My wife and I have been budgeting with YNAB for over a year now. We’ve learned a lot. Although budgeting can’t solve all of your financial issues, it can help put your mind at ease a little bit. If anything, it gives you a goal to work toward – like furthering your career, earning more salary, and moving to a better place financially.
Finances are hard work. Budgeting can’t possibly solve everything. I’m not promising that. However, if you’re looking to control excess spending, try it out. Read on to see what we learned in our first year.
Just so you know, this is not a sponsored post. YNAB is one tool. It won’t increase your salary at work and it won’t make you happier by itself. Instead, think of it like a vitamin. While it’s good to use it daily, it won’t cure a sickness.
If your “sickness” is “I don’t have enough money for rent” and you’ve cut out all extra spending, try working on increasing your income first.
If you want to learn more about YNAB, sign up for a free trial (this is a referral link).
1. Financial issues are hard
Like I said previously, it’s hard work to be good with money. Many people are not. There are two parts to financial issues. Your expenses (the ones most people like to talk about) and income. You can’t handle your expenses without some type of income. And sometimes, you can minimize your expenses and still not have enough income to pay them off.
2. Budgeting will not solve income problems
If your true expenses are greater than your income, no amount of budgeting wizardry can help you start saving. Budgeting is a struggle – I struggle with it at times as well. However, I realize I’m fortunate enough to live off last month’s income. Some people simply can’t do that.
3. It’s not a magic bullet
Money issues are complex. There’s no single thing you can do to get better at it. YNAB (this is a referral link) won’t suddenly help you move beyond living paycheck to paycheck. It’s hard work. I still encourage you to try it though. It’s a skill that can help you for many years to come.
4. Income is more important than you think
You can’t budget money you don’t have. It becomes obvious really quick when you don’t have money to budget for certain things. Sometimes in order to budget more money, you need to make more money. Keeping a budget has motivated me to always look for ways to increase my annual income.
5. Budgeting is a lifestyle change
If you’ve ever tried to lose weight or get in shape, you know there aren’t any shortcuts. If you try to take one, you won’t get anywhere. That’s budgeting, too. There are no shortcuts. You either budget regularly or you don’t. You can’t go on a diet for a few weeks and expect to be great with money.
6. Start fresh
When you’re first starting out with YNAB, you’ll fight the urge to import past transactions. I’m here to encourage you not to do that. Instead, simply budget the money you have when you start. Add future transactions as you go.
7. You can’t possibly budget for everything ahead of time
While it’s good to think about future expenses, it’s impossible to get this right all the time. Things will come up. You’ll have some compulsive purchases. Budgeting isn’t about getting the right answer all the time. If you need to make adjustments, do it.
8. You become old school
When I was growing up, my mom would enter every transaction into her checkbook. That’s what you’re doing when you use YNAB. You’re keeping a checkbook. Each transaction you enter gives you a new balance. You’re better connected to your money that way.
9. You think about the future more
If it’s March, you’ll have to think about your budget for April, May, and beyond. This helps you anticipate irregular expenses that come up throughout the year. I learned to appreciate this because of the security it provides. Knowing you have money budgeted months ahead of time puts your mind at ease.
10. When you budget with your spouse, you talk about money more
If you and your spouse never talk about money, budgeting with YNAB will help you. Both of you should install the apps on your phone and enter transactions as they happen. Your budget stays front and center that way. Better yet, plan your budgets together. You’ll learn to make changes together that way. There’s no hiding from them anymore.
11. You think about credit card spending immediately
Without a budget, credit card spending hides away in your closet until the bill comes. It’s easy to stop checking your credit card balance when you don’t need to pay it until next month. YNAB stops this behavior. When you record a credit card transaction on YNAB, it pulls money from the category of the transaction. If you didn’t budget enough for that category, guess what? There won’t be enough money to pay your bill.
12. It’s really easy to see how much you spent on vacation last year
YNAB reaps more benefits over time. After a year of budgeting, you end up with a wealth of data. I’m able to look for trends and see what we spent on anything. For example, we recently budgeted for a vacation. When booking a similar vacation this year, we were able to see exactly what we spent last year. We didn’t have to go digging through credit card statements.
13. When you get ahead, your mind can relax
Worrying about money sucks. Before budgeting, no matter how much money I had, I worried. I always thought I was spending too much and saving too little. Keeping a budget has kept those thoughts at bay. I find it easier to pay extra on student loans and spend money on larger ticket items without buyer’s remorse.
14. You start to think about credit cards as cash
Credit cards can be an evil thing for a lot of people. One reason is it separates you from cash. It’s like chips in a casino. The beauty of budgeting brings you closer to thinking of credit cards like cash. There’s just something about entering a transaction into YNAB. It makes you realize how much money you spent.
15. Your budget isn’t your net worth calculator
Don’t confuse your budget with your net worth. Your budget helps you keep track of the money you use for bills, expenses, and fun stuff. YNAB comes with a net worth report, but you really shouldn’t use it for that purpose. Instead, use their net worth report as an indicator of your progress.
16. It’s easy to get behind
Don’t fall behind. That’s what I did. For one reason or another, we fell behind entering transactions and categorizing them. When you finally come back, it’s a pain in the ass. Even worse, I couldn’t get balances to match with the actual credit card balances. That’s a few hours I’ll never get back.
