I’ve spent quite a bit of time on a new setup guide for the YNAB system and am happy to say that one is finally here. I’ve combined both YNAB and YNAB Pro into one guide, while also talking quite a bit about each of the Four Rules. My hope is that greater understanding will lead to more implementation. I also really made an effort to walk new user’s through the nitty-gritty of getting started, step by step.

Download the new Setup Guide

Thanks to Georg, Karin, and Erin for their questions and helpful comments that spurred some behind-the-scenes changes to YNAB 3.0 to bring about 3.1.

• The “Transfer” inflow has been removed. See this post over at the forums for the long answer. The short answer is that it was causing more confusion than it was worth.
• The “Date Format” option that was necessary for International users is now gone. It was annoying me from the get-go and, thanks to a few user tips, I ended up using a slicker way to get the job done. International (dd/mm/yyyy) formats (or any other date format for that matter) will be happy to know that this extra step is gone.
• An outflow category can now use amounts entered as inflows (as in the case of refunds, rebates, or reimbursements). YNAB Pro did this, and I thought it best that YNAB followed suit.
• The inflow column is now the last column in the Register. It’s basically switched places with the Outflow column. Reasoning: there are many more outflows than inflows. This will save you from having to hit an unnecessary extra tab every time you enter an Outflow.
• The percentages as calculated on the Overview sheet were only triggered with Primary income. The denominator was also Primary income as well. This dated back to when I was the sole user of YNAB (and it didn’t have a name, except for ‘the budget’ in our house); I wanted to see what percentage of my Primary income was taken by XYZ expense. This has confused a lot of users who expect the percentages to add to 100% (a fine expectation). Now the category percentages’ denominator is the total expenses.
• Those who do switch to 3.1 will notice a bit of increased Registry entry speed. I had inadvertently specified an unnecessarily large database range for the Register. It needed to be literally one fifth the size. I didn’t know this was affecting performance but it was. Lag time between Registry entries should now go *almost* undetected.
• The Income statement has now changed to a more generic “Inflows” and “Outflows” label. Doing this completely eliminated the need to mark certain categories with asterisks. The additional small bit of value added was not worth the investment on the user’s part.
• No need to mark savings categories with asterisks any more (see above).
• Printing on the budget sheet will now give you a print out of all the categories and their current balances. This will be handy for sticking the list on your fridge periodically.
• Everyone has probably noticed that the balances don’t add across until the end of the year. The reason I don’t do that is because the Budget sheet looks very, very scary when there are numbers flying everywhere. So, to that end, the original YNAB only tallied the new balance once that month had started. That is annoying. Everyone knows that a good budgeter likes to get the budget set up a few days in advance. So, the balances now tally one week prior to the new month starting.
• The prior balance column has been eliminated. It served one purpose, for one time only and wasn’t worth the hassle. From now on, if you do have balances when starting YNAB, you just enter a Supplemental inflow and budget them.
• A default category called Buffer is now included with the rest of the default categories. It will help people transition from a life without Rule #1, to one of bliss and financial peace…really.
• There’s no longer a need to enter a start date. Its sole purpose was to calculate the monthly average on the Overview sheet. The first transaction entered in the Register now determines what the denominator is for computing the average.
• I shaved two pages off the setup guide, and then decided to redo the entire thing, which added about 25 pages to it. I dig into the rules in a lot of depth, discuss savings categories to a great degree, and try and paint the picture that a life without YNAB is a life of…well…less money.
• Added another default 300 or so lines to the Register.

To grab the latest version, shoot me an email and I’ll get you a download link.

I know there are some that are visual learners. Hopefully this diagram will help you understand YNAB’s concepts a bit closer. With all the fanciness of software, it all comes down to these four principles, put into practice month after month after month.

Not only is my wife a phenomenal cook, she’s also a phenomenal grocery bargain shopper. After a lot of nagging, pushing, prodding, and begging, I finally convinced her to write a small article about how to keep your grocery bill consistently low. Her take on bargain grocery shopping:

Julie: Well, the first thing with bargain shopping is to know what groceries your family eats and enjoys. If your apples always go bad, there is no reason to buy a lot of apples just because they are on sale. You end up losing money even if they were a really good deal. So, once you have a list of things you know your family enjoys you can keep a look-out for those items in the grocery stores weekly circular.

The next step is really knowing what constitutes a “good deal.” If you have a list of those things you know you and your family enjoy and would really eat, then those are the first things you should take note of in the weekly circular. It will only take a few weeks for you to get a really good idea of what good prices in your area for the various different items you buy regularly.

Another way to save money when grocery shopping is to plan meals around those items that are on sale. Make a list of those things on sale, then go through your recipes and cookbooks to find recipes using those items. You can and should of course, stock up on those things you know you use frequently (just maybe not that week) and are on sale that week. At the same time, you should keep in mind that things will go on sale again and not to be too excessive in your stocking up.

