Budgeting is the foundation of a good financial plan, but that doesn’t mean it’s easy. Setting monthly goals and keeping track of all of your expenses can be time-consuming.
That’s where the You Need a Budget (YNAB) app comes in.
YNAB helps simplify the process of creating a budget so you can spend less time budgeting and more time doing other things: evaluating your investment plan, working on your side hustle, and catching up on Netflix.
This YNAB review will dig into the service’s features and tools to help you decide if it’s the best budgeting app for you.
You Need a Budget review
YNAB is a budgeting app that helps you create a budget and track your daily spending. Similar to other budgeting apps, such as Mint and Personal Capital, YNAB lets you connect your accounts and review your transactions as they come in.
You can log into your YNAB account at any time and see where your budget stands. You can also create reports to track trends in your income and spending.
The YNAB method
YNAB doesn’t just offer budgeting software. The service also encourages its users to follow four rules for successful budgeting:
1. Give every dollar a job: Prioritize your incoming cash as soon as you receive it. This strategy will help you avoid buying something based on how you’re feeling that day.
For example, if you’ve added all your important monthly bills already in your budget, you’ll know you need to prioritize those before you go out for pizza or a movie.
2. Embrace your true expenses: Avoid letting infrequent recurring expenses break your budget. Instead, look ahead and break them down into manageable monthly bills.
Say you know your semi-annual car insurance premium is going to be $600. To keep your budget consistent, set aside $100 a month so it’s not a surprise when the bill comes out of your account.
3. Roll with the punches: There will be months where you overspend in a budget category. Instead of beating yourself up, simply move some money from another category to make up the difference.
4. Age your money: With YNAB, your ultimate goal is to progress from living paycheck-to-paycheck to being able to live off of last month’s income.
Essentially, as you budget and save wisely, you can get to the point where you’re spending money that’s been in your bank account at least 30 days.
Budgeting online with YNAB
When you first sign up, you’ll have a blank budget with some general spending categories grouped together.
For example, the “Immediate Obligations” category group includes things like your rent or mortgage payment, your utilities, and groceries. You can add and change category groups and individual categories.
Then you connect your credit card and bank accounts. While it’s not necessary, doing so will set up an automatic import of your transactions from each account every day. This process saves you from having to log into each account separately to update transactions.
For each account, you’ll choose an account type which clarifies whether it’s a budget account or if it’s an account you’re just tracking. For example, investment and loan accounts belong to the tracking group, while credit card accounts belong to the budget group.
Using reports to track your spending trends
As you’re working to perfect your budget, it can be helpful to look into past trends. Knowing whether or not you’re making progress can help you decide if you need to make changes.
YNAB has three separate reports you can use to check your spending habits over time. The spending report breaks down your spending for a given time frame into category groups and individual categories.
With the net worth report, you can track your overall assets and liabilities, and how your net worth has changed over time. To make this report worthwhile, you’d need to add all of your assets and liabilities to your account.
The third report tracks your income vs. expenses. It provides a monthly breakdown of all your income sources and your expenses by category. You can also track whether your overall income has exceeded your overall expenses for individual months and throughout multiple months.
If you want to look beyond your monthly budget, YNAB allows you create goals for certain categories to help plan for future expenses.
You can choose between a target balance or a monthly funding goal. You can also set a date by which you want to reach your target balance. Once you create the goal, YNAB will track your progress and give you some tips on how to reach your goal.
Since your main budget lives on your computer, YNAB has built a mobile app to help you know how much you have to spend while you’re on the go. You can also add expenses as they occur if you don’t want to wait until you get home.
The app syncs continuously with the web app and other mobile devices. This means that when you update the budget, a shared user on your account can see it when he or she opens the app.
YNAB offers valuable budgeting advice
YNAB isn’t content to just provide you with solid budgeting software and some rules of engagement. The company offers free, live workshops about various topics. Workshops include:
- Mastering credit cards with your budget
- How to aggressively pay down debt
- Reaching your savings goals
- Breaking the paycheck-to-paycheck cycle
- How to pay for big expenses without borrowing
- Budgeting when broke
YNAB also offers step-by-step guides, weekly videos, a weekly newsletter, and a podcast to give you more guidance on managing your money. The best part? You don’t need to be a YNAB user to take advantage of them.
How to create a YNAB account
YNAB is not a free service. As a new user, you’ll get a 34-day free trial, after which you’ll pay $83.99 per year. YNAB justifies this cost by sharing how its service can improve your finances.
According to the website: “On average, new budgeters save $600 by month two and more than $6,000 the first year! Pretty solid return on investment.”
To sign up, head to the YNAB website and click on the signup button in the top right corner of the page. Unlike other online services, YNAB doesn’t require your credit card to sign up for the free trial. The means there’s no chance that you’ll be charged automatically once it’s over.
Simply enter your email address, create a password, and you’re in.
To protect your information, YNAB employs several security protections. They also permanently delete your information from the database when you close your account. Learn more about YNAB’s security practices here.
YNAB review: pros and cons
The biggest benefit to YNAB is that it allows you to see all of your financial accounts in one place. What’s more, with the direct import feature, the only time you need to visit your financial accounts online is to make a payment.
The direct import feature can also help you detect and stop fraud. Be sure to check your YNAB account every couple of days to review transactions as they come through.
YNAB reports also offer you bird’s-eye view of your budgeting progress. Plus, live YNAB workshops provide you with actionable help from real people.
YNAB does come with some drawbacks. For instance, the $83.99 annual fee is somewhat steep for a budgeting service, especially considering that many other budgeting apps are free.
What’s more, although the YNAB software tries to assume which purchases belong to which categories based on your past usage, it’s not always correct. You may need to manually transfer purchases into the correct categories to ensure your budget is accurate.
You also can’t import any of your account histories when you sign up. So if you’re switching from another budgeting software, that means you won’t have access to that data through YNAB. Instead, you’ll only get to review your budgeting information from the day you added the account.
Connect with YNAB
YNAB doesn’t offer phone support, but you can reach them by emailing them at email@example.com. You can also send them a message by clicking on the big blue question mark on the bottom right of any page on the website.
YNAB review: Is it right for you?
All things considered, YNAB offers valuable tools and resources.
Whether you’re budgeting for the first time, or you’ve been doing it for a while, YNAB is easy to use and effective. And, if you follow YNAB’s four rules to manage your money, you’ll probably save enough to make the annual cost worth it.
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