You Need a Budget (YNAB) is one of the more popular budgeting software programs. YNAB 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. You Need a Budget was previously only sold as a desktop software program that also had mobile apps for iPhone. They have since shifted to a cloud based online software version, and rebranded the desktop version as YNAB Classic.
What Makes You Need a Budget Special?
You Need a Budget specializes in one thing – tracking your cash flow to help you make a budget that works for you. They have one simple rule above all: Give every dollar a job.
You Need a Budget is a budgeting software program that will help you manage your money and cash flow. It uses a zero based budgeting system, which means budgeting every dollar of income that you receive. That doesn’t mean you need to spend all your money, it just means you need to give every dollar a job. If you have money left over at the end of the month, you can use it to pay down debt, apply it to your emergency fund, save it for a long term goal like a vacation, or anything else you want to do – you just need to give it a job.
You Need a Budget is not a full money management program like Personal Capital, Mint.com, or Quicken. YNAB is great for setting budgets, tracking expenses, setting goals, and understanding where your money goes, but it is not designed for advanced money management like tracking investments, managing small business expenses, or detailing your rental property information, like some versions of Quicken are designed to do. But that’s OK, these software programs are designed for different demographics and one or the other may be perfect for your situation, while the other just isn’t right.
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 money management software programs out there you may find more aligned with your needs, such as Personal Capital, Mint, and Quicken. Some of these tools are online only, while others, such as Quicken, are desktop. Which tools is best for you depends on whether you need r want something online, desktop, free, or a paid tool. Either way, there are many options to choose from.
Compare Popular Money Management Programs:
- Personal Capital Review (our favorite – it offers budgeting and investment tracking)
- Compare Personal Capital & Mint
- Compare YNAB and Quicken.
- Compare Free Online Money Management Tools
- Free Online Investing Tools
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.
YNAB’s 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:
- Stop living paycheck to paycheck
- Give every dollar a job
- Prepare for rain
- Roll with the punches
These four principles are all you need to get your financial house in order. The first step, stop living paycheck to paycheck, is one of the most important steps you can take. This is similar to what Dave Ramsey advocates in his 7 Baby Steps. The most important thing to do is to get current on your bills, then start getting ahead.
In the second step, Give every dollar a job, YNAB users are instructed to use each dollar of income. As I mentioned earlier, that could mean spending it, saving it, paying down debt, or something else. Just make it productive.
Step three, Prepare for Rain, is designed to spread out large, occasional expenses which can be anticipated. An example of this would be saving for your property taxes, a new set of tires, or an annual insurance payment. You know these expenses are coming, and they are much more manageable if you save a few dollars here and there instead of trying to make a huge payment all at once.
Finally, you’ve got to roll with the punches. Life does not always follow a script, and to pretend that you can prepare for every expense that will come your way is paramount to setting a date with disappointment. It can be as simple as spending too much on groceries, or it can be an unexpected expense such as a flat tire. Whatever the unexpected sends your way, you need a way to deal with it. Step Four is a way to pay yourself back for unexpected expenses and replenish your emergency fund or other savings.
Benefits of Following the YNAB Budgeting Philosphy
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.
Now to the good stuff – what You Need a Budget 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 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 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. 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 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 34 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 YNAB
Overall, I’d say You Need a Budget 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.