YNAB ($60), which stands for You Need a Budget , aims to straighten out your personal finances so that every dollar has a job. Well, that’s all true, but not perfectly accurate. What this desktop software for Windows and Mac really does is teach you how to be more financially responsible by walking you through the paces of making a budget, explaining why budgeting is important as you go. The educational value implicit in the app is well worth the $60, luckily, because a lot of the core features can be found in free online alternatives, such as Mint and Pageonce. And those online alternatives typically enter transactions automatically for you by linking to your bank accounts, credit cards, and so forth. With YNAB, however, you have to manually record your expenses. (YNAB does have some syncing capabilities, which means you can access the budget you set up from a mobile device, but syncing is not the same as those automatic transaction entry features found in Mint or Pageonce.)
If you prefer to work offline, YNAB is a very good program with a reasonable one-time price.
YNAB Set Up and Basics
YNAB is available to buy as a download (a 30-day trial is available, too), which means you can start setting up your budget quickly. Install the 32MB program, fire it up, and let it teach you what it knows. I like that the app immediately has you choose your currency and date format, welcomed options for international users, and takes little time aside from that to getting to the heart of the matter: your finances.
Tutorials introduce you to the basic concepts used by YNAB. During setup, help windows pop up to explain what different boxes and categories mean. Online, you can read about YNAB’s Method, which teaches four basic principles:
1. Give every dollar a job
2. Save for a rainy day
3. Roll with the punches
4. Live on last month’s income.
Part of YNAB’s premise is to help people who live paycheck-to-paycheck understand where their money goes and become more aware of income and expenses. Ideally, the app and its developers want people to subsist off their monthly income only without dipping into extra funds, and hopefully begin to save, too. It doesn’t tackle deeper and more complex matters of investing, like how to generate additional income or how to invest existing or future savings. YNAB is for much more modest individuals and households just trying to get a grip on their money.
YNAB in Use
The app looks like a balance sheet. A header at the top shows money available to budget, which is not the same as the balance in your bank account. It’s simply a total of the current month’s income, a thoughtful way to help newcomers readjust their understanding of what is meant by “available” funds. You can enter your bank account totals, too, and you have the option of keeping those balances off the budget.
The next step in creating a budget in YNAB is to enter estimated amounts for how much money you will spend in various categories for the month. Categories include living expenses, charitable donations, medical bills, and a whole lot more. The software prompts you to budget every single dollar available, including those you want to set aside for savings and emergency funds.
When you spend money, you enter it as a transaction. When the transaction clears, you click on a little ‘C’ icon next to the entry, which turns green. The goal is to spend close to the budgeted amount of money in each category—and don’t worry if you’re wildly off because YNAB is ready to talk you through that very issue and teach you how to handle it.
One of the app’s greatest strengths is its flexibility. While it gives inexperienced people a lot of guidance, it also lets more knowledgeable users change practically anything in the app. You can create or delete categories and sub-categories, add notes, and manually futz with just about everything.
Using YNAB feels quite different from using Mint.com, one of the most popular personal finance and budgeting tools around. While Mint logs all your transactions automatically (by connecting to your bank and credit card accounts and pulling data for you), YNAB relies entirely on you to enter income and expenses. Ironically, Mint can generate almost as much “work” for the user as YNAB requires. When I tried that app over several months, I found myself constantly adjusting details that Mint got wrong, like seeing a “payment to Duffy” and deciding it was a doctor’s bill instead of recognizing it as a transfer between two of my very own accounts. YNAB at least gives you total control from the get-go, and it has an option to “Make a fresh start” anytime you need (while saving all your past data, too, in case you need them).
YNAB does have a function that lets you bulk upload expenses from an account, but only if you can first get them into an .OFX, .QFX, .QIF, or .CSV file.
Like most personal finance apps, YNAB requires some time investment upfront and gets easier to use the longer you keep at it. Users can sign up for free webinar classes to learn more about how to use the app, and how to get your money to work for you. The philosophy behind YNAB is really its primary value—the app is more of a balance sheet—so taking advantage of the live webinars (or online videos that cover FAQs) is essential to getting your money’s worth.
Do You Need a Budget?
YNAB is a sound program with a reasonable one-time price. Many people have a lot to gain from using YNAB, especially those who need the most basic advice about creating a budget, sticking to it, and getting out of debt. But it does take effort and repeated use for the app to have an effect. If you wouldn’t open the app on almost a daily basis, it wouldn’t be of much use. If you know you wouldn’t have the self-discipline to manually enter your expenses as you spend money, they use an online Web app, like Mint, instead because it tracks your money flow automatically.
Furthermore, YNAB isn’t meant for people who already live in the black and are looking to increase their net worth or monthly income through investments. But it does teach very basic principles of personal finance for those who need them.
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|OS Compatibility||Windows Vista, Windows XP, Mac OS, Windows 7|
Copyright © 2012 Ziff Davis, Inc