I like to consider myself relatively technically savvy. No, I don’t build my own computer. Heck, I don’t own a lot of gadgetry But I do appreciate the finer technical advances of life. If there’s ever something that can make my life a whole lot easier, without a lot of maintenance or hassle, I’ll usually take advantage of it.

When it comes to planning your personal budget, however, proceed with caution.

I’ve written before about software ruining your personal budget, and I believe it can be true. No, it’s not inevitable, it’s just more likely.

So let’s talk about a suggestion for the YNAB system. A few users have expressed the desire to be able to set up fixed budget amounts that would automatically be populated for them each month. Excel has certain limitations that can be overcome with macros, but I tend to avoid macros except for optional add-ins. I’ll admit that this is one reason I haven’t offered this type of functionality.

Update: As of February 2007, Pro will soon be carrying this feature, but please read on about my personal reservations.

But there’s another reason as well. Do we want YNAB to budget for us? Well, not entirely. We just want YNAB to handle the fixed budget amounts each month. So if my rent is $750 per month, YNAB should know that and enter it - right? Yeah, I guess that’s not a big deal really. But let’s examine the flip side. When you’re planning your personal budget, what exactly are you doing? My wife and I sit down during our planning meeting (which needs to happen tonight or tomorrow, as this is the 31st of March) and deside what the budget is going to look like. We move through most categories! When I hit the Rent category, do I sit there and mull over it? Heck no. I just enter the same amount as I did last month. It takes 0.8 seconds (I type fast).

What other fixed budget amounts are there? Well, a lot of the rainy day fund accounts will be set up this way: Christmas, Property Taxes, Home Owner’s Association dues, Car Insurance, Gym Membership, Wall Street Journal subscription, Cell Phone, Car Payment (shouldn’t you be paying that thing off?), etc. There are a whole slew of them. So without YNAB doing it for you, it probably takes you a total of 30 seconds to budget for fixed, recurring expenses. It’s really not a big deal. Personal budget planning is about planning the variable stuff - I recognize that. But let’s not get so hung up on automation that we forget what exactly we’re trying to do here. We’re trying to get you actively involved with your money, with as little time invested as possible. I recognize you’ll save a minute or two each month by having the fixed budget amounts automated, and I haven’t entirely written this off - not even in the slightest actually. I just want to put things in perspective.

(I am slightly concerned that a few users will attempt to automate everything - see the better software making things worse article referenced above - and then they’ll do exactly what happens to users of MS Money or Quicken: they’ll not be involved with their money at all. The budget will be so much on autopilot that they’ll forget to hold their monthly planning meeting. That’s a very bad thing, and something I worry about to some extent).

With your personal budget planning, you focus on the variable stuff - groceries, gasoline, car repairs. How much will you need? How much will you spend? That’s where the 20 minutes during our planning meeting are mostly spent. Those fixed amounts are done — Done — DONE in a very quick way. Then we duke it out over the grocery budget (just kidding - sort of).

I would like to step slightly to the side and speak to those proponents of budgeting systems that you apparently set up one time and can then “walk away” from. What?! You walk away from your budget? Then why did you do it in the first place? That has absolutely no logic attached to it. Those people who push such systems are trying to sell you something that will save you so much time it won’t do you any good. There is no free lunch in this world. You can’t have your budget and eat it too…

Hmm…

If there is supposedly some system out there that claims to make budgeting so easy that you don’t have to do anything with it, well, let me fire up the Mack truck because I’d like to drive it through the hole that’s in their sales pitch. That makes absolutely no sense. The YNAB system is easy. It takes very little time. I’d like to think it takes as little time as possible for the benefit you receive. In other words, it’s Benefit/Time ratio is extremely high. What would the ratio look like if it required no time (read: work)? Benefit/0 - everyone knows what happens when you try to divide by zero.

Alright, off my soap box and back to the task at hand. We’re looking at saving ourselves some time when it comes to planning our personal budget…should we maybe be looking somewhere else for a better return on our investment of time-saving tools, tricks, and automation? Maybe.

How many times are you grocery shopping each month? Eight? Ten? Making a list and going twice a month will save you time and money. What about the [insert too many hours here] hours we all spent watching TV last night? Hmm… Thirty minutes of vigorous exercise five days a week will do wonders to your productivity - have you been hitting the gym?

Again, let me reiterate that I’m a tech kinda guy. I love saving myself time. I just wanted to stress the real time savings that would come from automated budgeting - not a lot - and the big fear I have with automation. Perhaps it will be a feature with a few more articles written on the subject. To put it simply: automation, software, etc. should never replace the personal budget planning meeting.

Will I add automation in the future? Most likely - to a safe extent. But the key to your personal budget planning is the discussion with your spouse, the analyzing of the variable expenses, the setting of financial goals, and the commitment you make to yourself and spouse (if applicable) to stick to your budget for the month. Focus your efforts there. Move quickly through the fixed expense stuff. Focus on what will bring you the most bang for your…minute. Let’s not be missing dollars chasing dimes. Or however that saying goes.