Time for propaganda!

I use the You Need A Budget (YNAB) software, and have been for over a year now and it's still just as great. I wrote up my feelings and how it works here already 400 days ago. I will quote here:

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Hey, I was about to make a thread on that topic soon, what a coincidence!

I moved out from home (moving out of my family's place) as well as buying a condo, so therefore everything related to managing finances was completely knew to me. So far I could waste money, give my mom a couple of hundred and still live really good and yet save about 2k-2.5k Euros a month (I don't wanna brag, just for comparison purposes). My fiancee from America moved over, and I wanted to be able to sustain us both and pay off the flat pretty quick, even if she wouldn't find work right away (and thankfully I planned that way). So for me it was from super chill to ALRIGHT YOU'RE AN ADULT NOW WITH 110% FINANCIAL RESPONSIBILITY within 30 days. Full throttle. Now to YNAB:

The advantage I have as a German is, that you're generally raised here to live off your last month's paycheck as soon as you earn money. SInce I started earning my own money, the money I get at the end of the a month, I completely use for the next month. Leftovers at the end of the month I move to my savings. From watching various videos on the YNAB website this was confusing for me at first, because it was the 'normal' thing to do, but watching the YNAB video sessions and remembering the American credit craze, I remembered that it might not be that way in America, or harder to pull of for Americans who don't start doing that right off the bat when earning money.

So the good thing is, is that you already noticed this approach to finances part of YNAB, because the software is useless if you don't stick to their four principles. The awesome thing is: Their web sessions and trainings are free to attend! And their website has generally very much information and explanations. So far I found every single piece of info I wanted on their homepage without asking anyone else. Their philosophy and rules IS a part of the package that comes with the software!! If you don't follow them, the software might be rather useless.

The main difference between Mint and YNAB is, that Mint tracks your spending, and gives you an overview how much you spend on something. YNAB on the other hand is all about planning in advance. Budgeting your money you have available and trying to stay in that budget. If that's not possible, YNAB will make you prioritize. You have a budget for example for clothing and for video games. And you saw those shoes you want, but you're unsure about it. And then Bayonetta 2 comes out but sadly you spend your money on Shadow of Mordor already. But you know what, if you think about it, you don't need the shoes, you liked them, yes, but you have 2 working pairs and waiting a month is no issue. But waiting for awesome Bayonetta 2 is an issue, so fuck that, and you go in the software and adjust the budget, and move it for this month from clothing to video games.

So it helps you set priorities, and at the end of the month it switches to next month, "archiving" the old month and you see how much you spend in each category. So it's much more than just giving you an overview. Of course this comes with a little bit of work, because you have to literally enter every cent you spend in the software or - gladfully - in the free app! It uses Dropbox to synchronize the data and it works flawlessly. Entering a spending you just did is a matter of seconds with the app, and if you get home it's all pretty and cozy sitting in your PC, waiting for your reconciliation. The reconciliation is a the larger bit of work you have to do, but depending on how often you do it, the less time it takes. The first time I forgot to do it for the first month, and balls, it was a lot of work. "Where do these 7,59€ come from?" "Why did I get 15€ on my bank account there?" and - I shit you not, I didn't see the bank statement and this happened 1:1 like this - "Holy shit, they charge me the 750€ monthly payment for the condo already?!". Yes, for 3 weeks I thought they didn't charge me for the flat already and when my mom bought, it took the bank a couple of months till they started charging her. So I was like: Awesome! 750€ to save each month till they start charging me! Until YNAB's reconciliation made me literally go into my bank account and compare every single statement and I immediately started being a little less spendy. Now I do it whenever I feel like it, but at least once a week. All my spendings are still fresh in my mind, and I know immediately where the spending does come from, in case I forgot to enter it with YNAB. And if there's something unexpected, I notice it within a week, which is pretty good.

