YNAB - Operational Review
Prompted by a recent comment from mapgirl, it is time to give an operational review of our experience with You Need a Budget (YNAB) budgeting software. I first considered using YNAB in July (post), we started with baby steps in September, and moved to full utilization by October.
For those of you unfamiliar with this software, review the details at youneedabudget.com (we are using the basic version, not YNAB Pro). Some basic concepts necessary to understand our experience using this product: 1) this system forces you to “stop living paycheck to paycheck” by using last month’s income for this month’s expenses (i.e. January income pays for February spending); 2) every dollar must be accounted for and budgeted; 3) there are real implications to whether or not you stay within budget.
The Good
- Excel Format - The excel format is YNAB most valuable feature because we want a customizable system.
- Using Last Month’s Income – At first I thought this idea was kind of hokey and it took some convincing to get the partner to try this system because it pushes you to save up a month of income. I’ve found that the peace of mind the buffer offers is invaluable.
- Register Entry - The checkbook-like register entries allows us to double check that we haven’t missed entering something and sort entries as needed.
- Joint Responsibility - The register entry is the only place where spending data is entered; this allows the partner and I to share the responsibility of keeping the budget up-to-date and allows us check in with our spending throughout the month. Other systems we considered put the financial management responsibility on one person and we wanted a joint finance solution.
- No Checkbook Balancing - I do not have to balance my accounts with this system. We carefully double-check our register entries and don’t worry about how much is in the account. Some people balk at this aspect of YNAB but I love it.
The Bad
- Category Limitations - One of my initial complaints with YNAB is the number of category spaces available. However, the spaces available are more than we currently need, so it is just a technical complaint. Also, I would like to have nesting categories, an option YNAB Pro offers.
- Copy & Paste - it can be frustrating to copy and paste with this program because of all the hidden rows and columns.
- Budget Tinkering - Because of the real implications of over/under budgeting, we were constantly tinkering with our budget to reallocate money. More on this under “Our Modifications”.
- Annual Budget - YNAB only allows you to do one year’s worth of budgeting in the same file. For 2007 we had to start a new file and this prevents easy access to previous spending. YNAB Pro does not have this limitation.
Our Modifications
- Over/under Budget Implications:
As I mentioned, there are real implications for over/under budgeting. The implications are best illustrated by example:If we budget $300 in January for groceries and spend $350, our available funds for February will be decreased by $50. However, if we budget $300 and only spend $200, then the remaining $100 will remain in the groceries category until it is spent – our available funds for February will not increase by $100. To spend the extra $100, we would need to budget $200 in February for groceries and spend $300 (that will use the $200 we budgeted and the $100 leftover from January).
My frustration is that this means that we have to be exact with our budget or we’ll start accumulating cash (literally, it’ll be sitting there in the bank waiting to be spent) in individual categories. Also, if an unexpected expense comes up and we decide to eat out less to pay for it, we have to change the budgeted amounts instead of just changing our spending habits; the result: our budget no longer reflects our planned or estimated spending.
I’ve modified this so that any money that isn’t spent is added to next month’s available fund along with deducting any amount that exceed the budget. No more constant tinkering and finally our budget is exactly that, what we think we’ll spend, and not an edited reflection of what we’ve actually spent.
- Budget Categories - I want nested categories, but it isn’t possible with our version of YNAB. Instead of nesting categories, I’ve modified an unused visible column to the left of the categories and added labels. You can see the modification below, this is just a visual alteration, but one that will help us visualize our spending better.
Overall Impression
This software is not perfect, but it is much closer to what we want than anything else we’ve found online. It is closely related to my previous budgeting system and the excel platform will allow me to continually modify it to meet our need.
Recommendation
How you manage your budget is a personal choice, I can only recommend that you find a system that works for you. YNAB works for us, but your mileage may vary.
mapgirl
January 22nd, 2007 11:21
Very interesting! Thanks for posting the reply. I feel like I need to do something different to control my spending, so I’m thinking about this. However, I only have MS Works at home, not Excel.
