You Need a Budget - Personal Finance Software

[GoStumpy]

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

[samsquench07]

I know what your talking about. I have been using it for about 4 months. Not amazing progress yet, but the concept is there, that makes more sense on "how to get out of the hole"

Ive used excel sheets, and other budget programs, but this one is by far the best. We have definatley been spending wiser now. You do have to be willing to work within a budget to make it work.

[Captain Awesome]

I still like Mint.com

Far easier, free, and intuitive.

[Queen K]

Don't spend more than you make.

Thank you.

Send me $20 bux via Castanet to my account set up there under QKsPersonalFinancial Advice Column.

[Captain Awesome]

Don't spend more than you make.

[Queen K]

I've been plagerized!

[GoStumpy]

I still like Mint.com

Far easier, free, and intuitive.

I *really* didn't like how Mint.com accessed my bank account... that never sat well with me... It violated the T&C of my bank as well...

I actually appreciate the power that manually entering transactions has on my spending... When I buy something, I know I have to have room in my budget for it, I'm going to have to enter it, and if I don't have the $$$ left in that particular category, where is the money going to come from.

The part I like the most, now I can spend freely on groceries, fuel, etc, knowing there is room in my budget category, meaning there is no chance I am accidentally using money that should have been going towards a larger monthly bill. Within a few months I should be to the point where I am living off last month's income, so I'll have enough money sitting in my checking account to cover the entire month's budget

[GoStumpy]

Ive used excel sheets, and other budget programs, but this one is by far the best. We have definatley been spending wiser now. You do have to be willing to work within a budget to make it work.

Glad I'm not the only one here using it

Anyone that is currently using a budget is already better off than 90% of the population... So they're not the ones that 'need' to try YNAB... I suppose the real issue is that a lot of people need to start using a budget period!

My favorite part is how I have to manually assign every dollar to a category when I get paid, and when my wife gets paid... so it really felt like a huge raise for us seeing how much actually comes in, & putting it to work getting us completely out of debt

[samsquench07]

I agree, everybody should budget. Most people I know that say they don't need to budget, put a good from on the outside, but inside they are in financials ruins. Most often because of any debt, including vehicle purchases.

Another cool thing about the YNAB budget, is that you can hook it up to your phone. I have an Iphone. When i go to make a purchase, i can check how much is in that particualr category, then enter the transaction right away. It is linked via dropbox, so it goes to your computer, and they all match up

[grammafreddy]

Trouble is people look at budgets the wrong way. They think it tells them how much they can't spend. If they thought of a budget as a savings plan they'd do better.

[samsquench07]

That is bang on grandmas freddy.

A person can be "On a budget" and still blow just as much money, and be in debt if they have no discipline. And its so easy to do, even if you are aware of being disciplined. THe world of credit is the enemy.

[hobbyguy]

Doesn't matter if you do it with software, or on the back of an envelope, budgetting will make you aware. Awareness starts you down the road of really understanding affordability, and the disctinctions between need and want, more importantly want bescause some slick advertisement told you so.

[GoStumpy]

Completely agree.

For us nerds & techies, software like YNAB brings an entire new level of awareness to our finances... Having to literally enter every dollar spent brings me grossly hands-on with my money... and whether the goal is to get out of debt, save for a down payment, save for a vacation, save for retirement, any of those things, having a system to keep you on track is CRUCIAL to meeting goals in a timeframe

Going beyond just the fact that it's a peice of software, the methodology behind it is what does the most good. Software like mint.com gives you a monthly budget, but does nothing for helping you save up for the larger expenses... For me, I plan to A) replace the deck, B) replace our furnace, C) remodel the bathroom... So I've set up categories for those three things, and add money to them each paycheque... each month that amount rolls over to the next month, and when I add more, it slowly adds up. Once I'm ready and there is enough $$$ in that category, there will be enough money in my bank account to cover it!

That's a nice thing for me as well, bank account balance doesn't matter, it's what's in the category that decides what we can buy.. My wife is completely on-board with it and we don't even care how much $$$ is in the bank, if we have no money in the restaurant category we don't go out to eat! And we resist the urge to take money from our saving-up categories (savings goals) to fund non-essential activities.

It really is a revolutionary way of budgeting, if anyone wants to journey over to the YNAB forum there's a community of people that have turned their financial lives around...

[samsquench07]

Now that you bring that up, thats another thing i really like about YNAB, you start to not even look at your bank account to budget, which is key. It based off probally the oldest way of budget, the old envelope concept, but now in software form.

I used to use a program called budget express, which was alright but i found it taught me to make sure I didn't bounce or go over my overdraft( meaning, i learned to be in the negative using my overdraft). I was never aware in this sense. I learned to ride my overdraft all the time, almost as my new " $0 balance" if you know what I mean

[GoStumpy]

I know I've been in overdraft for the past... well... 5 years? Maybe 8 years? I don't remember ever having more than few hundred in my bank account, and if I ever did have more, I spent it. I've been steadily in overdraft for at LEAST 5 years, when I get paid I get close to zero, or perhaps go a few hundred into the black, but then the mortgage payment comes out and I'm always negative.

For the first time in over 5 years, only a month after starting YNAB, I'm already $250 in the black and all my bills are paid and up to date, mortgage paid... it's an incredible feeling!