Julad reviews You Need A Budget (YNAB). Because why not.
I've been trying to be a good financial girl the last few months, because I really needed to get my shit together about saving for buying my own home and then, you know, paying a mortgage for the next thirty thousand years. In aid of this mighty quest, I've ended up switching to some budgeting software called You Need A Budget (YNAB). If budgeting and/or budgeting tools are relevant to your interests, please allow me to tell you all about it. I wrote half of this down just to get my thoughts straight in my own head, but I figured I might as well share it with anybody else who cares.
YNAB has been around for aaaages, like since dinosaurs roamed the internet. I've looked at it many, many times over the years, and it's always been intriguing, but it's never been quite right for me. This year I looked again, and it now had a Mac desktop application and an iPhone app, so it was ticking two boxes. My other box was fortnightly budgeting, since I get paid fortnightly. YNAB still doesn't have that; you can only budget monthly.
I ended up giving it a go anyway, because I was so freaking impressed by their website. I mean, I manage websites for a living. I see a lot of websites from behind the curtain, and I was blown away by the way they've architected the whole user experience on their site. It's really good work. So I was like, "Okay, YNAB. I'm impressed. You've got my attention. Despite the absurdity of me trying to budget monthly on a fortnightly salary, I'm going to give this thing a try." So I downloaded the trial version and off I went.
How YNAB works
So, as budget software, it works like you'd expect any sensible budgeting software to work:
The different thing about YNAB is that it's built to work with their own budgeting method. If you don't follow the method, the software probably makes no sense. The method is basically four rules, which seem simple enough when you read about them, but as I tried to implement them, I couldn't get them to sit right in my head. It was like that one scene in that one episode that you can't stop mentally gnawing on, because it was so close, but it just didn't freaking work with how I saw things. So like the good little transformative artist I am, I rewrote their rules. *g*
Read the canonical rules first if you want, or read on for the remix. They're basically the same thing, but the point of view is different. ;)
Rule 1: Your account balance sucks at telling you how much money you have. And don't expect your brain to tell you how much money you have, either, because this is your brain on shoes.
This is the most straightforward concept in the world, and it is something that I have totally failed to comprehend my entire adult life. So my entire adult life has gone like this:
Awesome Shoes: Y HALLO THAR.
Me: Oh shut up. I cannot afford you.
Shoes: But look how awesome I am!
Me: Hrm. Um?
Bank Balance: $650
Me: OMG! I can totally afford shoes!
[fifteen minutes later]
Really Expensive Dentist Appointment That I Really Painstakingly Kept Money Aside For, Except For Those Two Brief Minutes When I Was Staring At The Shoes: Y HALLO THAR.
Me: Ohhh.
So Rule 1 says, your budget is the thing that tells you how much money you have, because you are not actually getting the information you need from your account balance or your brain.
Rule 2: Smooth out the peaks and valleys. Eat some elephant at every meal.
Rule 2 is utterly mundane. Sometimes you have no bills or expenses, and lots of money to spend on other things. YAY! And then sometimes you have lots of bills and expenses, and no money to spend on other things. BOO! So here's a crazy idea: lets average out all the bills and expenses and put some money aside for them every month, and then we'll always have money to spend on other things! *WILD CHEERING*
The second part is based on that old saying: How do you eat an elephant? One bite at a time. It's saying, duh, when you need something that costs more than you can pay out of one paycheck, you're going to have to get there by adding up multiple bits of money out of multiple paychecks over time. Every paycheck, you need to make money pile up for the things you want. I mean, getting the things you want is the whole point of this budgeting thing, right? Mmmm, elephants. :)
So, given that Rule 2 is mind-numbingly obvious, you'd think we'd all be doing it without the need of special software and budgeting methods. But the catch is, Rule 2 only works if you're following Rule 1. If you're not following Rule 1, and you're letting your brain and your bank balance tell you how much money you have, then you're going to see pieces of elephant and averages of bills lying around in your bank accounts and think, "OMG!! SHOES!!!"
Rule 3: No plan survives first contact with the enemy.
Rule 3 is what you didn't have all the other times you had a budget, and then you didn't like having a budget. Because you are a Human Being who lives in Reality.
Let's say you budget $250 for groceries. Then you go on a giant cooking binge and spend $80 more on groceries than you should have. OMG YOU HAVE RUINED YOUR BUDGET. CLEARLY YOU NEED MORE SHOES.
