YNAB BLOG

Three Big Threats to the Bliss of Budgeting

Green Visa

I wonder if many people “succeed” with budgeting on their first attempt. It must have been at least four years ago that Jesse first gave me YNAB, and yet I’m just now closing in on two months as a “real budgeter.” Actually, “real budgeter” is too strong a title. How about Budgeting Intern?

My attempts at budgeting are similar to my (and many others’) attempts at sustained scripture study.

“How many times have you read the Bible cover to cover?” someone might ask me.

“Uh, well, none.”

“How many times have you read the first few chapters of Genesis?”

“826.”

So why do we all fall off the wagon so often?

We’re sold on the 4 Rules. We see the benefits of budgeting, but for some reason, we just stop. One day we’re budgeting; the next day we’re not.

Here’s my take on why I kept flaking:

I Kept Breaking Rule 1

I didn’t even know I was breaking it (because I didn’t attend one of the excellent YNAB live classes – which would have sorted me out in no time) – but I sure was. I kept trying to budget for an entire month before I had an entire month of money available to budget.

So I’d make these estimates across all these categories, and the total budgeted amount would look ridiculous (because it was), and I’d throw up my hands. “I guess budgeting works for some people, but not for me. The numbers just don’t work.”

The numbers didn’t work because I was treating categories as guesses, rather than treating them as official jobs for each dollar. My budget wasn’t reality. It was what might happen, sort of.

As a budgeting intern, I now understand that you always budget to $0, and you never budget money you don’t have.

I Over-Estimated the Hassle of Entering Transactions

…and underestimated the benefit. These days, YNAB’s free mobile apps allow Kate and me to enter 90% of our transactions at the point of sale.

Before cloud sync and the mobile apps, it would only have taken two or three minutes per day to open my online checking and credit card accounts, look for any new transactions, and square things up. Why was I so convinced the only “efficient” way to deal with YNAB was a weekly or monthly import from my accounts?

I’d fall behind on my transactions, then mess up the import process, so my numbers were always wrong, and I’d quit (again).

My budgeting internship has taught me nothing raises awareness like entering transactions at the point of sale and reviewing the budget daily.

I Handled Credit Card Balances Incorrectly

I’m grateful to say I no longer carry any credit card balances.

When I did have balances (on cards I was still using), they constantly made a mess of my budget. One of two choices would have solved this problem, but I was too lazy to carry out either:

  • I could have stopped using the card until it was paid off, making it just like any other debt I pay monthly and manage off-budget (like my mortgage).
  • I could have watched the education team’s excellent video on credit card management in YNAB (or attended the live credit card class), and followed through on their instructions.

All said and done, I can’t blame any of these circumstances for my budgeting setbacks. The reality is I hadn’t fully converted myself to the joys and disciplines of budgeting. Once the pain of not budgeting exceeded the temporary discomfort of creating the habit, YNABing became a breeze.

Have you ever fallen off the budgeting wagon? Why? And how did you get yourself back in the groove?

 

20 Responses to “Three Big Threats to the Bliss of Budgeting”

  1. Kristin

    It took me several times to figure out how to handle my credit card debt. But now I have it sorted out and everything seems to be going smoothly. I can’t stress enough how much this program has helped me get control of our finances. We still have debt, but we are working on that now too, instead of just wallowing in it!

    Reply
    • mark

      Glad to hear YNAB is working for you, Kristen. I don’t know about you, but most of the stress of debt went away once I felt like I was in charge of it, and making progress toward freedom. Keep it up!

      Reply
  2. João Pedro

    Mark, it was a breeze for me! I had just 3 days of trial, and it was enough! I bought YNAB right after that.

    I already had a spreadsheet that did pretty much what YNAB does, but WAY LESS effectively, so the transition was a breeze.

    I just use the Import functionality for Reconciliation purposes, the numbers are always right.

    Some time ago, I tried some other budgeting apps (just to check if YNAB is the best)….and it just confirmed that YNAB IS the best…the others have SO MUCH clutter….

    Reply
    • mark

      Sounds like you’d already developed the discipline of budgeting before discovering YNAB. Glad to hear our simplicity sets us apart!

      Reply
  3. Kel

    I also suffered from Over-Estimating the Hassle of Entering Transactions Syndrome, both in terms of time and how I’d enter them. In part, due to my perfectionist tendencies, which, ironically, get in the way of budgeting perfection! I’d forget/not feel like importing transactions regularly, then would feel frustrated at how long it would take and dread doing it again- vicious cycle. I’d also get very hung up on small details like assigning the “right” subcategories, etc. (after reading one of Jesse’s posts a while back, I realized I had way more categories than I needed and have since streamlined). The mobile app has been very helpful for this! And, I’ve been spending 5 minutes most evenings updating my transaction register, which is so simple and far less daunting.

    Reply
    • mark

      Perfectionism is the enemy of budgeting perfection. Love it.

      Reply
  4. Rolo

    When I wasn’t my own worst financial enemy, Quicken was: I either succeeded in spite of it only to later trip over its being a significant obstacle. “Automatic download” is like thinking “Cruise control” on your car actually steers it. YNAB shares the same oft-stated mantra as investing: “I wish I’d started sooner.”

    Also, Matthew 25:14–if I’m not being responsible with a little, then I certainly won’t be very responsible with more.

    Reply
    • Anne W

      “Automatic download” is like thinking “Cruise control” on your car actually steers it.

      This is brilliant!!

