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Home > Started using YNAB - any suggestions about budgeting and tracking money?

Started using YNAB - any suggestions about budgeting and tracking money?

August 19th, 2015 at 05:33 pm

After reading about YNAB in various SA blogs, I decided to sign up for the free 33-day trial period to see if I would want to purchase the program for $60 and continue using it. I am terrible at creating a budget, tracking expenses, assigning incoming money to specific goals, etc. So far, it seems like it might work as a way for me to better utilize my money, although it's only been about two days! It is fun to play with the categories and switch things around.

I'm curious how people keep track of or "store" money that's set aside for certain goals...for instance, a car replacement fund. If you have a fund that you put money into each month, does the money actually exist in a separate account, or is all non-spent money lumped together in one account, but differentiated on a spreadsheet? As in, say I have $12,000 in checking or savings and I know that $5000 is an emergency fund and $7000 is a car replacement fund. Or would the $5000 be in one actual account alone and the $7000 in another separate account, both of those being different than a checking account? I'm assuming that it could be done either way, but I'm curious how various people set up their accounts.

Also, one of YNAB's recommendations is to live off of last month's pay. I can do that, but I put most purchases on a credit card that then gets auto paid during the next month. So, money is being spent say in August which would be budgeted against August's available money, but then it's actually being paid in September? How does that work?

I'm not really sure if these questions are making sense. I imagine that once I play with this more I can figure it out, but I'm so curious how others manage money and what seems to work/not work for various people.

Please feel free to share your experiences in the comments - I'd love to get some ideas. Smile

7 Responses to “Started using YNAB - any suggestions about budgeting and tracking money? ”

  1. Debt-free by Thir-ty Says:

    I don't have any experience with it, but I'm commenting so I can follow the comments. I've been debating whether or not to try it too.

  2. creditcardfree Says:

    I too think my husband and I should start YNAB. He's out of the loop with the finances and with one in college we need to buckle down. So I'm following too!

  3. Buendia Says:

    Hi! I've been using YNAB since January and love it! I hope I can help a little bit... some of it will become clear when you set everything up.

    Re: accounts v. categories. So... you have all of your money in various accounts, now. YNAB distinguishes between accounts and categories. You might have a savings account with your 12k, and YNAB will track that. But each of those 12k is "given a job" as YNAB puts it - so you need to assign all 12k to different categories. You'll assign 5k to emergency fund and 7k to car replacement fund. You get to set up the categories. You can also move things from category to category. It doesn't matter where the money is or which account it's in.

    Re: last month's pay... this was hard to get my head around, but basically you're living off last month's pay if you have all of the money in hand (in your account) at the beginning of the month before you start spending any of it. When I just got my paycheck I assigned it to Income for September (not August!); I can't spend it yet or assign it to any categories until September. In other words, you need to have a full month's worth of expenses before you begin assigning categories. You're not waiting for your mid-month paycheck to come in. You also need to have enough to cover your credit card purchases for the previous month, because that payment is coming this month. It means that there is a lot of money in your accounts (more than I was used to before) but it makes sense because that money is already spoken for... you already spent it when you made the credit card purchase. At the beginning of the next month, you're starting fresh with the money you made last month.

    One last thing... I carry balances (positive balances!) in all sorts of categories (for example we need to build up enough for my daughter's camp so we can pay for it in March). I now have a few negative balances in a few accounts (medical due to some unexpected expenses); YNAB people discourage that, but I know there is a big cushion since I'm living off last month's money. And I can see that there is a lot of money in our accounts, so it's like I'm loaning money to those categories.

    Hope this helps!!!

  4. starfishy Says:

    thanks buendia! do you have every dollar accounted for in YNAB (including IRAs, the mortgage you are paying down, etc.) or just money that you are spending regularly - paying bills, buying food, etc.? i'm feeling a bit overwhelmed and confused, but i imagine that it will get easier if i keep using the program. i hope so!! i did take a few of the live classes to learn more. i don't quite understand your explanation about last month's pay (above). i thought you could start populating categories ahead of time in each month to get an idea of what's coming up? or are you saying that will mess up the current balance?

  5. BudgetBrilliance Says:

    Hi Starfishy,

    I'm new to YNAB too as of this week. I signed up for the introductory course and had a bit of a play around. After a little while it seems a little more intuitive. I still don't quite get some of the philosophies behind the way they account for money however. I've got another class on Saturday that I'll tune in to.

    I have an investment property and fund investment where I have recorded everything from council rates, water usage, insurance, interest payments, agents/management fees etc. I a fan of spreadsheets and a bit OCD when it comes to tracking everything. I didn't want any grey area if I was going to start using YNAB.

    One feature I would like YNAB to have is weekly budgeting instead of monthly. I wish it could be changed as I like to know weekly how I am travelling.

    I think in relation to the second part of your question, and again I'm a newbie to YNAB so take it with a grain of salt, I think the money for Christmas, vacation etc. just stockpiles increasing your net worth until you use it. It goes into negative territory if you go over budget. I think you can reconcile your account if you realise something has been miscalculated.

    There's certainly a lot to the program but I do really like it compared to other freebit programs I have tried. All the best with it.


  6. Buendia Says:

    Hi! You could track all accounts... but I leave the IRAs out of it - too much fluctuation to track. I just do checking, savings, credit cards.

    For the last month pay - here is an example. I've gotten a paycheck for August, and so has my husband. This money is categorized as "Income for September" so it shows up as available not in August, but in September. I wait until all of our paychecks have come in August, and then on August 31 or September 1 I will assign all of that money to categories. I have a budget so I know how much to put in each category each month.

    You can put notes, too, in the different categories, so I have a note under groceries about how much I spend each week. And I put the budget amount right in the category name so I can see it easily. So my category for taxes and insurance for our home is called Taxes/Insurance (297). That way it's easy each month to put in $297 without referring back to my budget.

  7. FrugalTexan75 Says:

    Hi Starfishy,

    When you have different savings goals/categories you can allocate money each month to them. Then at the beginning of the next month that money rolls over into that months category balance.

    Foe example - I pay my car insurance two times a year. I know I need to save $36/month to have my 6 month premium. In January I allocate $36 to the car insurance category. Then in February I now start with a category balance of $36, and then allocate another $36 - so I have a total of $72. That $72 will roll into March.

    As to where the actual money is located, that doesn't really matter at all. What YNAB tries to help you learn is to spend from category balances and NOT from account balances. So I could have one checking account with my EF, my bills money, my spending money, my various short term savings, etc. The total might be a big number, but that's not the number I look at when deciding if I can afford something or not.

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