Confessions of a YNAB Teacher


Mark’s recent blog post about the buffer reminded me of how I saved mine, so I thought I’d share my buffer journey.

I remember the day I found YNAB.

It was 2006, and I had just added up my credit card debt (almost $9,000) and knew I needed to do something.  YNAB popped up in a google search.  I spent two days pouring over the material on the site before purchasing.  When you finally come to the realization that you don’t have any money, spending money to solve the problem feels counter intuitive, you know?

But I couldn’t poke any holes in the method.  Give Every Dollar a Job. Save for Rainy Days.  Roll with the Punches.  Live on Last Month’s Income*.  This felt like common sense stuff, except for one thing I could not get past:

“I will never be able to save up one month’s expenses. Who does this Jesse** guy think he is? Does he really think people can do this?”

I was finally facing my debt and it felt like THAT should be my top priority.  One month’s expenses felt like a lot of money.  I needed to rid myself of debt!

So here’s my confession:  When I bought YNAB, I had no intention of implementing Rule Four.  It felt insurmountable when weighed against my debt.  But I figured the other rules would still help address some of my issues.

And you know what, they did.  I immediately felt more control over my finances.  I knew what my money was doing thanks to Rule One. Rule Two really helped me even things out so I wasn’t blindsided by less frequent expenses.  When things went wrong, I adapted and adjusted per Rule Three.  Things were going…okay.

I became a forum rat and read the blog whenever Jesse posted something new. But I still wasn’t feeling this “magical thing” that people on the forum were talking about. Things were better, but months later, my life didn’t feel radically changed.

Then I started reading posts on the forum by people who’d been successful with YNAB. They were living on last month’s income and their lives really did seem changed.

That’s when I realized that unless I tried, I would never get a buffer.  By not trying, I had removed all chances for success.

So I made a deal with myself.  I decided that I would put something toward my buffer that month.  I would try.  In my mind, I imagined that it would be about $10.  But hey, $10 is a step in the right direction! I resolved to work on it even if it took a long time.   I wanted to grow a surplus in some categories (car repairs) but in others I didn’t care about a surplus (eating out).  So I shuffled things around and I threw any extra money I could at the buffer.  At the end of the first month, I’d saved $100.

Here’s the kicker:  It wasn’t that hard.  That $100 was surprisingly easy to find.  Hey, if I can do it one month, I can do it every month!  I decided to send a set amount of money toward my credit card debt and put everything else to the buffer.  (I had moved my credit card debt to a zero percent card, so the debt wasn’t costing me anything, at least in that sense.)

Then I had a month with an extra paycheck, so I threw a bunch of that at the buffer.  The positive momentum fed on itself.  I went through my house and looked for all the things I hadn’t used or touched in years and sold some stuff on craigslist.  That went to the buffer.  Within a few months, things started to feel really different.  Cash flow was no longer a concern.  I wasn’t worried about the bank balance.

My buffer was growing and more importantly, it started to feel possible.  I could see the light at the end of the tunnel.

Now, full disclosure: I had two setbacks while I was saving my buffer.  I had a car die and a computer die.  If those things had not happened, I would have saved my buffer much sooner.  In the end it took me about a year from when I started trying.  I believe it was June 2008 when I finally got my buffer.  A few months before that,  I was thinking ahead a bit. I realized that with an extra paycheck and a little cutting back, I could squeeze through June on the money I’d saved.  That meant my June paychecks could take care of July and I’d be there.

It wasn’t until I finally arrived that I understood the magical part of having a buffer.  The peace of mind can not be overstated.  I set all my bills on auto pay. I knew I could because the money would be there. If a month was going to be tight I could see it coming before it arrived, giving me time to adjust and adapt.

But the biggest change was the impact on my cash flow.  Here’s a few charts to illustrate my point.

This is what my cash flow situation looked like before YNAB.  I was paid twice a month.  The dollars represent my paychecks.

I’d get paid and immediately spend down the paycheck.  Sometimes I’d run out of money before the next check arrived and have to use a credit card.  It was a state of constant stress.

Then I started saving money for rainy day funds and that helped a little.  I had more cash in the bank cushioning me from the financial edge and the spending and earning was sitting on top of those funds.

But take a look what things looked like once I had saved my buffer:

My earning and spending was happening on top of a huge cash reserve.  My buffer and rainy day funds grew my bank balance.  I was living on less than I earned.

It was totally worth it.  I would never go back.  Never having to worry you have money to handle things is magical.  Not having to time paychecks to bills is life changing.  With this in place, I now spend far less time managing my money because things just hum along.

