and wiser spender because these seemingly smaller amounts had to go further.  For instance, instead of buying magazines at the newstand I went to subscriptions; gee, is this mag worth $20 to me?  I did have $10 a week from this secondary account  go into a passbook account for vacations.  This seemingly small amount meant I had to be more creative by sharing a ride, flying group charter, etc
  Since closer to the bone, dating was not always dinner, the theatre and a club afterwards.  It sometimes became cooking at home, a long walk, and a game of checkers by the fire.
  Did this always go smoothly?  No.  There were a few weeks where lunch at work each week was PB&J until I advanced further on the learning curve.  The important point is that the worry was gone; the necessary expenses were automatically taken care of including investing.  Any money left over went to the second account, and I didn't have to worry as I spent it.
  Once each quarter I checked both checking account balances.  Was I taking out too much pocket money, going to sushi too often, managing daily life?  For the primary account: was the monthly balance basically steady state, did I need to add another fixed expenditure such as saving for a house, etc?  Did I need to take on a pt-time job?  Sell some junk? Have a better meeting of minds with SO?
  Every time I got a raise I spent two weeks thinking about it.  Was current discretionary lifestyle meeting my needs?  If so, use it for investments.  If not, can I meet the shortfall some other way: borrow, buy used, trade services -- made me much more creative


  • 5 O'Clock Shadow
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Re: How do you use YNAB?
« Reply #5 on: February 15, 2014, 07:08:06 PM »
I LOVE my YNAB account.  I got my girlfriend and married brother on it as well.  Its a great way to track my spending and squeeze expenses down. 

I do disagree that its a poverty mindset.  I think it helps made sure I am only spending what I have and allows me to KNOW what I have and can save/spend.  I really don't know what I would do without it.  Its a blast managing cash assets with YNAB.

I have tried excel and I like the GUI of YNAB a lot better.


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Re: How do you use YNAB?
« Reply #6 on: February 15, 2014, 11:30:42 PM »
Budgets are a pain, so I don't do them.  Budgets also reinforce a poverty mindset, so I really don't want to do them. 

I don't understand this way of thinking in the least.  Budgets reinforce intelligence and awareness about your money.  People in poverty (or broke as opposed to being poor) often don't know where their money is going.


  • Pencil Stache
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Re: How do you use YNAB?
« Reply #7 on: February 16, 2014, 07:43:33 AM »
Budgeting is often a source of denial.  We can't do this, we can't get this, this category only has this much...This is what I call a poverty of the spirit mindset.
After analyzing my own finances and my goals I set up a spending plan instead.  The difference is that one looks backwards (budgeting) while one looks forward (spending plan).
  True, the often broke do neither


  • Pencil Stache
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Re: How do you use YNAB?
« Reply #8 on: February 16, 2014, 07:50:39 AM »
I have tried spreadsheets in the past and didn't have much luck. I am still learning YNAB but I really like how it is going. I like checking my categories before buying something to see if I can A. afford it B. Do I need it right now.

It keeps me on track and I like all the built in reporting as well.


  • 5 O'Clock Shadow
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Re: How do you use YNAB?
« Reply #9 on: February 16, 2014, 07:55:49 AM »
Back when I've used spreadsheets, I thought I was budgeting, but in reality I was only tracking expenses (plus some self-blaming for being unable not to overspend in certain categories). I went through monthly cycles of first entering expenses for the last month and then assigning numbers to my "budget" categories, then not updating their balances during the month (too much work) and finally finding out where I overshot only at the end of the month. Rinse and repeat. It was a continuous cycle of plan-dang!-plan-dang!, with zero learning effect. To be totally clear: I was not budgeting then.

I like YNAB a lot, because it is forward-looking and pragmatic by design and helps to budget in the true sense of the word. Budgeting meaning "planning your expenses" (and savings). A plan is only worth something if you act accordingly. That's what YNAB facilitates as well - it facilitates spending decisions by making it easy to refer to the plan (the budget). Even on the go (mobile apps).

That's also why I find the statement "budgets enforce a poverty mindset" flat-out wrong. What does planning your finances have to do with poverty? I guess phred is referring to budgeting done wrong (which isn't really budgeting, see the first paragraph).

Edit: phred - budgeting IS a spending plan. It's just many people who claim that they are budgeting aren't really doing it correctly. And that's what YNAB changed (at least for me).

Edit 2: Also, budgeting is not backward-looking.
« Last Edit: February 16, 2014, 07:58:46 AM by Blackadder »


  • Bristles
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Re: How do you use YNAB?
« Reply #10 on: February 16, 2014, 08:18:03 AM »
Back when I've used spreadsheets, I thought I was budgeting, but in reality I was only tracking expenses

This hits the nail on the head for me, and why I've enjoyed using YNAB the last few months.  I really enjoy the whole concept around budgeting only with money that your currently have, as opposed to money you plan on having.  For some reason it took using YNAB for that concept (as well as having a "buffer") to really click with me. 