17. You get to see a year’s worth of transactions
Data is beautiful. After a year, you’ll have a boat load of it. Go back and see how you did. I’ve learned some trends in our spending like our monthly minimum and maximum. You also get a better idea of your average spending. That gives you a benchmark to improve upon.
18. It’s easy to see how much you really spend on eating out
I never really knew how much we spent on dining out. If you keep a dining out category, it becomes pretty easy to see. If you don’t keep track of these things, it’s hard to make a good estimate.
19. You can’t hide your spending habits. They stare you right in the face.
If you stay up to date with entering transactions, you’ll constantly be reminded of your spending habits. You can’t sweep things under the rug. As you force yourself to confront your spending habits, you’ll improve.
20. Create your own categories if you need them
You don’t have to stick to YNAB’s default categories. It’s easy to add any you need or remove the ones you don’t. If you need a category for basket weaving, make one. We like to snowboard so we have a category strictly for snowboarding related equipment.
21. Let money pile up in your categories but feel free to move it around if you need to
Our electric bill varies each month in the winter and stays constant in the summer. We budget more than needed in the summer and let that money build up for the winter. We try not to take money from that category. However, we’re always moving money around for other categories.
22. It’s like working out, you only lose weight if you show up every day
Losing weight is a journey. Budgeting is the same way. You don’t get good at it after a few days. You have to find a way to stick to it. Start by opening the YNAB app every day and adding each transaction as they happen. Over time, you can dive deeper into the reports and learn from your mistakes.
23. Don’t add all of your accounts
This could be controversial, but don’t add all of your accounts. Add your checking account and maybe your savings account, then add your credit cards. That’s it. Your retirement accounts aren’t a good fit here. You aren’t budgeting for 30 years from now.
24. Keep things up to date
You want your budget to always be a source of truth. If your cell phone bill goes up, update your budget. Don’t lie to yourself. If you need to move money around, do it. Feel free to borrow from future months too.
25. Look for ways to save money, but only every now and then
It’s exhausting looking for ways to save money every day. Instead, only look for ways to save money every few weeks. Take it one step at a time. A lot of small improvements over time can add up to one giant improvement.
26. When you’re moving money around, just take it out of To Be Budgeted
For me, it doesn’t make sense to enter a large transaction like paying off a student loan. Instead, I simply budget until I feel good, then let the rest sit there. If I want to make a big payment on a student loan, I simply take it out of To Be Budgeted. That’s the way it makes sense to me. Your mileage may vary.
27. The age of money really isn’t that important, but it’s a good thing to look at
I don’t really know how YNAB gets this number. It fluctuates constantly. I know it’s supposed to be an indicator of how old your money is when you spend it; however, like I said, it doesn’t really mean much to me anymore. Instead, I look at how many months ahead are budgeted. This can also function as your emergency fund.
28. Set aside money in the future as soon as you can
Budget into the future. If you’ve budgeted the current month and have money left over, move to the next month. This is mentally healthy. Knowing you have next month and the next month budgeted is super helpful. Trust me.
29. YNAB can’t solve all your problems
Simply using YNAB alone isn’t going to help you be better with money. You have to stay in tune with money and educate yourself on ways to save. Further your career. Make more money. YNAB is simply a tool in your toolbox.
30. It’s easy to feel lost
You might find yourself not knowing what to do. I’ve been there. Just keep doing what you feel is best. You can always fix it later.
31. There are groups out there to help you
If you feel stuck on something for quite awhile, check out r/ynab. There are always people asking questions and providing great answers.
32. YNAB’s documentation is amazing
Honestly, this is one of the first things you should do and you should come back to it often. YNAB invests a lot of money in producing great documentation for you. Try to take advantage of it. Even if you don’t end up using what you read, you’ll learn a lot.
33. You won’t learn if you never try
If you sit on the fence for too long, you’ll waste time and won’t learn anything. If budgeting feels scary, try to make yourself jump in. You’ll learn a lot about your spending simply by trying.
24. Just start
There’s never a perfect time to start budgeting. You’ll always think you don’t have enough time or budgeting will never make sense to you. In the end, budgeting actually saves you time and the more you do it, the more sense it will make. Jump in and see how you like it.
35. The mobile apps are great
I’m not always great at entering transactions immediately, but I open the mobile apps at least a few times a week. Although the apps were lacking functionality for awhile, the apps are great now. You can do everything. There’s hardly a need to use the website anymore.
36. Your friends and family will be happy for you (and a little jealous)
As you make budgeting a way of life, your friends and family will notice. You’ll make more conscious decisions about money. Your friends might ask you about the app and what you’re doing. Deep down, they might be a little jealous. Share the wealth about budgeting if they’re curious.
37. You’ll never go back
Honestly, I find it hard to stop budgeting with YNAB. It’s become more than a habit – it’s something I do. When I don’t do it, I don’t feel the same – it feels weird. It’s a skill I’ll carry with me for the rest of my life.
38. You can pass it down to your children
Budgeting is a life skill. It’s something to better your children’s lives with. If your children grow up with budgeting, they’ll better take to it as adults. You can teach them how you were able to curb your bad spending habits and grow your net worth. Better yet, once they graduate college, budgeting will help them pay down their loans so you don’t have to.
If you want to learn more about YNAB, sign up for a free trial (this is a referral link).