OR, you can see that because of your cooking binge, you're not going to be buying lunch at work for at least a week. Plus you didn't go out all weekend because you were too busy being a maniac in the kitchen. OMG YOU ARE STILL MOSTLY IN YOUR BUDGET. WINNING!
Rule 3 says, reality is going to mess with your budget every time. And that's fine, actually. Shit happens. And when shit happens, you can look at your budget and figure out how big a deal it is, and what you need to do to about it.
This is where the software itself makes a big difference. When you overspend, you're not forced to juggle everything around right away to make up for it (unless you want to). The overspend is just quietly incorporated in the next month's budget. The software makes you aware of your overspending, but it doesn't make you feel penalised for it.
After shit happens, Rule 3 merges nicely with Rule 2. Big horrible car servicing bill you didn't see coming? Man, let's average out that shit from now on. Overspending on groceries by eighty bucks every single month? Gosh, I wonder what that's telling you. Rule 3 + Rule 2 = you climbing up the learning curve of what your life really costs you. Information being power and all that.
Rule 4: Keep extra money in your account, so you can stop thinking about the if and when of money, and start thinking about the what and why. Or about werewolves. Or hockey. Whatever.
This one totally surprised me.
So, YNAB says you should live off last month's income, while this month's income piles up. (Obviously, you need Rule 1 in place for this, otherwise: SHOES.) That month's worth of income you're not spending yet is called The Buffer and it's Very Important, apparently.
The whole last month/this month thing made my head hurt, though. Also, I didn't have an entire month's income just lying around, and the whole thing just seemed unnecessarily convoluted. In the end I went along with it by sort of vaguely and confusedly taking all the spare money I had and shoving it into my main account, and then in vague and confused fashion trying to make more money pile up on top of it.
What happened was this:
In ye oldene days, my calendar had all my pay dates in it, and I tracked the dates of my significant bills and expenses, and I was constantly, constantly checking my bank balance and my calendar to see if I should pay for things now, or if they had to wait until the next paycheck. Or if I had a bill coming out of my account soon, I had to keep checking to see if it had come out yet, or to find out exactly what my balance was so that I knew how much I could spend on groceries. I had actually figured out all the tiny exact spots where I could get mobile data coverage in my local supermarket, because I checked my account balance so often when I was there.
I thought this was good. I mean, it was good - it was a big fucking step up from having not the slightest clue how much money I had or when I needed to pay for things, that's for sure.
BUT! When I followed Rule 4 and always had money sitting in my account, I didn't have to check my balance and my calendar, because it didn't matter what day it was, or when it was going to be payday. If I needed to pay a bill, I paid it. If I found myself near the good butcher across town, I stocked up. I sometimes had to check my budget, but I didn't have to check my balance, or the date. It's actually really hard to explain the difference between before and after Rule 4, but I think what sums it up best is that I very quickly started forgetting when pay day was, because it didn't matter any more. If you told me a few months ago that I'd be forgetting when pay day was, I'd be like O_O.
Rule 4 takes all your thinking about money, and chops off everything to do with the daily logistics of making sure you'll have enough. I literally feel like there's more room in my head now, just because I keep more money sitting in my main account. It's not that I have more money to spend - I really don't - but an entire aspect of my thinking about money just got tossed aside. And that is really helpful. If you're going to spend, say, fifteen minutes a day thinking about your finances, you're so much better off thinking about your plans and your options, rather than being on the endless hamster-wheel of when the car insurance bill is due and when is your next pay and how much can you spend on groceries. Rule 4 changes your thinking about money from quantity to quality.
(Eventually I did grasp the living-off-last-month's-income thing, BTW. But it only made genuine sense to me once I had vaguely and confusedly piled up enough money to actually make the switch from this month's income to last month's.)
Switching from fortnightly to monthly budgeting
YNAB only works with a monthly budget, which was a big reason why I never used it before. And in order to try out the software, I had to switch to monthly budgeting.
Let's not beat around the bush: THIS PART REALLY SUCKED. I've been paid fortnightly my whole life. My rent was fortnightly, my bill payments were fortnightly, my entire financial life was fortnightly. Plus, nothing about monthly budgeting made any fucking sense. Sometimes you get paid twice a month and sometimes you get paid three times. Sometimes rent is due twice and sometimes rent is due three times. You don't get three paychecks in the same month that you pay three rents. The months aren't even the same length! What the motherfucking fuck is the point of monthly budgeting when it's this fucked up?
So, yeah. I possibly didn't like switching from fortnightly to monthly. It took me days and days to get my head around it. At one point, I stopped trying, and started drinking. (Then went back to trying. Haha, drunk budgeting. That was fun.) But by the time I got through the first month, I was adjusted, and budgeting got simpler. Actually, much simpler.
