The 4 ways You Need a Budget (YNAB) took the stress out of my family’s finances

A good budget shouldn’t just help you manage money, it should also help you manage your emotions.

My family has been using the You Need a Budget (YNAB) app for several years. Thanks to the app, we’ve set aside enough money to pay off my wife’s student loans, purchased a car without taking out a car loan and are better prepared for those unexpected expenses. However, the biggest benefit we’ve received is an overall reduction of stress when it comes to managing our finances.

YNAB’s secret sauce isn’t complex — it streamlines financial information from different sources into a single interface that lets us focus on making decisions, not gathering data. By showing us how much money we have available for specific purchases, we can spend without worrying we’re compromising our long-term goals.

If you’re struggling to find a budgeting system that works for you, here are a few things to take a closer look at as you wade through all of the free spreadsheets, budgeting apps and expense trackers.

YNAB uses the zero-based budgeting method, so you put every dollar you earn into a category you create in the app. By doing this, you’re setting aside money for specific expenses before you need to spend it and you’re only spending money you’ve already earned.

Before using YNAB, I logged my monthly spending in a spreadsheet I updated maybe once a month. It was easy to overspend because I wasn’t regularly tracking my purchases. This monthly ritual left me feeling stressed and defeated when there was rarely any money left over for long-term goals. YNAB makes it easier to see track spending and to set aside money in advance for the things that matter most. This has helped me focus on priorities that are easy to overlook, like paying off debt, building an emergency fund and saving for a vacation.

That said, no budgeting system or app will magically fix everything and there’s a learning curve with YNAB. Also, You Need a Budget costs $14.99 a month or $99 for an annual subscription ($8.25 a month), plus taxes where applicable. Think of it along the lines of paying for a personal trainer or gym membership, it’s an investment in your financial health and might just help you take your budget more seriously.

Still, if you’re hung up on paying anything at all for a budgeting app, both Mint and PocketGuard offer free alternatives to YNAB.

I can manage priorities and track progress in real-time

A budget should help you align your spending and saving with your priorities.

With YNAB, I can easily create spending and savings categories such as groceries, utilities, a new phone or an emergency fund. And I can also set goals for each category. As my priorities change, I have the option to merge old categories or create new ones. By tracking my financial priorities in real-time, I’m more aware of the tradeoffs. It’s easy to see that if I drop $45 on Pad Thai and an Uber, then I won’t be saving as much for the upcoming vacation.

This makes it simple to set aside money for different expenses and goals without having to stuff cash into separate envelopes. And being able to readily see the progress I’m making toward goals that are important to me (outside of paying rent) makes me excited to budget. Before it felt like a chore, now it feels like progress.

For short-to-medium-term goals, a high-yield savings account makes for an excellent place to park my money and watch it grow. The high interest rates on accounts such as the LendingClub High-Yield Savings account and the Ally Online Savings Account give me “free money” while keeping everything safe in an FDIC-insured deposit account.

Planning for large and irregular purchases is easy

Using YNAB and the zero-based budgeting method has helped me to better manage irregular expenses.

For example, I pay car insurance twice a year, instead of monthly, to save on my premium. To ensure I have enough money set aside, I created a car insurance category and set a savings target of $350 for the month the premium is due. The YNAB app automatically breaks down how much I need to save each month to reach that goal. 

When you set a savings goal in YNAB it is yellow until you’ve set aside what you need to for that month, then the goal becomes green. This makes it easy to manage all of my savings goals. At any time I can quickly skim my budget to see which goals are funded or underfunded for the month. I’ve used the same strategy to set aside money for car repairs and medical bills and to start building an emergency fund.

My credit cards work like debit cards

The nice thing about debit cards is you can only spend the money you have. What I like about YNAB is it takes this principle and applies it to my entire budget, so my credit cards function like debit cards.

Whenever I pay a bill or buy something with a credit card, I enter the transaction in the YNAB app and it automatically deducts the money from the appropriate category. If I’ve set aside $300 for groceries and I buy $150 worth of groceries on a credit card, the YNAB app lets me know I only have $150 left to spend.

Although the money to pay the credit card bill won’t leave my bank account for another month, that money leaves my budget the moment I spend it. This makes it easier to avoid overspending.

Tracking my spending is automated

I’m a bit of a travel rewards nerd and manage more than 20 credit cards for my family. So YNAB is an essential tool for helping me manage all of them because I can link my checking accounts, savings accounts and credit cards.

Since every transaction is automatically imported, I don’t miss purchases and if I enter anything incorrectly I can fix it quickly. Regardless of what budget system you use, you’ll want to automate as much as possible.

And while YNAB’s system works smoothly most of the time, it’s not flawless. I’ve had trouble automatically importing transactions from certain cards, like my American Express cards, to the YNAB app. I’ll frequently have to reconnect my Amex accounts, but (according to an in-app message) this seems to be a problem with Amex cards in general. So certain banks may make sharing data difficult, regardless of which app you use.

Budgeting is an important part of maintaining healthy finances. But it doesn’t have to be a chore.

I’ve used You Need a Budget for a few years and it has helped my family focus our finances on what matters most to us and has reduced the stress and emotional energy we need to invest in managing our money.

Regardless of the budgeting system or tools you use, it’s important to find a way to align your spending with your financial priorities and to automatically monitor the money that’s coming in and going out.

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