The best personal finance apps give you basic budgeting tools. You decide how much you want to spend monthly in different categories, like restaurants and clothing, and the app monitors your progress. YNAB, which stands for You Need a Budget, is different. YNAB founder Jesse Mecham says that to use his app, you have to unlearn some of the deep-seated beliefs you have about money. “Our goal is to help people rethink how they manage this precious resource,” Mecham says. He’s also written a book spelling out YNAB’s philosophy, and the company has tons of guidance in other forms. “We want the stress around money to disappear so that people can actually enjoy how they spend,” he says.Here are 25 ways to do just that.1. Follow the Four RulesYNAB’s philosophy is governed by four rules. They are:Give every dollar a job. What do you want your money to do before you get paid again?Embrace your true expenses. Think about not only your monthly expenses, but also your non-monthly expenses, like holiday shopping, and build it into your budget.Roll with the punches. Be flexible, and change your plan when your life changes.Age your money. In time, you’ll be able to use some of last month’s money to pay the current month’s bills.
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2. Learn the Basics Before Doing the Free TrialThis app has a tough learning curve, and you don’t want to waste any of the time you get in the free trial figuring out the basics of how YNAB works. So before you sign up, check out YNAB’s YouTube channel. Read some guides. Attend a free online workshop. 3. Change Your MindsetYNAB has a PDF-based interactive workbook called Change Your Money Mindset that gets you to start thinking about your financial goals in a realistic way. The workbook gets you to break down your goals so you can tell whether they’re attainable and what you’d have to do to make them happen. Filling out this workbook before you sign up for YNAB may be helpful because it will get you to think through some of your most basic financial issues before plugging numbers in to the app.4. Take Advantage of All 34 Days of the Free Trial YNAB gives you 34 days rather than the standard seven or 14 or 30 for a test drive. The company wants you to have gone through an entire monthly budget and have a few more days to evaluate your experience with the app. No payment details are required.5. Answer All the Questions in the Introductory PagesOnce you sign up for and start using YNAB, don’t skip any questions. It only takes a few minutes, and it’ll give you a good starting point for your budget. Then you can start assigning Targets, which consist of your answers to a few more questions:6. Connect Your Financial AccountsYou can enter the information manually every time you spend money or earn money, but you’ll probably quit soon after because it takes too long. Instead, connect your credit card accounts and bank accounts to YNAB so the app can see all the charges and deposits to your accounts automatically. It’s easy to set up connections. YNAB supports all major financial institutions and thousands of smaller ones. If you’re concerned about the safety of your data, read YNAB’s security page. 7. Use Category GroupsYNAB sets up some default Category Groups (such as Bills, Needs, and Wants) when you first start using it. You can reorganize the existing category structure, editing or deleting the labels provided and adding your own. For example, you could create a Savings Category Group and add categories beneath it for savings types like Vacation, Wedding, and New House.8. Create Categories for Business ExpensesAre you doing gig work or are you otherwise self-employed? Create a Category Group for your business expenses to make them easier to track. It’s a good idea to maintain a separate checking account for this and maybe even a separate credit card, too, if you’re not too loaded up with debt.9. Deal With Overspending as Soon as You See It When you get rolling with YNAB, you do a daily check-in on your finances, and one of the problems you’ll look for is overspending. Always deal with overspending right away. Don’t put it off, since it will affect other areas where you manage your money.10. Budget for Non-Monthly ExpensesMake sure you budget for non-monthly expenses—things like car maintenance, vacations, gifts, and anything that you have to pay quarterly or annually (such as insurance or car registration). YNAB wants you to avoid surprises. Create a Category Group called Non-Monthly, and start assigning dollars to these costs. Estimate your annual cost for any of these non-monthly expenses and divide by 12 to figure out how much money you need to set aside each month for it.
