Starting a budget for the first time can be scary.
You don’t know how much to allocate for each category, you can’t remember your bank’s password, and you don’t particularly want to know how much you spent on happy hour last week.
That’s where You Need a Budget (YNAB) comes in.
This popular budgeting app has helped hundreds of people evaluate their cash flow, change their spending, and reach their financial goals.
But with dozens of budgeting apps on the market, why would you choose YNAB?
What is You Need a Budget?
You Need a Budget (YNAB) is a personal budgeting software for people who need to get control of their money. YNAB is available on desktop, Androids, and iPhones to track your budget anywhere. Users enjoy the platform’s simple, easy-to-understand format and encouraging approach to budgeting.
YNAB uses a zero-based budgeting system. When you have this type of budget, you give every single dollar a job. Depending on your income, most of the money will go to expenses.
If there are any remaining funds, you can assign those to savings, debt repayment, or transfers to investment accounts. The key is to make sure you have a plan for your money, and YNAB helps you achieve that.
The YNAB zero-based budget takes a while to set up because you have to think carefully about your expenses and goals. Once you have the initial budget, you’ll feel much more confident about your true expenses and know that you have a plan for paying down debt and saving.
“Unlike every other budgeting tool currently out there, YNAB only lets you budget the money you physically have in your account,” said financial coach Nick True of Mapped Out Money. “If you only have $450 in your checking account right now, you only get to budget $450.”
This forces people who live paycheck to paycheck to build up their savings so they’re not relying on future income. It can be difficult to make this shift if you’re used to living on next week’s paycheck.
How Does You Need a Budget Work?
Many people wonder how YNAB works and what sets it apart from other personal budgeting apps. The combination of unique features and customer support make it a great choice for both new and experienced budgeters.
YNAB automatically syncs accounts, which means you don’t have to manually input each transaction. They also make it easy to transfer money between budgeting categories, much like moving cash from one envelope to another.
Account Setup and Login
Start by creating an account. After you sign in for the first time with your login, YNAB will ask you a series of questions about your financial goals. They’ll ask if you’re trying to pay off debt, save for a big purchase, or stop living paycheck to paycheck.
YNAB will also collect other information, like whether you’ll be budgeting solo or collaborating with a partner and if your income is stable or varies month to month.
From the main dashboard, you can set up your budget and add all your bank and credit card accounts. Once you link your accounts, you can start assigning transactions to categories.
You can also set financial goals for each category or how much you’d like to spend in the “budgeted” column. For example, if you want to spend $500 on groceries, you’ll input $500 in the grocery category.
The “activity” column in the middle will show how much you’ve currently spent. If you go over that category, it will show up as red in the “available column.”
Features
YNAB has some key features to help you succeed on your budgeting journey.
First, YNAB swears by its four rules: give every dollar a job, embrace your true expenses, roll with the punches, and age your money.
The first rule, give every dollar a job, is straightforward. Every single dollar you make has a job to do, whether it’s paying the mortgage, buying dinner at a restaurant, or saving for retirement.
The second rule is to embrace your true expenses. This means that you should plan for larger, less frequent expenses by breaking them down into multiple months. For example, spending $1,000 on Christmas presents could break your December budget if you don’t plan for it. To keep that from happening, you can save $84 a month from January through December.
The third rule is to roll with the punches. When your life changes, your budget shouldn’t stay the same. Change your budget to match your new priorities when you need to. YNAB makes this easy, allowing you to change amounts in categories throughout the month.
The fourth rule is to age your money, which means that you budget this month’s income for next month’s expenses. This rule is especially valuable if your income varies from month to month. You won’t be waiting for this month’s income to pay your bills because you’ll already have that money in the bank.
In addition to their four rules, YNAB also offers goal tracking and helps you collaborate with your partner. Built-in reports will help you check your progress and review your spending.
You don’t have to worry about security or support either since YNAB uses 128-bit encryption. They offer personalized support as well as in-depth tutorials. It also uses multiple technologies to make sure that your financial data is safe.
YNAB Cost
YNAB costs $84 per year or $11.99 per month. If you aren’t happy at any point, YNAB offers a money-back guarantee. You can also take advantage of a free 34-day trial to decide if YNAB is right for you. If you pay annually, you’ll save $59 over the month-by-month price.
The Difference
YNAB is different from other personal budgeting apps, and that’s what makes it so effective. YNAB doesn’t offer an automated approach to budgeting. Instead, the system encourages users to be very hands-on. When you set up your budget, you make a plan for each and every dollar.
Many budgeting apps simply report what you spent at the end of each month. If you don’t like how the month turned out, there’s not much you can do about it after the fact. YNAB, on the other hand, encourages you to work with your budget throughout the month so you can make adjustments and stay on track.
Referral Program
If you love YNAB, encourage a friend or family member to sign up. You’ll both get a free month through YNAB’s referral program.
Review of You Need a Budget (YNAB) Pros
YNAB comes with many benefits, such as a simple way to budget, intuitive app, goal-setting features, and the ability to collaborate with your spouse on your budget.
Simple budgeting method: YNAB uses the zero-based budgeting method, assigning a job to every dollar. It’s a straightforward and easy-to-understand budgeting system, although there is a learning curve for the actual software.
True says that this can be a bigger problem if you’ve used other budgeting apps before, like Mint or Tiller, because YNAB is a little harder to understand.
You have to manually assign each dollar for a specific job. He says the clients who struggle the most with this are the ones who have used a budgeting app before and aren’t used to YNAB’s functionality.
Well-designed app: The mobile app makes it easy to track your budget from anywhere and enter transactions manually. The app has a 4.8 (out of 5) rating on the App Store and a 4.2 (out of 5) rating on the Google Play Store.