So after all this talk, the most often 'criticism' I hear about YNAB: "Can't I just use Excel for that?" Yeah, but what about the sync? "Duh, I can always do it on Google sheets". Yeah, of course you can do that, and bam, Google has your finances to the cent exact for every single spending. Tinhat aside, I really like Google, and myself wouldn't even be bothered by that, but that's already a No-Go for a couple of people. And the software itself is cheap, $60 holy moly. (If you want, I can refer you, you get 6$ off then, I get 6$ credit). I don't know how much you earn per hour, but let's say you get the $54 version, then you get either paid near to nothing an hour, of you can make the perfect excel sheet or a program with an app in like 2 to 3 hours. And I don't think so. On top of that you get their videos for free and a huge helpful community (I found /r/YNAB to be nice, but as I said earlier, there was nothing I couldn't solve myself). So I say, it's worth eeeeeevery single cent, and you read that very often on the internet, and I was honestly very sceptical, but damn, it is worth if you have a use for it. I went on g2play and bought a steam key for YNAB for about 20$, once you start it, you can copy the license and download the standalone software. So you get all this for about 20$ and it saves me sooo much headache and gives me a perfect overview of my finances which I wouldn't have otherwise (and honestly, I doubt anyone has such a clear overview without any kind of software, and if he/she has, respect). If you're still struggling about the $20 (hehe, I think you should get YNAB then anyway if $20 are an issue ;P), you can test YNAB for free for a month, so why not download it and test it. The worst thing that happens is, is that you don't like it and uninstall. But once you set it up on the first day, you did like 90% of it's work already, so at that point it doesn't take a lot of convincing probably :P

The way I started off is, that I just created my categories and together with my mom I thought about how much I should budget to that category and what is realistic for two people. To give you an idea I will list my categories here with the percentages of my salary, it might give you a starting point when you start with a blank sheet:

Monthly bills:

- Mortgage (31%)

- Internet/Phone (1.6%)

- Cable TV (0.8%)

-Electricity (3%)

- Utilities (9.6%)

- Mobile phone contract (0.2%)

- Insurance (0.4%)

Everyday expenses:

- Groceries (10.4%)

- Fuel / Transportation (2.4%)

- Restaurants (2.5%)

- Clothing (2.1%)

- Household goods (0.8%)

- Barber (0.4%)

Spending money:

- Keyboards (yes, I'm a mechanical keyboard fetishist) (0.8%)

- Games (2.1%)

- Other IT/Cinema (2.1%)

Rainy Day funds:

- Home maintenance (not quite sure with this one yet, because I just moved, currently 0.8%)

- Car insurance (2.1%)

- Doctors (0.4%)

- Presents (0.8%)

Saving goals:

- Emergeny/Leftover fund (Currently all budget, that is not budgeted in any other category, about 13%)

- Christmas (depends on the month, every now and then I add something, depending on how much you need at the end of the year)

- Car repairs/replacement (2.1%)

- Vacation (4.2%)

- Wedding travel (handling it just like Christmas, if I get unexpected money, almost all of it will be divided into Christmas, Wedding travel, some other saving goals and Emergency/Leftover fund)

- Building loan contract (2.1%)

Keep in mind that this is for Germany and I'm paying off my condo quite fast, so your insurances, restaurant costs, doctor costs etc. may vary. It also is only 2-3 months old, so it might need a little tweaking here and there. Budgeting will be hard at the beginning, but it makes you think about your money and how you spend it, which most people try to avoid. So either you're good with finances anyway, budgeting will be easy then and YNAB will be a good program to support you, or you're not good at it, and then it will be a bit harder at the beginning, but YNAB will force you to think about it and educate and train you how to handle your money and your finances/budget planning. And I read a lot of success stories about the second part :)

I hope I could answer a lot of your questions! You read that on the internet a lot, but I really like YNAB and every cent I spent on it, and would buy it again without hesitating a second. And in this case it's because the product is good, not because everyone is brainwashed. You can try it yourself or read a little bit more with googling around or on /r/YNAB.

TL;DR: Watch all the YNAB videos/join the web info sessions for free, buy it or test it for free, be happy, any question? read the whole post :P

Edit: Also, another short thing is, if anyone of my relatives/friends ask me what YNAB is or what it does: Basically you have this huge chunk of money sitting on your bank account, and YNAB takes care of what each bill in this chunk is planned and budgeted for and keeps track of it. It's like a toolbox for your money, it puts every piece of money to a fixed small shelf, where you can go and get it if the time has come and you need it. As soon as you close the YNAB program, all this nicely and neatly sorted money becomes a huge, unsorted pile again.