I find budget conversations on the forums interesting, because in each thread about budgeting, or YNAB, etc. there is always a group of people who insist that they don't budget, as if this indicates some higher level of mustachian consciousness or something. If that's the case, good for you.  Personally, i love budgeting and planning, and will continue to do so, no matter how strong my mustachian muscles become. 


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Re: How do you use YNAB?
« Reply #11 on: February 16, 2014, 08:52:14 AM »
Budgeting always seems to tally your categories after you've spent - whether the spending was planned or not.  Still, since I could be wrong, I did some searching.  This if from (first time visit)
"Budget = Restrictions
One of the biggest issues I have with the concept of budgets is the restriction factor. I know that, as a personal finance blogger, Iím supposed to be ok with cutting back, but I really donít like the idea of enforced restrictions on my spending ó even when Iím the one creating the restrictions with a budget. My personal money style is that of a spender, and a budget cramps my style.
To me, budgets are about limitations. With a budget, I try to set a limit on different categories of spending. Once I hit that limit, Iím supposed to be done. Thereís no spontaneity. Unless, of course, I budget that in, too. But it seems kind of pointless to budget in whatís supposed to be fun, spontaneous spending.

After a while, the budget starts to chafe, you feel restricted, and you start to feel a little bit harried, forced to count every penny ó and possibly pinch each penny as well. Itís exhausting, and, in my case, it sucks the joy right out of spending money.
Instead, with a spending plan, I find thereís a little more flexibility. Just because I donít like budgeting, and I like spending, doesnít mean that I ignore the basics of good financial practices. Instead, I plan some of my spending ahead of time to make sure that my most important funding priorities are met.

Before I spend on entertainment, recreation, dining out, and travel, I make sure that the essentials are covered. My funding priorities include:

Tithing to my church
Charitable donations
Monthly obligations (mortgage, insurance premiums, utilities, groceries, etc.)
Retirement account
Emergency fund
Effort to build dividend income portfolio
Long-term spending goals (vacation, car down payment, home improvement, etc.)
As far as Iím concerned, once those funding priorities are met, other spending categories donít matter. I automate most of my funding priorities, so that is all taken care of without conscious effort, and recorded in my personal finance software.Reactive vs. Proactive Financial Planning
Another difference I see between budgets and spending plans is that one seems reactive, while the other is more proactive. To me, a budget seems reactive. Itís as if youíre on the financial defensive, cutting spending and trying to avoid ďoverspendingĒ in each category.

Itís a position that seems to encourage a lack of control. In my mind, having a budget is a lot like being at the mercy of your money.
On the other hand, a spending plan evokes feelings of purposeful spending. In my mind, a spending plan is about taking charge of my finances, and directing my money. I can choose the way I direct my resources, planning to fund my most important priorities.

It just seems more positive to focus efforts on creating a spending plan that puts you squarely in charge of your financial destiny. Rather than thinking, ďI canít only do this much this month,Ē as a budget encourages you to think, a spending plan allows you to say, ďIím going to do this with my money.Ē Perhaps itís not a big difference, but it reveals a lot about the mindset.

With the budget mindset, money is always scarce. Even if money isnít scarce in your situation, the budget mindset seems to set up financial scarcity, since you know there is a cap on what you can spend in certain categories.

Your spending plan, though, indicates that you have some sort of direction and purpose for (at least some of) your spending. It implies that you have the money to meet your goals, and that you are in charge of your money habits, deciding where your resources should be used next."
 This guy is obviously wise beyond his years. Ha-ha!
Once all my automatic payments are set up, everything else is discretionary.  If I choose one month of restaurants $400 and bookstore $200, and then the next month restaurants $120, bookstore $20, spur of the moment canoe 3 day weekend $300 no categories have to be juggled as everything is out of the monthly discretionary up to the limit of that free-spending category.  I never borrow from the auto pay accounts, and can basically not worry about them.  They've been set up in advance; I check the monthly statements to make sure they are on track.  With worrying about money lessened I am actually able to save more 


  • Pencil Stache
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Re: How do you use YNAB?
« Reply #12 on: February 16, 2014, 11:08:43 AM »
I've used ynab for six years now. It is life changing. I started as someone who budgeted in excel and thought I was doing great. However, I was living on my credit card by making purchases this month with the plan to pay them off by my credit card due date. Not only was I living on anticipated income, but I was living on next months anticipated income. As a result of the awareness ynab has brought me, I've amassed over 120k in all my accounts by the age 25. (Including getting a bachelors and masters degree during this timeframe)