Turns out, being simpler is the point of monthly budgeting. It means I only have to budget 12 times a year, not 26 times. I am dealing with bigger chunks of money, which gives me more flexibility about what I can buy when, and makes me feel like I can get more things done in each budget. And since you're usually going off two fortnightly paychecks in each month, when you get paid three times in a month, IT'S LIKE FREE MONEY. The deep dark secret is, monthly budgeting is all a nasty trick to make you think you have less money than you actually do, so that you end up spending less. And it's a nasty trick that works. So, I'm a lot cooler now about the monthly budgeting thing. *g*
In conclusion
Look, I assume it's obvious that some software and a few budgeting rules weren't magic fairy dust that made me instantly a model of financial responsibility. (Shoes.) But for me, when I care about getting it right, they make it much easier to get it right. Just that much is kind of a big deal, actually.
I was budgeting and planning and tracking spending before, but it wasn't coming together properly, and I was always overspending even when I thought I was on track. The YNAB approach puts everything in one place, and helps in a few additional ways. First, you plan better. Second, when your plan goes goes screwy, you recover more smoothly. And third, you improve your budgeting over time. Even though I thought I had a good budget before, I was getting constantly bitten by unexpected costs, and every fortnight I had always spent more than I expected. It turned out my budget was getting blown not so much by shoes (which I really thought was the most logical explanation!), but by some basics that I was consistently underestimating: groceries, health, and transport.
Switching to YNAB took considerably more time and energy than I expected. This was partly because of the switch to monthly, partly because of adjusting to the method, and partly because it just plain takes time to get used to looking at the wall of numbers in the software and understanding what it's telling you. But I'm not at all sorry that I spent the time, and it was apparent within a few days that the effort was going to be worth it.
The value is really the method, and how it changes your thinking about the money you have, and the money you do not have, actually, regardless of what your account balance is telling you. There's lots of online support and explanation, and also an email series which walks you through the method, which I really liked.
The iPhone app and the desktop app support and enable the method. They're both easy to use once you get going. They sync, they remember shit, it's quick and easy to track your money. They disappear into the background, really - you don't think about the software, you think about your finances.
That's about it really. Check out their website if you want to know more. It's not a bad website. *g*
This entry was originally posted at dreamwidth (
comments).
YNAB has been around for aaaages, like since dinosaurs roamed the internet. I've looked at it many, many times over the years, and it's always been intriguing, but it's never been quite right for me. This year I looked again, and it now had a Mac desktop application and an iPhone app, so it was ticking two boxes. My other box was fortnightly budgeting, since I get paid fortnightly. YNAB still doesn't have that; you can only budget monthly.
I ended up giving it a go anyway, because I was so freaking impressed by their website. I mean, I manage websites for a living. I see a lot of websites from behind the curtain, and I was blown away by the way they've architected the whole user experience on their site. It's really good work. So I was like, "Okay, YNAB. I'm impressed. You've got my attention. Despite the absurdity of me trying to budget monthly on a fortnightly salary, I'm going to give this thing a try." So I downloaded the trial version and off I went.
How YNAB works
So, as budget software, it works like you'd expect any sensible budgeting software to work:
- you tell it how much money you have
- you plan how you're going to spend your money in various categories
- you track your money as it goes in and out (on the desktop app and the iphone app)
- you check how much you've spent in each category, and it goes red if you overspend.
- you see reports about what you're spending in different categories (I confess I've never really looked at that stuff)
The different thing about YNAB is that it's built to work with their own budgeting method. If you don't follow the method, the software probably makes no sense. The method is basically four rules, which seem simple enough when you read about them, but as I tried to implement them, I couldn't get them to sit right in my head. It was like that one scene in that one episode that you can't stop mentally gnawing on, because it was so close, but it just didn't freaking work with how I saw things. So like the good little transformative artist I am, I rewrote their rules. *g*
Read the canonical rules first if you want, or read on for the remix. They're basically the same thing, but the point of view is different. ;)
Rule 1: Your account balance sucks at telling you how much money you have. And don't expect your brain to tell you how much money you have, either, because this is your brain on shoes.
This is the most straightforward concept in the world, and it is something that I have totally failed to comprehend my entire adult life. So my entire adult life has gone like this:
Awesome Shoes: Y HALLO THAR.
Me: Oh shut up. I cannot afford you.
Shoes: But look how awesome I am!
Me: Hrm. Um?