It reminds me of something that happened every year when I taught public school. Before working for YNAB, I used to teach high school music. Fall was audition season when kids would try out for regional and state honors festivals.   Every year kids would come up to me and ask, “Miss Lowell, do you think I have a chance of making it into the District chorus?”  My answer was always the same.  “If you try out, you have a chance. If you don’t try out, you have no chance at all.”

Do you want a buffer? Increase your odds immediately by deciding to try.  $10.  $50.  Put something towards the buffer each month.

The positive momentum will feed on itself.  Things will start to feel easier.  You’ll worry less.  You’ll feel more confident.  It doesn’t matter how long it takes you.  Just work on it and consider each dollar saved progress.

Join the cool kids in Bufferland.  Because I can assure you, once you are there, you will never want to leave.

*When I found YNAB, Rule Four was Rule One. Mark was wondering in his buffer blog post about why we changed the order.  We did it because when Live on Last Month’s Income was first, it gave new users the impression that they couldn’t use YNAB if they didn’t have a buffer when they started, which is of course not true. It’s the only rule most people need to work towards over time.  But the other three rules help you get there, so Rule Four is really the ultimate goal.

**Jesse is one of the smartest guys I know.  He knows money.  Listen to him.

29 Responses to “Confessions of a YNAB Teacher”

  1. mohammad ashori

    thanks erin, good to hear it’s possible, i’ll keep working at it! you had a really cool video on how to actually save money in the ynab software, do you happen to have the link to that video?

  2. Kristi

    Many congrats to you Erin as you diligently worked towards funding your buffer. The questions was asked yesterday, and I don’t think I’ve seen an answer yet. Where do you put this money? Since every dollar has to have a job do you create a category that says one month buffer, or do you put your money into the future months expenses. Can someone please explain this to me so I can start working on this? Thanks!

    • erin

      I just posted the link above. I used a category to save mine. I’ve found that’s easy for a lot or people. When it comes right down to it, if you can budget for the entire next month now, you are there. So you could just push money ahead to the next month and budget directly. Use whichever approach makes the most sense to you. :)

  3. SUE

    so, how do you actually save for the buffer?
    is it a category or is it just dollars that you don’t assign and they carry over to next month?
    I usually have extra money each month…I just end up giving it a job.

    • erin

      Hi Sue,

      You can do it either way. I linked an article in the first comment that explains that, but you are on the right track.

      Some people really like the category approach, some people like letting it roll forward. It’s up to you!

  4. heather

    Do most people use their emergency fund as part of their buffer, or is another pot of cash in addition to the emergency fund? I keep it all together, so to me the emergency fund is the buffer because I think of the buffer as just a way to pay bills with the money already sitting in the account without needing next month’s paychecks. Just curious what others think of that.

    • erin

      Hi Heather,

      It comes down to “what is the job of the dollars?” I see the emergency fund as different from the buffer. For example, I have a healthy emergency fund. In my mind, those dollars will take care of me if my furnace dies on a cold February night. :) That would be an emergency.

      My buffer takes care of everything for next month. It buys me groceries and gas, pays the light bill, the mortgage, gives me spending money, helps build rainy day funds, etc.

      Those are different jobs I think.

      Imagine what that chart would look like if you added an emergency fund too! :)

  5. K

    I found YNAB when it first came to be, I don’t even know what year it was, but I was scared off by the idea of living off last month’s income because I didn’t even have enough to live off of with THIS month’s income. Happy to say, we see things differently now and I am thankful I have spent the time to make YNAB part of our new financial future.
    Erin, I love your classes and your input! Thank you!

    • erin

      Thanks for your kind words K! I’m glad to hear things are working better.

  6. mohammad ashori

    thanks for that link! very helpful to review again….I really like the first method….let money roll over into the next month….when enough rolls over and it shows as available for budgeting then I just budget that amount and when my paycheck comes in I use it for the following month instead…voila! so cool :)

  7. Charlie M.

    Great illustration. A perfect way to visualize what’s going on.

  8. P.R

    Great article. I had the same google searching moment when I realized I wanted to get off the financial rollercoaster and ride the slow boat instead.

    I was lucky to have had a financial windfall around the same time as I found YNAB so I was just about fully buffered from the start. While I didn’t quite struggle like some to build a buffer I nevertheless thank my lucky stars I can live in financial peace and just can’t imagine living without YNAB and the four rules.