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11. Assign Amounts to Categories as Soon as You Get Money Remember that one of the Four Rules is “give each dollar a job.” So do it as soon as you have available dollars, every time new income lands in your account.12. Prioritize Your Category ListsTo save time and make sure you’re assigning funds to the most critical categories, arrange them in order of importance or due date. To do this, just drag and drop them. You can also pin categories to make them appear at the top of the list. 13. Add Emoji for Emphasis and FunClick on a category to open the label editing box. Place your cursor before or after the title and hold down the Windows key and press period. Select your emoji from the window that opens, and click OK.14. Experiment With Auto-AssignYNAB has a feature that uses your targets and scheduled transactions to allocate funds across categories. You can preview these assignments without committing to them. So, experiment. YNAB lets you allocate your money in several ways, like Underfunded (based on your Targets), Budgeted Last Month, and Spent Last Month.15. Troubleshoot Problematic AccountsIf you’re having trouble with the connection to your online financial institutions, consult YNAB’s troubleshooting page. To stay on top of your finances, you need accurate and up-to-date information, so resolve problems quickly.16. Reconcile Regularly Try to reconcile your accounts regularly so it’s not such an onerous job when you finally get around to it. YNAB has a comprehensive guide to the reconciliation process.
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17. Make YNAB Part of Your Daily Schedule Though you may visit the app more than once a day, make a YNAB check-in part of your daily routine. Categorize newly imported transactions, analyze your recent spending, and make modifications if necessary.18. View Subsections of Your Budget Using FiltersBy default, YNAB displays all your categories. But you can filter them to see subsets: Underfunded, Overfunded, Money Available, and Snoozed. Click the filter labels at the top of the page.
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19. Use YNAB’s Reports to Analyze Your FinancesClick Reflect in the toolbar to dive into reports. YNAB has four reports that you can customize and run: Spending Breakdown, Spending Trends, Net Worth, and Income v Expense.20. Learn Keyboard ShortcutsPress Shift-? to see a list of keyboard shortcuts you can learn for this app. You can also find a link in YNAB’s toolbar, which you open by clicking the YNAB logo in the upper left corner.21. Don’t Be Afraid to Adjust Your BudgetFor your budget to be successful, you must adjust. In fact, founder Jesse Mecham says it’s important to constantly adjust your budget. He says it’s part of the learning process and the way to make progress.22. Use the Mobile App YNAB’s mobile app for iOS and Android doesn’t replicate absolutely everything in the desktop site (which is easier to use when you’re setting up), but it gives you everything you’re likely to need when you’re on the go. You can view and modify your budget, assign money, see your account transactions, add transactions, access a few reports, and consult YNAB’s many support resources—including videos, articles, podcasts, and the KnowledgeBase.
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23. Take Advantage of YNAB for College StudentsVerified college students can get YNAB free for a year.24. Share YNAB and Share the CostYou can invite up to five trusted people to join your YNAB Together group, all for the price of a single subscription. The minimum age in the US is 13. It’s ideal for families. Every YNAB Together group has a Group Manager, who has access to all budgets, but each group member can choose whether to share with other members.25. Keep Going When You Get Discouraged The YNAB system works, and you can learn to apply it to your financial situation. If you feel like your budget is tangled up and beyond repair, clear it and start over. And spend some more time watching tutorial videos or reading YNAB’s guides to make sure you fully understand the system. Let YNAB Work for You YNAB’s founder has seen numerous success stories, people who have pulled themselves out of debt and been able to save money for the first time. These people have embraced the system and attended to their finances on a daily basis. “YNAB requires regular attention, but the eventual reward is a flexible monthly spending plan that’s tailored to meet your goals,” Meecham says. “YNAB offers a chance to reframe how you see money, turning it into something that serves and benefits you. The app guides you through the process with grace and patience, supported by workshops and videos.”That reframing involves both diligence and persistence, and a willingness to change your thinking. “The transition can be challenging, but it’s worth it,” he says.
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About Kathy Yakal
Contributor
I write about money. I’ve been reviewing tax software and services as a freelancer for PCMag since 1993. Along the way, I took on reviews of other types of business and personal finance technology. Prior to that, I had spent a few years writing about productivity and entertainment applications for 8-bit personal computers (my first one was a Commodore VIC-20) as a member of the editorial staff at Compute! After working at Lawson Associates, now Lawson Software, I switched my focus to accounting but learned that personal computer applications were more progressive and interesting to cover than mainframe solutions. So I served as editor of a monthly newsletter that provided support for accountants who were just starting to use PCs. I still ghostwrite monthly how-to columns for accounting professionals. From there, I went on to write articles and reviews for numerous business and financial publications, including Barron’s and Kiplinger’s Personal Finance Magazine.
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