October 7, 2019

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Do you budget? There are so many budgeting tools out there nowadays that it can sometimes feel like a hassle to pick one and just use it. I used Mint in college, but in 2016 I switched to YNAB and have never looked back.

I have to admit that I’m a little obsessed with keeping track of my family’s financials. This probably stems from growing up sort of sheltered from my parents’ budgeting process and the skewed perception that came from dad handing us cash back at the grocery store whenever we asked for it. But whatever the reason, I’ve found that I can spend hours fine-tuning our budget to maximize savings and plan for future financial goals.

What is YNAB?

YNAB is an online budgeting tool that stands for “You Need A Budget.” Pretty self-explanatory, right? The reality is that no matter who you are or how much money you make, you really do need a budget… Even if it’s a basic accounting of where you plan to spend your money.

There are a few different types of budgeting, and YNAB is pretty much an electronic version of the envelope method.

YNAB also teaches four core budgeting rules:

1. Give Every Dollar a Job

As soon as a paycheck comes in, you assign every dollar to a budget category, whether for spending, saving, or future investing purposes. This lets you clearly see priorities and know exactly where your money is going.

When you’re done with this step, you shouldn’t have any money showing as “to be budgeted” at the top.

2. Embrace Your True Expenses

The core of this rule is that there are no “normal months”. We all have some big once-a-year costs that seem to pop up unexpectedly. This rule teaches you to set up time-based “savings” goals to break that annual cost up into monthly chunks. So instead of panicking about needing to spend $1000 on a new laptop because yours just broke, instead you have a “new laptop” category where you sock away $100/month for a targeted replacement date.

My favorite example of this is Ramit Sethi’s “Stupid Shit” fund. He has money set aside and regularly adds to it for things like traffic and parking tickets, paying for an item broken in a store, and other similarly stupid things that we don’t normally plan to spend money on, but they come up anyway.

3. Roll With the Punches

Flexibility is key with managing any budget. If you overspend on groceries, you can just move some money from the “vacation” category to cover it. The key is to take from the categories that are not immediately necessary to cover the ones that you overspend on. There’s no guilt here!

I know the feeling of having a budget look pretty on paper (or on the computer screen) before a month starts. But then the inevitable happens—the month doesn’t behave “normally”! Every month is an exercise in iteration on the next month’s budget.

Sometimes I go through our budget and ruthlessly move money around to better align with our priorities and upcoming expenses.

4. Age Your Money

When just starting out, the “age of money” goal is 30 days. This just means that the money in your bank account has been sitting there for, on average, 30 days before you use it. This number indicates whether you’re living paycheck-to-paycheck or not.

As YNAB says, “Use last month’s pay on this month’s expenses.”

I’ve gotten to the point with YNAB that my current month’s income completely covers next months’ expenses, and whatever’s left over goes into savings.

YNAB Features

I think of YNAB as more than just a budgeting tool. It’s really my one-stop financial picture. It lets me set specific goals for savings, track progress on those goals, and easily categorize expenses for reporting. It also handles investment accounts.


The basic section of YNAB is the budgeting section. This is where you allocate your money for different planned categories.

YNAB features a few default category groups for new budgets:

  • Fixed Obligations
  • True Expenses
  • Quality of Life

Fixed obligations are the things that happen every month, without fail. They don’t usually change in how much they cost. This includes expenses like these:

  • rent or mortgage payments,
  • groceries,
  • gas/transportation costs,
  • utilities,
  • internet,
  • phone bills, and
  • car/home/renters insurance (when paid monthly).

True expenses happen on a regular basis, whether monthly or on a different schedule like every year, every couple months, or some other frequency. This includes the bulk of most peoples’ budget categories:

  • personal care expenses,
  • pet costs,
  • out-of-pocket medical costs for things not covered by your FSA or HSA,
  • annual car tab registrations,
  • annual insurance costs like homeowner’s or renter’s insurance,
  • drivers’ license renewals,
  • any membership costs or recurring subscriptions you have,
  • car maintenance costs…

You get the idea. You can always add a category or take one away (you can even hide categories if you don’t want to see it for a few months).

The “Quality of Life” category group is for your savings-type goals or maybe your more fun categories. I use it more for fun things and have a separate savings category group. This is where I budget for things like:

  • Ski trips
  • The Highland Games spending money
  • Gym or exercise equipment costs
  • Books & other forms of self-investment
  • A catchall category for “fun shit” like paint nights, going to friends’ weddings, and generally having a good time

Other Category Groups

Some other category groups I use are Fun Money, Book Publishing, and Savings.

Fun Money includes dining out, money to back Kickstarter projects, dates, gaming, and hobbies. It makes sense for me to split them out from Quality of Life categories, but you may be content with lumping them all together.

Book publishing money is for the publication of my book. It includes editing, proofreading, marketing costs, and book cover design.

And lastly, the savings category takes care of our emergency fund(s), future vacations, long-term life savings goals, and other future big investments.

