You Need a Budget - Personal Finance Software
Posted: Dec 4th, 2012, 10:15 am
I feel like I need to tell the world about YNAB. It has changed my financial life for me, my wife, and when I have kids, my family.
I've been the type of person to control spending as much as I can (made mistakes in the past), save when I can, I know at the time where my money goes, but looking back I can never believe that I made that much $$$ yet it's all gone... Savings only grow by the amount that is automatically deducted, and if something big breaks I always have to reach for the credit card to cover it for now then pay it off.. Living a cycle of charge & pay off... SUCKS!
September this year I downloaded the last 3 months of my bank statements for me & my wife, and made a categorized list of where all the money went... so at least I know what I spent all the money on.. Besides all the cash that I have no record of, it at least gave me an idea of where I am compared to where I was...
Without getting too much into my personal finances, I can tell you I was spending a lot more in some areas than I realized!
At this point, I realized I needed a budget. I need to look forward and PLAN where my money goes, not look back and see where it went. At first I tried Gail Vaz-Oxalade's Jar system, but I felt cash just didn't work for me, and I thought there had to be a better way.
Enter You Need A Budget.
I'm a bit of a geek, so I was really happy to see a program other than Excel to manage my budget... and YNAB is so much more than just a spreadsheet. It's a beautiful peice of software, with a meaningful method & theory behind it. Give every dollar a job, Save for larger less frequent expenses, roll with the punches and adjust your budget as you go, and live on last months income.
Rule One: Give Every Dollar a Job
When you get paid, you input your income into the transactions & you now have money "Available to budget". Going into the budget screen, you can allocate those dollars to the different categories, prioritizing things that are required before you are paid again. Once immediate bills are paid, you can disperse the rest to savings categories, groceries, etc. When you are paid again, do the same!
Rule Two: Save for a Rainy Day
Things that come up less than monthly are hard to budget for normally.. it's easy to figure that insurance is due once a year, divide by 12, and budget that much, but unless you physically take the money and put it somewhere, it may be spent on other things accidentally! Beauty of YNAB is if you budget $50 this month towards Insurance, it rolls over into next month's category, but you cannot spend it again since it's been removed from your "Available to Budget". Budget another $50 next month, and you'll have $100 in that category. All the money can sit in your chequing account, because it has a job, just not YET! You stop looking at your bank account to see how much $$$ you have, and start looking at the category to tell you what you can spend! Helloooo budgeting!
Rule Three: Roll with the Punches
Life happens, and the number one reason budgets seem to always fail is that they are too rigid. They aren't flexible to deal with unexpected things, like a surprise visit, etc... YNAB can be adjusted on the go, if you need more money for groceries, you can take money allocated to something like clothing to cover... The beauty is there is only a finite amount of money to go around, so if you want to spend more in one area, the money has to come from somewhere! Say hello to no more overspending! More like adjustments in the budget!
Rule Four: Live on last month's Income
Ideally, you want to budget the entire month on the 1st, and input transactions. But to get there, you need to have the entire month's money available on the first. To get to this point, at the end of the month when you've spent all you're going to spend and you can find some money leftover, allocate it to next month's categories, and do this each month and you'll eventually have next month's expenses paid with this month's income. At this point, in YNAB you can allocate your current pay to next month's income, and BOOM, you now have an entire month's income as a buffer
Entering Transactions:
Budgeting the Categories:
Thing with budgets are, nobody makes too much to budget, and nobody makes too little to budget. Everyone can benifit.
I'm young, at 27, and I can see myself saving a few hundred dollars a month just because I *know* where my money IS going, and I know where it SHOULD go. It helps me not spend frivolously, and helps me prioritize what I do spend money on.
There is a free 34 day trial at http://www.youneedabudget.com, so you can try it for a month and a few days to see if you like the way it works... I HIGHLY recommend at least trying it.
If you like it and want to buy it, use my referral code for 10% off and help me for introducing you to YNAB
YNAB 10% Referral link
Let me know what you think
I've been the type of person to control spending as much as I can (made mistakes in the past), save when I can, I know at the time where my money goes, but looking back I can never believe that I made that much $$$ yet it's all gone... Savings only grow by the amount that is automatically deducted, and if something big breaks I always have to reach for the credit card to cover it for now then pay it off.. Living a cycle of charge & pay off... SUCKS!
September this year I downloaded the last 3 months of my bank statements for me & my wife, and made a categorized list of where all the money went... so at least I know what I spent all the money on.. Besides all the cash that I have no record of, it at least gave me an idea of where I am compared to where I was...
Without getting too much into my personal finances, I can tell you I was spending a lot more in some areas than I realized!
At this point, I realized I needed a budget. I need to look forward and PLAN where my money goes, not look back and see where it went. At first I tried Gail Vaz-Oxalade's Jar system, but I felt cash just didn't work for me, and I thought there had to be a better way.
Enter You Need A Budget.
I'm a bit of a geek, so I was really happy to see a program other than Excel to manage my budget... and YNAB is so much more than just a spreadsheet. It's a beautiful peice of software, with a meaningful method & theory behind it. Give every dollar a job, Save for larger less frequent expenses, roll with the punches and adjust your budget as you go, and live on last months income.
Rule One: Give Every Dollar a Job
When you get paid, you input your income into the transactions & you now have money "Available to budget". Going into the budget screen, you can allocate those dollars to the different categories, prioritizing things that are required before you are paid again. Once immediate bills are paid, you can disperse the rest to savings categories, groceries, etc. When you are paid again, do the same!
Rule Two: Save for a Rainy Day
Things that come up less than monthly are hard to budget for normally.. it's easy to figure that insurance is due once a year, divide by 12, and budget that much, but unless you physically take the money and put it somewhere, it may be spent on other things accidentally! Beauty of YNAB is if you budget $50 this month towards Insurance, it rolls over into next month's category, but you cannot spend it again since it's been removed from your "Available to Budget". Budget another $50 next month, and you'll have $100 in that category. All the money can sit in your chequing account, because it has a job, just not YET! You stop looking at your bank account to see how much $$$ you have, and start looking at the category to tell you what you can spend! Helloooo budgeting!
Rule Three: Roll with the Punches
Life happens, and the number one reason budgets seem to always fail is that they are too rigid. They aren't flexible to deal with unexpected things, like a surprise visit, etc... YNAB can be adjusted on the go, if you need more money for groceries, you can take money allocated to something like clothing to cover... The beauty is there is only a finite amount of money to go around, so if you want to spend more in one area, the money has to come from somewhere! Say hello to no more overspending! More like adjustments in the budget!
Rule Four: Live on last month's Income
Ideally, you want to budget the entire month on the 1st, and input transactions. But to get there, you need to have the entire month's money available on the first. To get to this point, at the end of the month when you've spent all you're going to spend and you can find some money leftover, allocate it to next month's categories, and do this each month and you'll eventually have next month's expenses paid with this month's income. At this point, in YNAB you can allocate your current pay to next month's income, and BOOM, you now have an entire month's income as a buffer
Entering Transactions:
Budgeting the Categories:
Thing with budgets are, nobody makes too much to budget, and nobody makes too little to budget. Everyone can benifit.
I'm young, at 27, and I can see myself saving a few hundred dollars a month just because I *know* where my money IS going, and I know where it SHOULD go. It helps me not spend frivolously, and helps me prioritize what I do spend money on.
There is a free 34 day trial at http://www.youneedabudget.com, so you can try it for a month and a few days to see if you like the way it works... I HIGHLY recommend at least trying it.
If you like it and want to buy it, use my referral code for 10% off and help me for introducing you to YNAB
YNAB 10% Referral link
Let me know what you think