Disclaimer: I took advantage of the free trial offered to all new YNAB subscribers. I have not communicated with anyone associated with the product. All opinions are my own.
Anyone who knows me well knows that I’m a money-hungry capitalist stingy frugal. This has served me well throughout the years. My financial awareness helped me navigate through grad school on an $800/month stipend without taking out any additional loans and helped me pay off my minimal student loan debt from my undergraduate degree (a shout-out to my parents for enabling me to take out only minimal loans!) within a year or two of graduating with my MA.
So I kind of thought I had the financial thing down. When I first randomly ran across YNAB (You Need a Budget), I thought it was a nice system, but I didn’t think I had any use for it. I was doing just fine. However, after a few very large and unfortunately-timed financial mishaps (namely, stolen and wrecked cars), I found myself suffering from a lot of anxiety about finances. My financial anxiety is probably the main reason I’m relatively good with money. I learned that I’d rather have a large buffer of money than a constant large knot in the pit of my stomach.
One day, I was reading a story on the YNAB website about a family paying off their debt (that and Ironman race reports are what my inspirational reading consist of!). I started exploring their web page, and I found myself at a list of their rules, which I had actually read before. However, the first rule jumped out at me in a way that it hadn’t before, and I suddenly started to wonder if maybe I could use this product and if it might help reduce my anxiety about money.
YNAB operates on four basic “rules”:
- Give every dollar a job. This is the rule that I suddenly saw in a new light. I had always left myself some buffer room in my budget, in case I went over in any one category. Suddenly, I realized that this unaccounted for money wasn’t going straight into my savings. I had no accountability for this money, so it was going this way and that way. Sure, sometimes it covered something needed like a parking ticket. But usually it went to Barbacoa burritos because I was feeling too lazy to cook.
- Embrace your true expenses. This was something I already (mostly) did. Essentially, everyone has expenses that don’t happen every month, whether it’s paying $300 for car insurance every 6 months or signing up for your annual Ironman. The folks at YNAB suggest that you sock away money every month for these “true expenses” so that you are prepared when it’s time to address them. I did this monthly for the most obvious expenses (like insurance and Christmas), but not for less-obvious expenses like general gifts or car maintenance.
- Roll with the punches. Don’t freak out if you go over budget. Just find another category you can slash to make up the difference.
- Age your money. This rule used to be “live on last month’s income,” which I think is a little clearer. Again, this was something I was already doing. At the end of each month, I’d have a full month’s salary in my checking account, and any extra would be transferred to my savings account. The benefit is that I never had to worry about what bill was being paid when or about overdrafting because I forgot I hadn’t been paid yet. With a full month’s salary in your checking account, you can just swipe your debit card and call it good for all regular purchases.
So, I signed up for a free trial, starting using the software regularly, and promptly forgot about this draft post in lieu of Ironman training. Now, I’m coming back to it with my thoughts and opinions after using it regularly for several months.
The basic approach of YNAB is to only budget the money you literally have at the moment. The question you are supposed to ask yourself is, “What does this money need to do before I get paid again?” When you get paid, you put the money you have into specific categories associated with specific months and then spend from those categories. In that way, it’s essentially a digital envelope system which is perfect for me. I love the way an envelope system helps you visualize your budget, but I’m far too lazy to use a traditional cash-only envelope system, and having a bunch of different checking or savings accounts is overwhelming to me.
Once you’ve budgeted out your money, you spend from your categories instead of from your balance total. In other words, if you go grocery shopping, the money you spend comes from the grocery category. Once the grocery category runs out, you just have to stop eating. (Well, really, if you overspend, you can transfer money from another category to cover it.) For me, this helps created a false sense of scarcity. Sure, my dining out category and my gas category may be looking flush. But if my grocery category is struggling, I’ll be careful about what I spend on groceries. In other words, I see that I only have $15 left in my grocery budget (looks like it’s time for soup!) instead of seeing that I have $150 left to spend in all before the end of the month.

Throughout the months, I’ve fine-tuned my categories. For instance, I found myself never wanting to buy deodorant or shampoo because it was just coming out of my grocery budget. Obviously, I need those things. So I created a new “Beauty and hygiene” category for that kind of stuff. YNAB deals with this kind of flexibility and change very well. I haven’t had any issues crop up after rethinking my budget categories.