Goals in YNAB

Each category supports goals. This is one of my favorite features, since you can set a goal on every category and hit the “quick budget” button to automatically send income dollars to your underfunded categories.

There are several different types of goals, some of them brand new!

Plan Your Spending Goals

  • Monthly (spend up to this amount each month)
  • By Date (spend up to this amount by a future date). This is the savings goal type I use for vacations, especially for pre-trip costs like airline tickets and new travel gear.

Build Your Savings Goals

  • Monthly Contribution (set aside this amount each month)
  • Target Balance By Date (set aside enough money each month to hit a target by a certain date). This one is great for your true expenses that come up once a year or once every few months. Use this type of savings goal for annual insurance premiums, Christmas gift spending, new electronics, and savings for a car.
  • Target Balance (generic savings goal)

Goals are a big part of what makes YNAB work so well, especially for me. It lets me see where I need to put money at the beginning of each month, and where I might be short or ahead depending on current priorities.

Reports in YNAB

This is one of my favorite features. You can choose any combination of categories, accounts, and date ranges to view trends in spending, net worth, and income vs. expenses.

It’s a great feeling to look at the net worth graph every month and see how our finances are growing. I know a lot of people get a thrill from watching their debts get smaller and smaller on the net worth graph.

The reporting feature is also a great way to identify average annual spend and categories you might want to cut back on next year.


YNAB lets you connect every bank account and credit card you have to the actual account at that institution. This lets you use the auto-import feature, so even if you forget to add a transaction, YNAB knows about it anyway when it posts to your account.

But if you don’t want to connect to your accounts, you can do that too! YNAB doesn’t force you to connect everything together for it to work. If you prefer manually tracking all your expenses, you can do that. And, you can do both together, which is what I do. I manually add transactions close to when they occur and YNAB’s transaction matching feature will match an imported transaction to the manually added one.

In addition to all of that, you can set up recurring transactions both for expenses and income.

I mentioned earlier that YNAB can connect to your investment accounts. I’ve had middling success with this section. YNAB isn’t an investment tracking product, so it doesn’t always import investment gains, losses, or contributions. Instead, I log into my investment accounts every month and manually change the account balance in YNAB to match what the account says. This way I always have an up-to-date view of my investments with only a few minutes of work a month.

YNAB Mobile App

The mobile app is best for use on-the-go. It’s missing a few features from the main desktop-based browser app, like customizable reports and visibility into what you’ve spent in any given category.

What I mean is that the mobile app shows amount budgeted and amount available for each category, but not what you’ve spent—until you click on the category to dive deeper for more information.

Reports on mobile only show net worth and age of money.

I use the mobile app mostly to enter transactions while out and about, or to quickly approve imported transactions from my bank accounts. I spend most of my planning and budgeting time in the full desktop-based app.


Unlike some other free budgeting tools like Mint, YNAB costs $84 per year or $11.99 per month after a 34-day free trial. To me, it’s totally worth it for all the amazing features YNAB brings to the table.

To take advantage of that 34-day free trial use my referral link! We both get a month free when you sign up after the trial is over!

Pros & Cons

Like any tool, it’s not perfect. Here’s a quick rundown of pros and cons from my perspective, having used the software for three years.


  • This is the easiest budgeting system I’ve ever used (and I’ve tried self-tracking with Google Sheets, too!). It’s intuitive, sleek, and the YNAB team is constantly improving the product.
  • And speaking of the YNAB team, they’re incredibly responsive to any support requests or questions I have. One time I was having a problem with a scheduled transaction behaving weirdly for the upcoming month, and when I brought it to the team’s attention they made the effort to keep me in the loop for resolving the bug, which they hadn’t seen before.
  • Multiple people can use it at the same time. My husband has the app on his phone and can easily add transactions when he’s out and about without me needing to log him in.
  • It’s easy to move money between categories to cover overspending, or to move money based on changing priorities. You’re not “locked in” once you put money in a certain category.


  • Sometimes account connections fail or get messed up. It may resolve on its own, but if it persists for a few days I probably have to unlink the account and re-link it back up. This can be a pain, especially since I have what feels like a bazillion Chase accounts and it’s not easy to tell which is which when the credit card balances are all at $0.
  • If you’re using manual transactions only without directly connecting your accounts, you’re relying on your own memory for all the transactions that occur. This might be a problem if you’re doing account reconciliation at the end or beginning of a month and the balances don’t match. This reason by itself is enough for me to connect my accounts.

Why I Use YNAB

I moved from Mint to YNAB because Mint couldn’t show me where my savings goals and priorities were. It’s possible the platform has improved since I last signed in sometime in 2016, but from what I can remember, it wasn’t nearly as flexible and transparent as YNAB.

For me, it’s 100% worth the $84 annual cost to use this software because of the value it brings in keeping track of all our finances.

Remember, if you want to take advantage of the 34-day free trial and get a month free after you sign up, use my referral link!

About the author 


Life & mindset coach, writer, host of podcast This is Type 1: Real Life with Type 1 Diabetes, and full-time analyst in the power industry. I'm passionate about showing people that how we think determines our realities.

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