We want it all, and we can borrow to get it all, before we can afford it all.
Dave Ramsey, Financial Peace Revisited
Ah, finances. Everybody’s favorite home subject, no? Well, until we manage to tech ourselves into a post-scarcity reality, our material wellbeing is something we’ve all got to be concerned with. Such is life.
A little while back a friend of mine clued me in to a budgeting app they’ve really been… I was going to say “enjoying”, but I don’t think that’s ever the right word when it comes to budgeting. Let’s say “utilizing to great effect.” I heard it through but was satisfied with (And, let’s face it, a little overproud) my makeshift Excel spreadsheet so I mostly discounted what they were saying. Some time down the line I heard about it again and ended up trying out the free trial but found it a little complicated and didn’t quite understand the point. Or, rather, didn’t know how I’d end up fitting it into the way we were living.
That last part there was the issue. Thing is, this tool didn’t fit into the way we were living, and that was because the way we were living was all jacked up. After I spent some time with the app I talked with the missus and we decided we’d give it a shot, and this year – really this month – we’re truly going to begin putting it into effect.
YouNeedABudget (YNAB) is, at its essence, a way to digitize an older cash-only mindset. A mindset that’s seen somewhat modernized by Dave Ramsey, where you never spend money you don’t have. Don’t go into debt, budget everything you plan to buy. It’s a simple idea but, especially in the world today, incredibly challenging. With everything done via credit card, money can seem like some abstract reality that we barely interact with, but I can tell you first hand that financial uncertainty is one of the most stressful things you can impose on yourself.
The idea itself is simple. Make categories for what you spend monthly. Tuition, car payments, mortgage, groceries, gas, electricity, personal spending, etc. Go as in depth as you possibly can. Then, you can set up each of these categories with types and targets.
Let’s say you have a yearly subscription to something and you know exactly when and how much that will be. Set the dollar amount of that yearly sub and YNAB will break down how much you need to budget for it per month. Or maybe you want to save up for a cruise but aren’t quite sure when or how much it’ll be. Make a category, set a monthly amount you want to budget, and it’ll track how much is reserved for that plan as time goes on. Simple, yes?
Well, here comes the important part. YNAB lets you link your finances to track them. You can (and will) link your bank and credit cards to the account. When you get paid, it’ll pull in as money you can assign to these categories. When you charge something, those transactions will show up for you to label which category they came from. Think of the categories as little envelopes that have whatever you budgeted from them as cash inside.
And now the last, most important step. Don’t spend anything if you don’t have the money in that category. If it’s important, move money from other categories to the one you need and then spend it. But don’t go negative. Don’t use what you don’t have.
That’s the main focus of YNAB. Clear visibility is one thing, but the confidence to know that what you’re spending is already covered, consciously, by you, is such a weight off your shoulders. Trust me.
I am a stress bot when it comes to money. I hate spending. Hate it. Using YNAB has changed that because I know, without a doubt, that we’ve already set that money aside for this thing. It’s planned, it’s ready to go. It’s serving its purpose. That peace is something I can’t put a price tag on. YNAB does – it’s a subscription service – but it’s one of the few things I don’t regret paying for. It absolutely has made life better and, should we be able to keep with it, will continue to do just that. I highly recommend you give it a shot. It will be confusing to start, I can promise you that, but it will also be worth it.
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This week I declared war against the color red.
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