As the YNAB Team, we’ve been living and breathing YNAB 4 and its evolution for the past 18 months.
We’ve debated minutiae that would drive most of you insane (“This is a pixel off. What if we did a slightly lighter blue? Couldn’t we give this a bit more breathing room? What happens if someone working on the Desktop deletes an account, but then their spouse with an offline iPhone adds a new transaction to that account? What if the Desktop deletes a category and someone on an offline Android modifies that category, while also adding transactions to it, then comes back online?”)
All this talk of features and functions has me missing The YNAB Method.
To be honest, all of my blog posts and emails since last Thursday have focused completely on the software. The software’s just a tool to implement the method.
The Method has worked under every iteration of the software.
When I used to sell the YNAB spreadsheet (it was called YNAB Basic), it only had one Register. You had transactions from all of your accounts all mixed in to one register. There was no scheduler. There was no Quickbudget, no split transactions, and certainly no importing of OFX files or anything of the sort.
When we launched YNAB Pro, people happily upgraded from the spreadsheet (duh!). YNAB Pro still didn’t let you use multiple accounts. The first version still didn’t let you import! We improved YNAB Pro, added some hideous tabbed accounts across the top, and you could import bank files. We added splits, a scheduler, reports etc.
Then we launched YNAB 3 just before I went bankrupt, which ended up being very good timing (avoiding bankruptcy I mean…and I’m actually kidding, though it was horribly stressful). We gave it a new look, lots of new features…
And now we’re at YNAB 4, with our best YNAB yet.
It’s still all about the method. Fancy Cloud Sync algorithm aside (don’t shoot me for saying that Taylor), the software is there to help you become more aware (Rule One), anticipatory (Rule Two), flexible (Rule Three), and secure (Rule Four).
Rule One: You’ll still be giving every dollar a job. That will raise your awareness. It will help you communicate better in your relationship, will highlight money “leaks” and will show you if your money is actually doing those things you truly value. Once your money lines up with your values, you’ll feel content. I was feeling that contentment using YNAB Basic.
Rule Two: You still need to be looking ahead and anticipating those larger, less-frequent expenses. It’s June, which means we need to renew the registration on our vehicles. That was the first expense that surprised me and Julie back in 2003. We’d never owned a car before, and I get this bill in the mail for $105! I about lost my lunch. I learned from that, and we created a “Car Registration Renewal” category where I’d plug $8.75 into it each month. I’ve never been surprised by a car renewal again.
(Well, not true. I got a ticket last year because I forgot to actually renew. But the point is that the money was there for it…)
The holidays are in six months. Are you halfway toward your savings goal for holiday spending? Paying cash for the festivities and gifts, with zero stress…that is living the method. And that type of thinking, applied to all sorts of future events that are coming down your life’s pipeline, is what will transform your life. The software will help you stay on top of it, but it won’t do it for you.
Rule Three: Some of you feel so mad/ashamed when you overspend in a category. My goodness, let me show you something:
Not too hot of a performance is it? That was May’s budget results. Frankly, I’d have to dig around to know exactly what went awry for the month. You know what’s interesting though? May wasn’t particularly bad. It was particularly normal.
You see that balance of $3,230.74? Those are our “Fixed Bills” where I save for things like Property Taxes, Life, Car, and Homeowner’s Insurance, HOA dues, and some others I don’t recall off the top of my head. That climbing balance is why I feel fine with missing some of the other categories.
I don’t budget to see if I can stay within budget and not overspend, I budget to arm myself with the information needed to make good decisions. Follow Rule Three by being flexible. Adjust things as needed. Roll with those incessant punches.
Rule Four: Save for that Buffer! Set aside a bit from each paycheck to be Available Next Month. Just keep making that amount bigger with each paycheck. You’ll get there (on average it takes YNABers about four months, but it’s okay to take much longer than that!).
You’ll love living on last month’s income. It’s liberating. Your bill-paying process becomes an absolute breeze, and you’ll work with a known number each month instead of doing crazy projections (a fancy word for JUST GUESSING :))
Imagine receiving a bill in the mail and…just…paying it. (Couple that with Rule Two: imagine receiving a huge bill in the mail and…just…paying it.)
All of this talk about features made me pine for the method, so this was somewhat cathartic for me. Hopefully some of you reading it were reminded of why YNAB works (it’s because you do).