I know that for many of us, January is often a time when we think about how to improve our finances, so I wanted to share what’s been the single most helpful tool to helping me stay on budget and helping us meet our financial goals as a family.
Before I jump in, let me start with a quick note. I don’t think using YNAB is the only solution for budgeting well. There are other great options out there as well that may work better for some – it’s just a matter of finding the best fit for you. A close friend his purchases carefully in a spreadsheet. That’s the format that works best for him and has worked well for years!
That said, YNAB has been a *game-changer* for me so I definitely wanted to share. Years ago I was really positively impacted by a blogger sharing her experience using YNAB, so I wanted to pay it forward to anyone who might also benefit from hearing about YNAB.
First off, for those who’ve never heard of YNAB, let me start there. According to their website, “You Need A Budget (YNAB) is an award-winning app and proven method that helps you take control of your money and build wealth. You Need A Budget helps you stop living paycheck to paycheck, get out of debt, and save more money.”
For starters, it’s accessible through your phone and computer. You can choose to link it to your checking/credit card to automatically import your transactions, or you can manually enter them in (or a combo of both, I believe).
I really like the clean, organized layout of the app – and since I use it almost daily, I keep it on my homescreen to make it as easy as possible to input transactions and check my budget before making purchases. Here’s a peak at my homescreen …
I guess the most important reason I use YNAB is because I get 3 major benefits out of it. These are the reasons I’ve kept using for the last 5 years and can’t imagine stopping:
- It keeps me from overspending. Right before I make almost any purchase, I pull out my phone and take a quick look at its corresponding category in my budget to see how much I have left to spend. Having those numbers staring back at me in black-and-white really helps me determine whether I actually should pull the trigger on whatever I’m considering buying.
- It helps me actually save money for bigger goals. Seeing an exact dollar amount that I’ve saved for something important to me (like savings for my son) and keeping that dollar figure right in front of me every day really keeps me motivated and focused on adding to it. I feel a little burst of pride every time I open the app and see the amount I’ve saved in those categories… it’s really motivating!
- It really reduces random impulse purchases. Because I take a quick glance at my budget every morning, I’m much less likely to buy something random the rest of the day b/c I know I’ll need to take that from one of my budget categories.
I know budgeting can be a little overwhelming at times, so let me share some of my budget to give you an example of how it can work because I think real-life examples are the most helpful when it comes to personal finances.
Here’s a snapshot of real-life categories that I use in my budget: (FYI – they’re all zeroed out because I created a fresh start for the new year.)
These are just the categories that work for me, so you won’t have the exact same categories but I think it’s helpful to see how other people break out their budget because it can give you some ideas that may work for you.
I think the second most helpful piece of information with budgeting is hearing real-life examples of how exactly a person uses their budget day-to-day… so I wanted to share my own in case it’s helpful.
Here’s how I use YNAB in my everyday life… and it takes very little time! (Which is a big part of the reason I keep it up! 😉)
- Look at YNAB budget in the morning (2 minutes daily) – Every morning, I open YNAB on my computer and take a quick look at all my categories to get a snapshot of where I’m at. If I’m overspent on any category, I take a minute to move money from another category into that overdrawn category. Super simple but helps to keeps me on track all day!
- Enter expenses manually into YNAB (2 minutes daily*) – I enter my expenses into YNAB every day as they come up, whether I’m buying it online or in-person. I usually do this right away using the app, but worst-case scenario I’ll enter it the next morning when I sit down at my computer. *Note that if you choose to automatically import your expenses from your checking/credit card account, your process would be slightly different … but you’d likely only spend a few minutes assigning charges to the correct budget category.
- Reconcile charges (15 minutes weekly*) – About once a week (or every 2 weeks), I go through the charges I have entered into YNAB and compare it to my credit card bill to make sure I didn’t miss any charges. *Note that if you choose to import your expenses from your checking/credit card automatically, this part would likely take even less time!
- Closeout the month/prep next month’s budget (15 minutes monthly) – At the end of each month, I go through and see if there’s any money I didn’t spend, and if so I move it to a savings goal or I let it carryover to the next month to spend it then. Next, I look at the month ahead and determine the amount that I’ll allocate for each category in my budget. My totals are similar month to month (so I have a kind of “draft” standard budget that I work from – so it’s not like I’m making the totals up from scratch each month). I then look at my calendar to see what I have going on that month and make any tweaks needed to accommodate any special events coming up that month – things like birthdays or other events that I want to make sure I have enough set aside for in their corresponding budget categories.
That’s it! It’s pretty simple and of course, having done this for 5 years now I barely think about it. It takes just a little extra effort the first time setting it up, but it’s been more than worth it to me. 😉
This post is getting pretty long so I’ll cut it off here before it gets overwhelming, but feel free to ask any questions in the comments.
I’ll also be writing a blog post about how I used YNAB to help me save $15k a few years ago. Also, if people are interested in trying out YNAB, I’ll write another post on helpful tips and tricks for using YNAB. Just let me know if you’d be interested in hearing more about YNAB by dropping a comment below or sharing this post on Pinterest.
If you’re interested in trying YNAB, you can click here to try it out free for 34 days: http://confettiandsunshine.com/YNAB
If you end up giving it a try, I hope it’s super helpful to you!