Once you know what things you would like to buy and know what price is a good deal, you can make a comprehensive list of all those things on sale and their prices. To make things a lot easier, I generally take this list and price match everything at Wal-Mart. I know many of you may think Wal-Mart already has the absolute lowest prices on EVERYTHING, but one week of this and you will think otherwise. Wal-Mart is the cheapest on many items on my list, but I have save hundred of dollars on items where they are not the cheapest at all. Generally I have found they are the cheapest on pasta, a lot of canned goods, generic sauces, frozen fruit, cereals, and a lot of convenience items. However, a sale at another store on these same things can occasionally beat their prices. On the same token, there are still groceries at Wal-Mart that are almost always cheaper somewhere else, so you just have to be aware and learn. You can also choose to go to the stores individually that have the sale items you would like. Sometimes that might be more convenient if you live nearby several grocery stores or would prefer not to make one really long trip to Wal-Mart.

That’s pretty much bargain grocery shopping in a nutshell. Learn what you buy, figure out a “good deal” on those items, plan around the sale items, and don’t think Wal-Mart is the cheapest for everything.

My hope is to get a lot of user feedback regading the ability to print in YNAB Pro. We need to think about utility and simplicity. Join the discussion over at the forums: What Would You Like to Print in Pro?

Perhaps this is selfish, but for longer-term growth of the YNAB method and improvement of the Software, both YNAB and YNAB Pro, I’ve launched forums. I say it’s selfish because I’m hoping over time the many dedicated YNABers will help me answer newcomers’ questions with clarity.

As the success of YNAB has grown, the volume of email I receive is growing — a lot. My hope is that the forums will be a place where people will be able to go to discuss YNAB issues with each other, come up with great new ideas for improvements, and help out those that are just starting.

The FAQ has helped a lot, but I also deal with questions that are so specific, from people that are sometimes really in need of some solid advice, that I can’t think of a better way to get great advice than from a solid community of people dedicated to managing their money efficiently and effectively.

And as you can see from this post, when I do reply, I’m much too wordy.

Head to the forums

On another note, I’ve added a subscription tool to the blog on the right-hand side. You can enter your email address and subscribe to YNAB’s feed easily. You’ll be emailed after every three updates (if three is too often, I can always change it).

I’m receiving requests by some users to be able to “reconcile” in YNAB. So, I’m throwing it back at you: what exactly do you do when you reconcile? What is the process from start to finish?

I need to get my head around the process people are expecting before I can incorporate it (or attempt to debunk it!)

Please leave any comments you have below.

Well, it’s finally here.

YNAB Pro is a stand-alone Windows application that will blow you away. It certainly has me. I’ve been using it successfully for the past three months and, while YNAB in Excel is still my baby, I’m — erm — never going back.

Back at the start of this year, I was contacted by Taylor Brown, who had a question regarding Excel’s capabilities handling a certain task. I wasn’t sure of the answer, but one thing led to another and we began discussing the possibility of YNAB being created as a stand-alone application. Taylor has extensive programming experience and a lot of enthusiasm for the principles that YNAB espouses. He was a perfect fit and we got cracking. Now, about ten months later, we have YNAB Pro.

If you’re already a YNAB user (and if you aren’t, why the heck not?!), you can “upgrade” to YNAB Pro. Just contact me and I’ll send you a special link that allows you to purchase YNAB Pro at 50% off.

(Basically, it’s as if you purchased Pro from the get-go, never working with the original YNAB system).

Oh, before I go off on what’s different, let me mention that I will continue to support, improve, and upgrade the spreadsheet version of YNAB. There are way too many people that really like using a spreadsheet-type approach for their finances. YNAB has become very popular, and I’d be a fool to let that go. Count on the same support you’ve received up until this point.

Just a few things worth mentioning:

