If you’ve spent any time at all on my blog, you know I am a huge proponent of Mint budget tracking software. No, I don’t get paid to advocate for them (but hello Mint, if you want to pay me, I am totally open to that…). Mint was quite simply the first budget tracking program that gave me clarity over my spending.
Here’s the thing though: Clarity is just one step. You have to have the internal motivation to change your spending—yes, Mint has budgeting features and such, but most of the changes, I did on my own. What I recently realized is, many people need a more structured program than Mint. Enter YNAB.
YNAB Versus Mint
YNAB stands for “You Need A Budget.” I’ve always heard good things about them, but never used them personally because I felt like it was overkill. What I didn’t realize until recently is, I automatically do the things that YNAB teaches people to do.
I’m not trying to toot my own horn, but I want to acknowledge that people who function just fine with Mint generally have some good cash flow habits—for some reason, with “minty” people, budgets stay front of mind in spending situations. And perhaps with these people, they can totally screw up, overspend and still be fine cash-flow-wise, because they are working with a surplus.
But sometimes people need more structure, because they have less space to mess up. Or maybe you don’t feel like you’re making headway with Mint. YNAB supports people who want a more stringent budget and to learn behaviors that help them get better with their cash flow over time. If you believe that your cash flow is your greatest opportunity for financial leverage, and if you want to really focus on it and get some real results in a matter of months, you need YNAB. And no…they don’t compensate me, but again…totally open to that :o)
The Rules of Good Budgeting
These rules are shamelessly plagiarized from the YNAB website, because they are worth reiterating, if you never seem to be able to stick to your budget:
Give Every Dollar a Job. Every single dollar you make should be allocated toward a budget item. This is called zero-based budgeting and it prevents you from looking at your account balance and thinking, “Yippee! I’ve got $500 in there, let’s go shopping!” Instead, you can look ahead and see exactly how each of those dollars will be spent.
Save for a Rainy Day. This is for bills that you pay less frequently than monthly—like auto insurance. Ideally, you know the total annual amount of those bills and things you want (like an annual trip to see your folks costs $1,500) and you’re saving for them every month. Instead of putting this stuff on a credit card, you’re chipping away at them as you go.
Roll With the Punches. There is no expectation that you’ll ever have a single month without overspending in one or more categories. There will always be unforeseen expenses. And as YNAB points out, the value in budgeting doesn’t come from managing the easily foreseeable, the REAL value comes from managing the unforeseeable more effectively.
Live on Last Month’s Income. This is quite possibly the most important rule YNAB has. This rule is the difference between living paycheck to paycheck and having a buffer that gives you some relief. How does this work? YNAB helps you to build up excess, and even if you feel like expenses are tight, YNAB forces you to be more precise with everything, so you start to build a buffer your very first month.
I don’t think YNAB has any drawbacks per se, but things to be aware of that might mean it won’t suit your money personality:
YNAB requires your commitment. Mint will chug happily along even if you don’t log in for 2 months. If you start using YNAB, be ready to use it. This is an opportunity for you to hold yourself accountable for every single thing you spend money on, because you are required to match every single purchase you make to a budget category. This is how YNAB gets results for you, fast.
YNAB needs consistent monitoring. You should plan on logging in MINIMUM once per week—ideally, every few days—and match transactions, so you know exactly where you are with your budget at all times. If you’re not ready to do the work, then YNAB won’t work for you.
YNAB Cost. To get started with YNAB requires a $60 one-time fee…but you get a 34-day free trial before paying. And they have tons of online resources so you can make the most out of your learning curve.
YNAB Desktop and Mobile. YNAB is a desktop product where you download transactions, so you’re tied to one computer. YNAB also has a mobile app, but its primary purpose is to help you make spending choices on the fly. It’s not for updating and matching transactions—you have to go to your desktop version to do that.
Actions This Week
- Try YNAB. I encourage you to go to the YNAB site and give them a shot if you have trouble sticking to your budget or seeing progress in building a cash surplus.
- Recommit. If you’re already on Mint, get back to reviewing it regularly. OR, you can try YNAB and let Mint keep going without you, until you decide which you prefer. You’ll just have to catch up categorizing if you decide to go back to Mint—not a huge deal.
- Not using any software? I really encourage you to try one or the other. A spreadsheet or list of expenses never fully captures what is going on all of the time, and it’s a system that relies on you to enter the data. Budgeting software makes life so much easier!
- Review Conscious Spending. Be sure and download my free 50+ page ebook that goes over how to take your spending beyond restrictive budgeting and deprivation.