I started using the software near the end of May with the express purpose of saving up for a “new” car. In the five months that I’ve been using it, I’ve managed to save just under $4,000 towards that goal, and since I tend to buy older cars, that means I’m almost there. I did that while in the build-up to my Ironman (expensive!), contributing (a little) to my retirement, and without making the big bucks to begin with. I suspect I’ll be financially able to start looking for a car by the end of November.
A few highlights for me:
I knew I had to get my driver’s license renewed this year. I also thought I would need to get a new copy of my birth certificate to do so. I contributed money to my “Legal/Paperwork” category for a few months so I’d have the cash on hand. And then, I didn’t need a birth certificate and my new license was way less expensive than I thought it’d be. So I ended up being able to put a hefty chunk of cash in my new car fund.
I grossly underestimated the amount of money I’d spend on triathlon the month of my Ironman, and new race tires emptied out my triathlon budget (and then some). So I moved some money from my Darn it Fund (which is a category created to fund any overspends or things I forgot about) to cover it. If I hadn’t had that category, I could have essentially borrowed money from myself and taken it from a category I knew I wouldn’t be using for a while.
My fall is packed with birthdays and weddings. Instead of spending a lot of money in September, October, and November, I started stashing gift money away in May so that all of the gifts won’t be an issue at all.
When I’m tempted to be lazy and get takeout or fast food for dinner, I am now able to see how much money I have in that category. Usually, it’s not worth it. Over the past four months, I have been so much better about deciding to get takeout or go out for dinner because I want that experience and not because I’m feeling too lazy to make a simple dinner.
A few lowlights:
I hate entering the transactions, and I’m really bad at it. You can often sync YNAB with your bank, but I don’t like doing that, so I tend to get behind on transactions and enter them every few days. It’s usually fine, but I can never remember if my Smith’s transactions are for gas or groceries. This is not the fault of the software but rather the result of my own laziness. The mobile app actually makes it really convenient to enter transactions as you go.
Periodically, I’ll click on something and suddenly that fund is full of money or a bunch of money (that I don’t have) goes to completely fulfill a goal I’ve set. There’s always a brief moment of panic, but the undo button does its job and I try to remember what that particular click does for next time.
The goal functionality is a little annoying. I had a goal set up for my gifts category (a certain amount by September, when the birthday and wedding tsunami started to hit). Well, once I started spending money for those gifts, obviously the amount in that category started to go down and went below the goal amount. So I just had to delete the goal once I reached it and moved past it. It would be fun to actually check off the goal as finished or something like that.
My verdict after using the software for a few months?
Try it.
Unless you are already using budgeting software that works for you (and maybe even if you are!), you should give YNAB a try.
The number one thing that YNAB helps me do is see what I have left at the end of the month and make an actual decision with it. Previously, as the end of the month approached (bills paid, planned contributions to savings account made), I’d take a look at my bank account. If I had money left above and beyond my one-month buffer, I’d feel okay spending it. On whatever. It was “free money” at that point.
Now, at the end of the month, I can see which specific categories have money left over and can actually make a conscious decide what to do with it. Twenty dollars left over in my grocery budget? I’ll let it roll over to next month’s grocery budget because that’s the category I tend to overspend most frequently. Thirty dollars left in my gas budget for the month? I may stick it in my New Car category or I may put it in my Dining Out category so Rob and I can get some (really good!) takeout at some point during the next month. But I make the decision consciously, and not on a whim.
YNAB costs $5 a month (or you can save a bit and pay $50 for a year). However, they offer a free 34 day trial, and if you Google “YNAB 90 day trial,” you should find some special promotions by bloggers who wrote sponsored reviews for YNAB. For me, the cost is well worth it. Even though I was fairly responsible with money before YNAB, it has helped me save far more than an additional $5 a month.
And best of all? It has helped a good deal with my financial anxiety. It hasn’t completely taken it away, but it has given me the level of control over my finances that I need in order to help mitigate my anxiety. I don’t necessarily like what my financial situation looks like, but I know enough about it to know what needs to change, and I have the tools to change it.