YNAB - A Tool I Love | Conner's Corner

I recently had a friend bring up some efforts they were making to change how they budget. I immediately jumped in and told them I use YNAB and that it was a life changer for me. I was working on a recommendation email for them and this blog post fell out.

I have been using YNAB for 10 years. This means I started with the fully offline version and migrated to the web app, which meant a monthly subscription, a jarring change at the time. Now, it is one of those things I am happy to pay for every year. It gives me significant peace of mind. I say that even as I try to move more and more services to be self-hosted, nothing I have found has made the trade-offs worth it.

But why do I love and pay for YNAB?

At its core, the system is just an envelope system: set aside money for a specific thing, spend from that envelope when it’s time. Then around that core function is the philosophy. The app does not enforce things; it’s just there to help you pull it off. These days they call the philosophy The Method. I distill it into:

Every dollar you actually earn needs to be given a job.
Do not anticipate earning a dollar, even if you expect a check to land tomorrow, it does not exist until you have it in your account.
You should expect adjustments; your budget is not written in stone.
The better you know your spending, the easier it is to put money into that envelope today for spending in the future. It helps avoid scrambling to figure out how to pay for predictable but irregular expenses.
Plan for fun spending and actually spend it. For example, I have an “Allowance” for both me and my wife every month. It has no rules; it’s just there in case either of us spends on something unexpected, which happens pretty much every month. Your budget should not be limiting, it should be freeing, at least eventually.

The reason YNAB clicked with me back when I was younger and dumber was that it preached flexibility. So I would often say something like, “hey, this month I had to replace my tires, so I didn’t get to put money in my vacation bucket” That’s fine, even if it is disappointing. Granted the stakes are different now that I own a home and share a life with a spouse, but the same philosophy applies. They used to call this Roll with the Punches. It was extremely freeing since it didn’t make me feel like a failure if I had to adjust mid-month. It also helped me cushion for predictable expenses. The first year, every time an unexpected, but predictable, expense popped up, it was a Roll with the Punches moment since I did not have money ready for it. But then I created a new category and set aside money every month to pay that expense when it would resurface. Yes, even my driver’s license has a category. I put aside $1.58 a month. Insane? Yes. Freeing? Yes.

The big actions are creating categories and then setting goals for that category. Goals can be:

The exact dollar amount of a bill (your mortgage, cell phone bill)
An amount to set aside to spend that month that will likely fluctuate (groceries, dining out)
An amount to save for a future known expense (insurance premium, Costco membership)
An amount to save for some unknown date (unexpected house expenses, travel).

I have my system down so that when I get a paycheck, I can mostly just have the system auto-distribute it, but that took a lot of time honing my budget. It takes time to make the software work for you, but that time is hopefully spent adjusting your relationship with money. It did for me. I spent the first 10+ years of my adult life fighting with money. It never seemed like I had enough and I was always on the cliff. Part of what changes is I got lucky and got a job in development, but the other change was YNAB. Figuring out how to track and understand my spending through their lens was a gamechanger. I highly recommend giving it a shot.

If you like this post and want to give it a try, this referral link will get us both 1 month free if you sign up at the end of your trial.