    • erin

      That’s great that you were able to start with a buffer. It definitely makes things easier, doesn’t it? :)

  9. Ian

    Great post. I’m three months into using ynab and this gave me some great ideas on how to start building my buffer.

    • erin

      I’m so glad Ian! The most important step is the first one – just getting started on it.

  10. Katrina

    Very inspiring post. I was so gung ho and all into YNAB when I had it for free. After I purchased it, it’s been used more so for tracking expenses and I’ve sort of fallen off. Your post is a sense of familiarity to me in regards to your initial financial situation. I’ve been telling myself to open YNAB and start budgeting the right way, but I guess I’ve been putting it off because I don’t want to face the spending habits I’ve fallen back into. Unknowingly, you’ve given me an extra push that I’ve needed to get back into real budgeting. Thanks for sharing Erin!

    • erin

      Awareness is power, so tracking will definitely help. Don’t be afraid to start over completely if you need to. I did that a bunch of times. :)

  11. pizzafrog

    I was convinced by others in the forums that paying off my debt was much more important than having a buffer. I now have a half buffer, and I am still much less anxious than I was with no buffer, but to me, no, paying off debt is NOT more important than peace of mind. Fiscally, it makes less sense to have a buffer than it does to pay off debt. No one will deny that. But people who’ve lived on or over the edge know how much easier it is to sleep at night with a full month’s buffer set aside. My vote? Both debt and buffer are important, but when you’re going to live with debt for years no matter what you do, then getting that buffer makes a heck of a difference in your peace of mind.

    • erin

      Great comment. I’ve found that different people have difference priorities depending on their situation. I’ve come to believe that you can work on both, it’s just a question of picking an approach and sticking to it. :)

  12. Maiya

    Thanks, Erin! Your post was perfectly timed for me, as I’m about to take the plunge and move $900 out of my off budget prudent reserve savings to fund my buffer with enough to be able to budget for a 1/2 a month ahead. ~Yes, my 2nd paycheck comes on the last day of the month so technically, it goes toward the next month, but only 1 day before!) I’ll keep my buffer category and keep adding to it until I have a real full month’s savings built up. It’s been frustrating living paycheck to paycheck, especially since I started YNAB in January, as my attention is now on my budget and not off in the clouds of La-La spending~land!

    I was really close to having that buffer filled out enough to be able to budget for a full month on the 1st, but then in April I got walloped with a huge emergency vet bill AND an emergency root canal I needed. Thankfully, I had that money in my buffer category, but it’s been taking a long time to build it up since then. I was starting to like the ease and comfort I was feeling at not having to look at my bank balance every other day to make sure I was still in the ‘safe zone!’.

    Its felt like deprivation to have to keep doing the budget category ‘switch-aroo’ and keep changing the budget amounts when my second paycheck comes in or when I need to adjust categories as I spend the 1st 1/2 month’s money. I end up with a spending record, not a spending plan, and I’d like to be able to see where I started and how much I actually spent in those categories. (I’ve hated seeing those red numbers though, so I keep taking from other categories to cover the overages, even though they’re usually small.)

    After thinking about it for months, I realized the peace of mind and clarity I’ll get from L.O.L.M.I. is worth it and even though my prudent reserve savings balance will go down, the money is really just being moved to fund next month. This was suggested to me when I first set up YNAB, since I had over 2 months of savings already in that account, but I was afraid I’d spend it. Since I’m spending the YNAB way now, and not according to my bank account balance, I feel confident I’m not going go there.
    Thanks for encouragement! I’ll keep you posted!

    • erin

      Don’t feel bad about making changes to your budget! What you are describing is rule three and success! The fact that you saw a problem and were able to address with a change is a sign of successful budgeting – not failure! :)

  13. Marissa

    Our story is very similar to yours as we never intended to create the buffer (or at least not until after our debts were paid off)… Thanks to Mark’s post the other day I finally put $10 towards our buffer, & thanks to your post I finally feel optimistic about achieving our goal!

  14. Ben

    When we started using YNAB, I was initially unhappy that my starting bank balance was categorized as income, as it seemed to imply I should spend all my money the first month. But after getting used to the program and seeing the value of the buffer, I decided one month to just take my full bank balance, which happened to approximately equal our monthly budget, and use it (even though some of the money had come out of our emergency fund and not from real income). This allowed us to start fully living on last month’s income, essentially with a one-time jump-start from savings. Had we not done that, I think it would have taken us at least a year to save up a full buffer.

    • erin

      It can take a while for sure. There are lots of approaches and I know many people have done what you did. :)

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