Wednesday, August 7, 2013

Do You YNAB?

So I have a new obsession.  It’s budgeting.  Yep.  You read that right.  And it’s not just budgeting.  It’s specifically YNABing.  Lean in close here people.  Yes I may be a little weird but I get super exciting about this!
So…  let me tell you what’s different about YNAB.  WAIT… I haven’t told you what YNAB stands for:  You Need A Budget – get it YNABFullscreen capture 832013 10052 PMOk. Whew. Now that we’ve got that out of the way let me spill the deats on what’s different about YNAB. 
There are 4 simple rules with YNAB:
1.  Give every dollar a job
2.  Save for a rainy day
3.  Roll with the Punches
4.  Live on last month’s income
Sounds so simple, right!?!?!  Why don’t we all live this way?  But is so simple it’s revolutionary!  You only budget money you actually have. 
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RULE # 1
Give every $ a job.
This means you assign the money that sits in your account a specific category.  You don’t assign money you don’t have.  Only what you actually have.  This may sound simple but it can be confusing.  If you haven’t gotten to Rule # 4 you have to think about what the money in your account has to cover until the next time you get more money.  For example you don’t budget all the grocery money for the month unless you actually have that money in your account. 
RULE # 2
Save for a rainy day
You budget $ for things that come up here and there.  For example your car taxes, car repairs, money for Christmas gifts, etc.  You can have as many categories as you would like.  You customize the program to match your needs.  You also assign your savings $s as well.  This I love.  I used to always feel guilty using our savings for something.  But now I have a specific line item for things we are saving for.  For example we needed a riding lawn mower for the new house (lots more grass here than the old place), so we created a line item for lawn mower and when we found a good deal on one we had actually saved up more than we needed.  So I was able to feel like I accomplished saving up for it and not guilty for using “savings” to buy something. 
RULE # 3
Roll with the punches
Some months your going to spend more on gas than you normally do.  So you’re going to have to re-assign some $ to make up for the over spending in your “Fuel” category.  This may mean you can only assign $25 to clothing this month instead of your normal $50.  You just have to find the money in a different category.  You could pull it from one of your savings categories as well.  Bottom line you just have to find the money and re-assign it.  If you don’t have the money to find…  then there’s a problem.  You just have spend less on eating out or eat “beans and rice” for the rest of the month.
Live on last months income
This is a goal to work towards.  The hope is we all have money sitting in our savings account ready to go but that’s not always the case.  This rule is especially helpful for those that live on an income that varies month to month.  This way you’re never spending more than what you’re bringing in.
Just 4 simple rules…  to financial freedom.  Me love!
Here’s an example of what the software looks like:
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this is a sample from not my personal account
You enter your transactions.  Yes YOU enter your transactions.  You can have it auto download but the concept is you are more aware of your spending if you enter the transactions yourself.  You can set up recurring transactions for your mortgage, utilities and bills. 
There are also some really cool reports that YNAB will generate for you to tell you about your spending.
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There is also an app that allows you to enter transactions on the go right from your phone.  It links to your YNAB so you and your mate can enter transactions from different devices that will all come together on your YNAB software.
I know this is a weird topic for me to blog about but its one of those things I am excited about and want more people to realize the benefit of knowing what your $$ is doing!  I am amazed when I ask someone how much they spend at the grocery store each month and they have NO idea.  Or how much they spend on restaurants, again no idea. 
It’s been interesting to me to see where we spend money, especially in categories I didn’t think we would.  My “Gift” category gets hit much more often than I would have thought and I’ve had to adjust how much monthly I put in that category.  I think it will be very interesting with Christmas to track how much we spend and then be able to budget a monthly amount next year so there’s no surprises at the end of the year.
Now…  I don’t work for YNAB so I’m sure I’ve not done the best job of explaining it.  They have lots of video tutorials and live classes to sign up for to learn more.  Just hop over to their website.
You can try the software out for 34 days to see if you love it as much as I do.  (Be aware your 34 days start from download date not from installation date.)  After the introductory period, there is a cost for the software: $60.  If you use this link you save $6 (and FULL DISCLOSURE) I get $6 referral fee. 
If you decide to try it out I would love to hear your thoughts.  Maybe you already use a budget system like Quicken??  Do tell!

***YNAB has no idea who I am… other than I purchased their software.    They have not perked me to write this post but they do offer a referral program for anyone that has purchased their product.  I’m not writing this post for the $6 referral fee, I’m writing it because You Need A Budget just like we needed one! Images from ***

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