Also, when I asked a couple of my buddies if they know what YNAB is, 2 or 3 of them were already using it, without spreading the word, but they basically confirmed what I read on the internet about YNAB.

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If you want further help of have any questions, feel free to ask!

I love that your exemplar article has a guy bitching about monthly estimation so he breaks it down by day and then decides that it's inaccurate so he adds them up to figure out where he is month by month. That's some magic right there, for damn sure.

He's talking about burn rate without knowing it, which is very different than budgeting. Budgeting is about preparing for the things you can't predict by taking your yearly costs and dividing by 365. A budget ensures that you have bandwidth for the stuff you can't put on the calendar.

For budgeting? We use Quickbooks. It'll give you a report whenever you want, on whatever you want, however you want it.

I don't think budgets work long term. They are like diets, great for short term examinations of habits, but not usually sustainable.

For me I "budget" what I need to save then I live off the rest however I want. Takes very little effort and I don't see money I can't spend. I added up my monthly bills, divided by two, and rounded up a bit. That goes into my bill pay account which has enough money now (thanks to the rounded up a bit) to cover 3 - 6 months expenses. My retirement and other long term savings (wedding, house, vacations, kids) are deducted from my paycheck or direct deposited into my brokerage. Whatever is left goes into my primary checking for me to spend how I see fit. I pay for just about everything with credit card and I pay off the card in full each month from primary checking.

Once or twice a year (usually December and tax season) I check in on my finances. I re-balance my retirement portfolio, recalculate my monthly bills and see if I can erase any or haggle them down, and move long term savings into short term for things like vacations or major expenses. Twice a year is all I really need to deal with money, and this is a plan I've kept up with for the last 5 years or so ago. Whatever style you pick, try to make sure it's something that works for you long term. Skimping and saving for a couple months wont make much difference if you quit after, it's sustainable change that makes a difference.

I don't keep a formal budget. I just make all my purchases on a single credit card, and have an intuitive sense of how much money I can spend each month. Anything left over from Income - Expenses gets put into savings to build up that emergency fund.

I don't and I should. Getting my shit together is next in the priorities. Lots of little stuff here and there adds up and now all my finances are messed up. Gotta figure something out and separate my business and personal accounts because can't manage anymore.

"Do I need this?"

(Y) - buy

(N) - "Is this cheap?"

(Y) - save the amazon tab and if I bother to chase down my debit card by the next time I cleanse my tabs, then I probably actually want it.

(N) - delete the tab

I basically stopped using credit. I pay for almost everything with cash, or bank transfer.

That leaves me with mortgage, internet, and cell phone bills that I pay electronically.

The surprising benefit of this method is that the bank account fills up really quickly. When you need to take cash out of your pocket for everything, it makes every expenditure very REAL, and you find yourself choosing NOT to buy things way more often. It pauses everything for a moment, gives you time to reflect on the purchase, and then either confirm the initial purchase decision was a good idea, or put the cash away.

I'm living on far less than I ever thought I could, and saving far more than I ever thought I could.

(Note: For credit purposes, and large purchases, I DO have credit cards. I just pay them off as soon as I buy anything on them.)

I use Mint to stay aware of what I spend money on. I've always been obsessively frugal when buying stuff and Making puchasing decisions so I've yet to use it to control or limit my spending. It is nice for taxes at the end of the year as I tag things that I know can be written off, export as a csv, and give it to my accountant. He's much more liberal about writing things off.

I like how automatic it is and it captures all my accounts (PayPal, checking, savings, two CCs, and my investments).

It's also pretty good at categorizing automatically which means less work for you.

Random user and I have a Google sheet to make sure that rent and the bills get paid and so we can be more aware of our electricity (something we thought was rather high the first two months of living here). That's less about budgeting and more about keeping track and making sure one of us pays stuff.