Bank Balance: $650
Me: OMG! I can totally afford shoes!
[fifteen minutes later]
Really Expensive Dentist Appointment That I Really Painstakingly Kept Money Aside For, Except For Those Two Brief Minutes When I Was Staring At The Shoes: Y HALLO THAR.
Me: Ohhh.
So Rule 1 says, your budget is the thing that tells you how much money you have, because you are not actually getting the information you need from your account balance or your brain.
Rule 2: Smooth out the peaks and valleys. Eat some elephant at every meal.
Rule 2 is utterly mundane. Sometimes you have no bills or expenses, and lots of money to spend on other things. YAY! And then sometimes you have lots of bills and expenses, and no money to spend on other things. BOO! So here's a crazy idea: lets average out all the bills and expenses and put some money aside for them every month, and then we'll always have money to spend on other things! *WILD CHEERING*
The second part is based on that old saying: How do you eat an elephant? One bite at a time. It's saying, duh, when you need something that costs more than you can pay out of one paycheck, you're going to have to get there by adding up multiple bits of money out of multiple paychecks over time. Every paycheck, you need to make money pile up for the things you want. I mean, getting the things you want is the whole point of this budgeting thing, right? Mmmm, elephants. :)
So, given that Rule 2 is mind-numbingly obvious, you'd think we'd all be doing it without the need of special software and budgeting methods. But the catch is, Rule 2 only works if you're following Rule 1. If you're not following Rule 1, and you're letting your brain and your bank balance tell you how much money you have, then you're going to see pieces of elephant and averages of bills lying around in your bank accounts and think, "OMG!! SHOES!!!"
Rule 3: No plan survives first contact with the enemy.
Rule 3 is what you didn't have all the other times you had a budget, and then you didn't like having a budget. Because you are a Human Being who lives in Reality.
Let's say you budget $250 for groceries. Then you go on a giant cooking binge and spend $80 more on groceries than you should have. OMG YOU HAVE RUINED YOUR BUDGET. CLEARLY YOU NEED MORE SHOES.
OR, you can see that because of your cooking binge, you're not going to be buying lunch at work for at least a week. Plus you didn't go out all weekend because you were too busy being a maniac in the kitchen. OMG YOU ARE STILL MOSTLY IN YOUR BUDGET. WINNING!
Rule 3 says, reality is going to mess with your budget every time. And that's fine, actually. Shit happens. And when shit happens, you can look at your budget and figure out how big a deal it is, and what you need to do to about it.
This is where the software itself makes a big difference. When you overspend, you're not forced to juggle everything around right away to make up for it (unless you want to). The overspend is just quietly incorporated in the next month's budget. The software makes you aware of your overspending, but it doesn't make you feel penalised for it.
After shit happens, Rule 3 merges nicely with Rule 2. Big horrible car servicing bill you didn't see coming? Man, let's average out that shit from now on. Overspending on groceries by eighty bucks every single month? Gosh, I wonder what that's telling you. Rule 3 + Rule 2 = you climbing up the learning curve of what your life really costs you. Information being power and all that.
Rule 4: Keep extra money in your account, so you can stop thinking about the if and when of money, and start thinking about the what and why. Or about werewolves. Or hockey. Whatever.
This one totally surprised me.
So, YNAB says you should live off last month's income, while this month's income piles up. (Obviously, you need Rule 1 in place for this, otherwise: SHOES.) That month's worth of income you're not spending yet is called The Buffer and it's Very Important, apparently.
The whole last month/this month thing made my head hurt, though. Also, I didn't have an entire month's income just lying around, and the whole thing just seemed unnecessarily convoluted. In the end I went along with it by sort of vaguely and confusedly taking all the spare money I had and shoving it into my main account, and then in vague and confused fashion trying to make more money pile up on top of it.
What happened was this:
In ye oldene days, my calendar had all my pay dates in it, and I tracked the dates of my significant bills and expenses, and I was constantly, constantly checking my bank balance and my calendar to see if I should pay for things now, or if they had to wait until the next paycheck. Or if I had a bill coming out of my account soon, I had to keep checking to see if it had come out yet, or to find out exactly what my balance was so that I knew how much I could spend on groceries. I had actually figured out all the tiny exact spots where I could get mobile data coverage in my local supermarket, because I checked my account balance so often when I was there.
I thought this was good. I mean, it was good - it was a big fucking step up from having not the slightest clue how much money I had or when I needed to pay for things, that's for sure.