• Of course Pro stays true to the Four Rules of Cash Flow.
• You can import your data from YNAB for Excel into YNAB Pro.
• Because Pro supports Master Categories, (Food: Groceries, Food: Restaurants), if you do import, you’ll need to assign your categories to Master categories.
• International currency and date formats are handled so well it gives me chills just thinking about it.
• Pro boasts gorgeous reporting that satisfies even the accountant in me.
• There is now built-in Receipt Splitting. Basically you select “Split” from the category dropdown and it takes it from there. The Splitter also has a built-in drop-down calculator for quickly calculating things like sales tax. (Well, the Splitter also can auto-distribute amongst categories, handling sales tax for you).
• The Budget looks beautiful. It’s organized by Master category, which are collapsible. My wife and I have loved this part of it, as it speeds up budgeting quite a bit.
• You can have as many categories as you like. Rename them, delete them, move them to other master categories, etc. The sky’s the limit.
• The date entry for transactions automatically sets at today’s date. There’s also a dropdown calendar that’s quite cool. Oh, and you can use the up/down arrow keys to move forward/backward through days as well.
• THERE’S A SCHEDULER. Honestly, I didn’t think the Scheduler would be so helpful, but it really is. I’m guilty of saying, “Oh gosh, how long does it take to enter Rent every month?” Well, man did I underestimate the time we were spending entering the same things every month. Heck, it serves as a bill-paying reminder to boot. The Scheduler now handles all of our automatic paycheck deductions, retirement contributions, rent payment, etc. It’s so easy to use, you’re grandma would feel comfortable in the driver’s seat.
• Helpful tooltips now make understanding come faster. By that I mean that when you hover over certain numbers in the budget, a nice tooltip will appear explaining why that number is what it is. It’s helped me a number of times understand what happened and why.
• Another extremely cool feature is Auto-Suggest Budgeting, which basically means you can right-click on a cell in the Budgeted column and see some common options to select and budget for that month: last month’s budgeted amount, last month’s spent amount, the average of the last three months, or what you have scheduled for the current month. It is handy. I’ll leave it at that.
• For the geeks I should mention that the data is stored in xml format, so you can have access to it in other ways quite easily.
• Familiar “Outlook” feel for navigation, along with keyboard shortcuts (again, for the geeks, myself included).

You may want to check out some screenshots of Pro as well.

Man am I excited to get this out there. It still has the Rules. It’s just built in such a way that the money management process has been significantly reduced. I honestly thought my wife and I had it down to about as fast as you can get it. We’ve shaved it in half. The redundant entries are now taken care of automatically, entries into the Register are faster due to the date entry improvement, and the right-click suggestive budgeting saves us even more time.

Your budgeting just got faster.

UPDATE 10/26/06: 24 hours later it looks like the response has been great. I’ll be contacting those who volunteered in the next little while with the details.

To any YNAB users out there that feel pretty darn comfortable with the system as it stands (and maybe some of you who are just starting!), I’m looking for a few betatesters for something I’m working on that’s very YNAB-related.

Contact me here with “betatesting” as the subject line and I’ll fill you in on more details.

Thanks in advance for your help!

The basic equation to lose weight is to eat fewer calories than you burn in a day. So if you’re daily burn rate is 2,000 calories, you probably want to eat around 1,700 calories per day to cause weight loss.

That is about as fundamental, obvious, and straightforward as you can get.

Yet how many billions of dollars are spent on dieting books, pills, classes, methods, magazines, strategies, etc.? How many times have people tried to eat less and failed? I don’t have any data to back this up, but I’m guessing the failure rate is very, very high.

It’s a fundamentally easy task that people fail at again and again and again.

The other day I was reading an article about nutrition (my other hobby). The author stated bluntly, “If you want to lose weight, you need to monitor your caloric intake. This necessitates writing down everything you eat. Nothing goes unaccounted for.”

Naturally, I thought of this hobby: budgeting.

When I first began my mission to get the world on a budget, I knew it would be an uphill battle. My main fear was the fact that I would, in this technologically-advanced society, be telling people to manually record everything they spend and everything they make. It just didn’t seem like people would swallow that very well.

But to be honest, that’s the principle that is absolutely crucial to the budget. Now, I’m not saying that if YNAB could import from your bank, that I wouldn’t support it. I’m only saying that the principle of going through your spending, looking over your income, assigning transactions to categories — being conscious of the inflows and outflows of your money — goes a long way in helping you out with your finances. As I’ve said before, the budget is your foundation to financial health.

So the very thing that turns people away from effectively managing their budget (recording and being aware of what they spend) is the very thing that will help them the most. And I say “most” without reservation.

Being convinced that recording your inflows and outflows is paramount, it is then necessary to actually do it. This is, as they say, where the rubber meets the road.

The key with dieting is to maintain consistency in monitoring your caloric intake. The key to managing your money effectively is to maintain consistency in monitoring your outflow. That probably bears repeating: The key to managing your money effectively is to maintain consistency in monitoring your outflow.

I won’t lie and say it’s a really easy thing to suddenly develop a new habit of recording purchases. It’s actually a bit rough for some at the beginning. It’s hard to do develop new (good) habits! However, I can promise you that the habit will come. Writing down what you spend will get easier. And you’ll start to develop the nasty habit of never not noticing an outflow. It may haunt you until it’s recorded. Good.

The one nugget of advice I would like to give regarding your ability to monitor your outflows is to not forget the little things. When you’re dieting and working hard to record your calories, it’s easy to eat a cookie, cracker, chip, etc. and not worry about recording the calories. After all, it’s just one little…

And that act begins to erode at the very thing you’re trying so hard to develop. When you concede, even just a little bit, and let one thing slide, it’s just going to make it harder to force yourself to do it right the next time. The slippery slope of rationalization is indeed slippery.

It’s the little things that count when you’re establishing your habit of writing down everything you spend. Don’t start out by stopping so soon! Develop the habit to write down everything! I promise you a rapid decline in your spending.