Integrates accounts: YNAB allows you to track your spending in one place, even if you have multiple debit cards and are tracking several types of debt. However, it seems to have problems syncing to Capital One and some Bank of America accounts. This may be true for other budgeting apps and not specific to YNAB.
Allows you to set goals: If you’re trying to reach a specific goal, you can do that through YNAB. You can also track sinking funds digitally, like if you save each month for annual car insurance payments.
Customer support and education: YNAB offers emails, articles, and tutorials for users on how to make the most of the app. If you’re new to budgeting and have lots of questions, the support is invaluable. They’re very quick to respond to inquiries.
Forces you to care about categorizing every transaction: Jacob Wade of I Heart Budgets said that YNAB wants its customers to make sure to categorize all their transactions. This forces people to really measure their spending and be responsible for every expense.
“With any other budgeting software, you can auto-import your transactions and then just ignore them,” Wade said. “YNAB puts a huge banner on top of the app (and through notifications), and forces you to categorize and clear each transaction. You have to interact with your spending and not ignore it. And this helps you make better decisions.”
This sets YNAB apart, because it does the hard lifting for you (imports your spending), but then keeps you accountable to stay aware of where every dollar is going.
Collaboration options: If you share a budget with your spouse or partner, you can both access YNAB via shared login credentials. There’s currently no way to have different login information to access the same account, so you’ll have to share your username and password with your partner.
Review of You Need a Budget (YNAB) Cons
Many users love YNAB, but don’t ignore these downsides.
Learning curve: There’s definitely a learning curve when you first start using YNAB. You have to set up your budget, which takes some work. Plus, YNAB operates on the principle that you should start each month with enough money to pay for your monthly expenses, so it takes time to adjust to that if you haven’t been doing it already.
Stephanie Gatewood of Financial Freedom Crew recommends using the site’s tutorials and watching other videos about YNAB if you’re having problems.
Handles credit card transactions awkwardly: Gatewood said the budgeting system doesn’t handle credit card transactions as easily as other systems.
“It took me at least four months to remember the process,” she said. “I even recorded a video to show others how to do it so they wouldn’t get frustrated like I did.” In Gatewood’s opinion, the process isn’t complicated, it’s just not intuitive.
Price: YNAB costs $84 a year if you pay annually or $11.99 a month if you pay every month. Some other budgeting software, like Personal Capital or Mint, is free. YNAB is slightly more expensive than Tiller, which costs $79 a year. It’s less expensive than the premium version of EveryDollar, which costs $129.99 a year.
Manual effort: YNAB doesn’t automatically fill in each month’s budget. You have to do this manually, which can be time-consuming if your monthly bills fluctuate.
But it also allows people to change the categories and amounts every month. “My financial goals are always changing, and I love going into YNAB and creating new categories for my spending and saving goals,” said blogger Melody Fanslau of Cash for Tacos.
Doesn’t account for transactions spanning months: If you travel for work and then get reimbursed, YNAB will have trouble tracking this because it settles everything within one month.
Lack of other budget types: If you don’t want to run a zero-based budget, you’re out of luck. YNAB is built strictly on the assumption that you’re using a zero-based budget and starting the month with enough money to cover the month’s expenses.
Little investing reporting: True said that YNAB doesn’t do a great job of showing your investments, and fails to compare to apps like Personal Capital. “The net worth report is also super basic,” he said.
Not good for freelancers or business owners. True is self-employed and uses YNAB to run his business finances. He said YNAB’s income reports aren’t as comprehensive as he would like. He has to export the data from YNAB into an Excel spreadsheet to see the exact breakdown he’s looking for.
YNAB Review at a Glance:
The YNAB app can be great if you:
- Use a zero-based budget or are willing to learn.
- Want to be hands-on with your money.
- Prefer a tech-savvy, well-designed user interface.
- Want to change how you think about money to get out of debt.
- Will invest time in learning how to use YNAB by reading articles and watching tutorials.
- Want to collaborate with a spouse or partner on your budget.
- Believe in starting the month with enough money to cover your monthly expenses (i.e. not living paycheck to paycheck).
You Need a Budget vs. Mint
YNAB and Mint are similar in some ways. Both have the ability to link to your financial accounts, track your spending, and do basic long-term financial planning. Both platforms allow you to aggregate your accounts so you can see everything in one place. Mint and YNAB also both offer mobile apps and easy-to-use interfaces.
However, there are some significant differences between YNAB and Mint. First, Mint is free and has ads, whereas YNAB costs $84 per year but has no ads.
YNAB offers a forward-looking method that actively helps you stick to your budget. Mint, on the other hand, helps you see where your money is going but doesn’t have a system for active budget management within the month.
YNAB also allows more flexibility than Mint. If you need to move around money within your monthly budget, YNAB offers that option. In Mint, your budget for the month is less flexible. If you’re the type of person who throws away a budget if you go over in one category, YNAB’s “roll with the punches” approach might help you better stay on track.
Related: Personal Capital vs. Mint: Which Personal Finance App is Right for You?
You Need a Budget Review Summary
If you’re ready to take control of your financial life, you absolutely need a budget. You can’t make better choices with your money unless you have a realistic view of your income and expenses.
“If you want a tool that will make you better with your money, YNAB will do the job,” Wade said. “Just make sure you don’t try it for two weeks and give up. It took you years to build your poor spending habits, so it might take more than a week or two to make it better.”
YNAB can help you understand your financial health and make a plan to meet your long-term goals. It’s a fun, intuitive way to keep track of your money. Try it free for 34 days to see if you like it before committing.
