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You Need a Budget 3 Personal Finance Software Program

by Ryan Guina

You Need a Budget (YNAB) is one of the more popular budgeting software programs out there, and they recently released You Need a Budget 3, their newest version. YNAB 3 maintains the same methodology and easy to use programming that made the original and YNAB Pro versions so popular, but they have added even more features that have enhanced YNAB’s capabilities. Oh, and it now runs on Adobe Air, so it will run on Macs, PCs, Linux, etc.

You Need a Budget 3

The most important thing to know about YNAB 3 is what it is and what is is not. If you need to track every segment of your financial situation, including budget, income, outflows, debt, investments, rental property, small business, etc., then YNAB isn’t for you. There are a couple other software programs out there you may find more aligned with your needs, such as Quicken 2010. YNAB is also a desktop program, so if you prefer an online software program, there are other options to choose from. [Note: here is an article Comparing YNAB Pro and Quicken].

You Need a Budget’s target audience

If you are more concerned with creating a budget, managing cash flow, and getting out of debt, then YNAB is right up your ally. YNAB 3 is designed to track your income and expenses, analyze your cash flow, help you create a budget, and manage your financial goals, such as getting out of debt.

You Need a Budget 3 budgeting philosophy

The YNAB budgeting philosophy is centered on a zero based budgeting system, which works backwards by starting with your monthly income and assigning each dollar a job. Do you have irregular income and don’t know where to start? YNAB can actually help you plan for that too. Here are the 4 pillars of the YNAB budgeting methodology:

  1. Stop living paycheck to paycheck
  2. Give every dollar a job
  3. Prepare for rain
  4. Roll with the punches

If you follow the YNAB methodology, you will be able to analyze your income and expenses to help create a plan that can help you get out of the cycle of living paycheck to paycheck. This is one of the most important things you can do to improve your financial outlook – it only takes one large unexpected expense to set you back several months and put you into debt. Once you get out of the paycheck to paycheck cycle, YNAB will suggest creating a buffer of one month’s expenses, which is essential for planning.

The next step is to give every dollar a job. that doesn’t mean spend each dollar each month. It means give it a job, whether that be a fixed expense, paying off debt, padding you emergency fund, investing, or something else.

Preparing for rain and rolling with the punches go hand in hand. Preparing for rain is saving up for large expenses, whether they are regular expenses, irregular, or unexpected. Rolling with the punches means having a buffer that can give you financial flexibility to adapt to your current situation. This is great for people with irregular income.

YNAB 3 Features

Now to the good stuff – what You Need a Budget 3 can do for you and how it does it. You Need a Budget will look familiar to users of other financial programs such as Quicken, Mint.com, etc. It will give you the ability to:

Manage cash flow and track assets. YNAB 3 gives you the ability to track all income and expenses, and also track your other assets such as investments, retirement accounts, mortgages, and other assets to give you a big picture view of your overall financial situation. (note: YNAB is designed as a budgeting tool, not an investment tool and the investment tracking is designed to give you an overview, not in depth analysis).

Create a budget. YNAB helps you create a budget based on your needs and inputs, then helps you take the guesswork out of managing it. You can place transactions into master categories and sub categories to make it easier to create reports and visualize where your money is going. The reports are often the easiest way to find areas where you can make cutbacks.

Import and export data. YNAB 3 has the ability to import data from financial institutions, credit cards, Quicken, and other programs (csv format). In most cases you will need to download an output file from your bank to your computer, then import it into YNAB 3. The process only takes a few moments and gives you access to your transactions, which can be automatically put into categories. You can also export data to Excel and other programs.

Schedule transactions. Scheduling recurring transactions is one of the easiest ways to set your budget on auto-pilot. Once you have those out of the way, it makes it easier to work with your cash flow and prepare for irregular expenses.

Create reports. YNAB 3 has quite a few more reporting features than the previous versions of YNAB and can output graphs, line charts, pie charts, spreadsheets, trend reports, and other reports to help you better visualize and understand your financial situation.

Additional features. You can search for transactions or for the payee, a smart budgeting feature alerts if of possible errors between your listed transactions and those in your bank account or credit cards statements, and an easy to use interface makes it easy to tie everything together.

You Need a Budget customer service and support

The folks over at YNAB stand by their product more than many financial software companies. They offer free tutorials, video tutorials, a forums, a free 7 day trial of their program, and a real person will actually respond to your support e-mails, instead of an auto-responder sending you to a list of FAQs.

Overall impression of YNAB3

Overall, I’d say You Need a Budget 3 is a great tool for people looking to create a flexible zero based budget to help them manage their cash flow, create at least a one month buffer for expenses, track expenses, and ultimately improve their chances at achieving financial freedom.


Published or updated May 18, 2011.
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{ 2 comments… read them below or add one }

1 Michelle

I love YNAB3 – though as a long-time YNAB Pro user, it’s taken some getting-used-to! Good review. As personal testimony – it is also great for folks who are starting out at spending-tracking-budgeting. My first few months using it were eye-opening, but I found that it’s interface made it really easy to track where my $$s were going – and make adjustments for future budgets.

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2 Finengr

This was a very interesting article. As a Quicken Premier user (recently updated) I enjoyed your previous article comparing the programs.

Overall: Clean snapshot
Favorite: Very clever assigning every dollar a “job”

Will be checking out their website more…

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