BUT! When I followed Rule 4 and always had money sitting in my account, I didn't have to check my balance and my calendar, because it didn't matter what day it was, or when it was going to be payday. If I needed to pay a bill, I paid it. If I found myself near the good butcher across town, I stocked up. I sometimes had to check my budget, but I didn't have to check my balance, or the date. It's actually really hard to explain the difference between before and after Rule 4, but I think what sums it up best is that I very quickly started forgetting when pay day was, because it didn't matter any more. If you told me a few months ago that I'd be forgetting when pay day was, I'd be like O_O.
Rule 4 takes all your thinking about money, and chops off everything to do with the daily logistics of making sure you'll have enough. I literally feel like there's more room in my head now, just because I keep more money sitting in my main account. It's not that I have more money to spend - I really don't - but an entire aspect of my thinking about money just got tossed aside. And that is really helpful. If you're going to spend, say, fifteen minutes a day thinking about your finances, you're so much better off thinking about your plans and your options, rather than being on the endless hamster-wheel of when the car insurance bill is due and when is your next pay and how much can you spend on groceries. Rule 4 changes your thinking about money from quantity to quality.
(Eventually I did grasp the living-off-last-month's-income thing, BTW. But it only made genuine sense to me once I had vaguely and confusedly piled up enough money to actually make the switch from this month's income to last month's.)
Switching from fortnightly to monthly budgeting
YNAB only works with a monthly budget, which was a big reason why I never used it before. And in order to try out the software, I had to switch to monthly budgeting.
Let's not beat around the bush: THIS PART REALLY SUCKED. I've been paid fortnightly my whole life. My rent was fortnightly, my bill payments were fortnightly, my entire financial life was fortnightly. Plus, nothing about monthly budgeting made any fucking sense. Sometimes you get paid twice a month and sometimes you get paid three times. Sometimes rent is due twice and sometimes rent is due three times. You don't get three paychecks in the same month that you pay three rents. The months aren't even the same length! What the motherfucking fuck is the point of monthly budgeting when it's this fucked up?
So, yeah. I possibly didn't like switching from fortnightly to monthly. It took me days and days to get my head around it. At one point, I stopped trying, and started drinking. (Then went back to trying. Haha, drunk budgeting. That was fun.) But by the time I got through the first month, I was adjusted, and budgeting got simpler. Actually, much simpler.
Turns out, being simpler is the point of monthly budgeting. It means I only have to budget 12 times a year, not 26 times. I am dealing with bigger chunks of money, which gives me more flexibility about what I can buy when, and makes me feel like I can get more things done in each budget. And since you're usually going off two fortnightly paychecks in each month, when you get paid three times in a month, IT'S LIKE FREE MONEY. The deep dark secret is, monthly budgeting is all a nasty trick to make you think you have less money than you actually do, so that you end up spending less. And it's a nasty trick that works. So, I'm a lot cooler now about the monthly budgeting thing. *g*
In conclusion
Look, I assume it's obvious that some software and a few budgeting rules weren't magic fairy dust that made me instantly a model of financial responsibility. (Shoes.) But for me, when I care about getting it right, they make it much easier to get it right. Just that much is kind of a big deal, actually.
I was budgeting and planning and tracking spending before, but it wasn't coming together properly, and I was always overspending even when I thought I was on track. The YNAB approach puts everything in one place, and helps in a few additional ways. First, you plan better. Second, when your plan goes goes screwy, you recover more smoothly. And third, you improve your budgeting over time. Even though I thought I had a good budget before, I was getting constantly bitten by unexpected costs, and every fortnight I had always spent more than I expected. It turned out my budget was getting blown not so much by shoes (which I really thought was the most logical explanation!), but by some basics that I was consistently underestimating: groceries, health, and transport.
Switching to YNAB took considerably more time and energy than I expected. This was partly because of the switch to monthly, partly because of adjusting to the method, and partly because it just plain takes time to get used to looking at the wall of numbers in the software and understanding what it's telling you. But I'm not at all sorry that I spent the time, and it was apparent within a few days that the effort was going to be worth it.
The value is really the method, and how it changes your thinking about the money you have, and the money you do not have, actually, regardless of what your account balance is telling you. There's lots of online support and explanation, and also an email series which walks you through the method, which I really liked.
The iPhone app and the desktop app support and enable the method. They're both easy to use once you get going. They sync, they remember shit, it's quick and easy to track your money. They disappear into the background, really - you don't think about the software, you think about your finances.
That's about it really. Check out their website if you want to know more. It's not a bad website. *g*
This entry was originally posted at dreamwidth (
comments).