MillionDollarJourney.com
January 22nd, 2007 13:33
Have you girls tried MS Money? I find the program pretty good where you can edit all the categories to suit your lifestyle. It also has a neat future called a Cash Flow Forecast where it esimates your cash flow based on spending $x on x date or spending $x every x time period.
FT
Donna Jean
January 22nd, 2007 13:49
mapgirl - they do offer a Pro version that doesn’t need excel (and it has all those neat charts and delux features). It looked like it had some nice updates that would be nice to have if I wanted to give up the excel format - instead I’ll just wait until I get around to adding them myself. :)
FT - yep, and like all stand alone software products, they don’t live up to my expectations. If I can’t dig into the way it works and tinker with it a bit, I don’t want to bother using it. There are so many other areas of my life that I already have to alter to suit the tools/utilities available (like online bill pay - argh) that I want my finance tool to do exactly what I want it to.
Eva
January 22nd, 2007 16:19
I’ve been using PearBudget (http://www.pearbudget.com) for a while now, and I really like it. I wish YNAB had a demo version that I could try before buying it, to see how the two stack up.
Jesse
February 1st, 2007 10:13
First off I want to say thanks to Donna Jean for offering such a thorough review of YNAB. Also, I was extremely delighted to see that you had altered it to use it how you wanted. That is just the type of thing I still love about having it on an Excel platform :)
Eva, one downside of having it in Excel is that trial versions aren’t really possible. However, if you want to try a trial version of YNAB Pro, I made it available just recently:
http://www.download.com/YNAB-Pro/3004-2057_4-10625881.html
Donna I thought you may be interested in the trial as well, at least just to test drive it a bit :)
To your modification, there are really two camps of people in regards to those budget numbers. One camp likes to keep their budget the intact so they can look back and have valuable iformation about what they they thought they would spend. The other camp (to which I belong more or less) sees budgeting as a way to direct your money to wherever it needs to go. It’s akin to an air traffic controller. You look to see where there may be problems and you change things around until everything will go smoothly again. This would necessitate that you remove suprluses from categories that no longer need them and move them to categories that are starving.
The first camp is more variance-focused, the second more balance-focused. Again, I can’t tell you how cool I think it is that you tweaked it to your liking!
Callie 302
May 12th, 2007 10:45
YOu may be interested to know that the pro version addressess ALL your concerns. I am using it with good success!
Donna Jean
May 12th, 2007 20:36
Callie, I’ve read the options for the pro version and it did sound like it offered many things that I wanted. However, as far as I can tell, eliminated it’s most useful aspect: being in excel. I don’t want to move to a product that I can’t shape into exactly what I want.
Thanks for the feedback, I’m sure the pro version will meet the needs of many people.
Anthony St. Clair
January 7th, 2008 23:48
Thanks for this and your previous post. I only recently found out about YNAB, and have been really interested. Our money situation is pretty good, but finding something that gives more a plan like this does sounds like exactly what we need.
Scott
January 13th, 2008 10:36
Hi, Donna!
Can you let us know how you modified the excel worksheet to reflect over/under budgeting. I think that’s what I’m looking for but am afraid to modify the formulas for fear of breaking something. I did do something similar to you with the categories, but your way of grouping them with a vertical title is slightly neater than my solution! :)
Donna Jean
January 17th, 2008 20:12
Hi Scott,
I appreciate the interest in the modifications I made, but I wouldn’t be able to explain how I did it. It was a pretty complicated process, took a lot of trial and error, and I did have to mess with all the hidden layers of the program to get it to work.
But, I also did it with little understanding of the more advanced features of excel. It took a lot of tinkering, but that was enough to help me figure out what needed to change and make the changes.
I suggest save yourself a new copy and go to town making trying to make it work for you — oh, and un-hide everything including the very (vba) hidden worksheet.
Scott
January 18th, 2008 21:00
Thanks! I’ll do that.