      Reply
  5. David Post

    As a contract employee, and someone who loves looking at numbers, I project the future months with what I should be getting paid, and have my base category filled out until then. This helps me to see the results of time off that I would like to take.

    At the beginning of every month I go back through each category and make sure that they are adjusted correctly and that every dollar has a job.

    What I have started doing differently recently is adjusting categories rather than recategorizing items. Sometimes towards the end of the month some of our categories are used up and we’d still like to purchase something. Before I may have bought some paper towels and assigned it to the Car:Gas category because I had extra there. When the new year came around and I was looking at reports it became very clear to me that these reports are useless because it shows I spent the same amount each month and money that should have been Household:Supplies was in Car:Gas.

    Now I’m following rule 3 much better and rolling with the punches. If I overspend in one category I have two choices, either 1) make an adjustment this month; or 2) let it overflow and adjust next months. Now I ALWAYS put the item in the correct category. With that, I can correctly assess areas of excess and see what really needs trimming.

    Reply
  6. Tony

    I was never good at budgeting and when I saw YNAB, I knew right away it was a piece of technology that would fit well with my lifestyle. But, I was breaking rule one the same way you were (and also not realizing it) until I did the intro webinar and advanced webinar. Now I’ve added due dates to my categories to help make sure I budget in the right categories at the right time and only budget the money I have, which has reduced my budgeting stress immensely.

    Reply
    • mark

      Adding dates to categories is a great tip, and one I do myself.

      Reply
  7. Finn

    I think my failures at budgeting have come from trying to be too granular. More particularly, I find that having 20-25 “Expenses” categories, 5-7 “Bills” categories, and 5-7 “sinking funds” categories only leads me to constantly tinker with the budget, pulling money from one category to pay for overages in another and putting way too much thought into where a transaction fits. Also, it really gave my wife no incentive to participate, as it would involve a lengthy discussion of how I characterize each transaction and why. After all, me being the spender and her the saver, YNAB was my choice to help me reign in my habits. At a certain point, it became a monster that I’d created and that she didn’t want to deal with. In spite of this, we have had great success with YNAB, but I wanted to make the budget more accessible for both of us.

    As a result, I’ve simplified my budget to the following categories starting this month:

    Expenses (anything that’s not a bill or debt)
    Bills
    His
    Hers
    Debt (student loans and mortgage)
    Future Expenses (all my previous “sinking funds”).
    Work/reimbursable (doesn’t affect the budget)

    I figure that it doesn’t really matter where my discretionary “Expenses” are going, but only that I evaluate whether we have enough money to make them. This way I don’t spend time fretting over whether I’ve budgeted enough to “Medical/Doctor” or “Toiletries,” but only pay attention to whether we’ve got enough to make it through the rest of the month.

    As far as my “Future Expenses” go, I’ve now got a good idea of what those are having been very granular for a while. Now, I “spend” these into my off-budget savings account at the beginning of the month, and they’ll be there for when I need them in the future. Instead of breaking them down into “car insurance premium,” “taxes,” etc., I simply treat it as one big lump sum, plus a little extra for anything else that might arise.

    I figure at worst we’ll try another approach if this doesn’t work.

    Reply
    • mark

      So you put all your rainy day funds in one category? That’s interesting. Do you ever find the category short of the funds it needs?

      Reply
      • Finn

        Well, since this is my first month trying this setup, I can’t really say yet. Ask me in a month…….

        I will say, however, that I took the total of my previous sinking funds and padded it with a little extra upon switching to this new system.

        Reply
        • Malisa

          I’ve done that with my unpredictable ones where there was no hard-and-fast target when I didn’t have enough to fund them with enough to make me feel like it was worth it. In essence, I just had a one-stop emergency fund category (not lose my job type, but had to call the plumber type).

          But for me, keeping the predictable rainy day funds that have specific amounts I need on specific dates individual and sacred is really important. If I ‘borrow’ from those, I have a heck of a time refilling it. So now I don’t. ;)

          It’s definitely worth tweaking things to see what works. And even if it works for a while, circumstances change and then it’s often time to try something different yet again.

          Reply
  8. Kate

    Well, after leaving the money issues to my husband for the first, oh, 11 years of marriage, (it wasstressful and I preferred keeping my head in the sand vs. seeing the mess and feeling like I had no power to do anything about it), I finally decided to get on board and be a part of it. But I couldn’t handle the way my hubby managed things, which was to see how much was in the bank account and do a rough estimate to see if we could afford something.

    I spent a month searching for, and tinkering with various programs and spreadsheets, trying to find one that would do what I wanted it to do. I finally emailed a friend who is pretty savvy in excel and told him what I wanted. But luckily, before he could look into it, I found YNAB and it was so perfectly, exactly what I was looking for and more, I just dove in and never looked back.

    Not that we stick to the budget, um, ever. But we’re getting better, and the fact that YNAB lets me roll with the punches but still holds me accountable for overspending makes it so easy to stay on board. After all, the only other option is spending money I don’t have and getting myself into a bind when property taxes come due.

    So, while there are plenty of wagons I fall off frequently, I never have with YNAB and can’t see that I ever would. I just love the control and organization of our money so much. :)

    Reply
  9. Wendy

    I too have struggled with the budgeting, I was always a future budgeter – I knew what I was going to get paid next month and knew what bills were coming up, so I was ok for most of the time, and knew when I couldn’t afford to splurge on things like concert tickets. However, after a job change which increased my frequency of pay as well as an increase in overall salary I finally made headway on savings and was actually living on my previous weeks wages and having enough to put aside to pay down mortgages, debts. Then disaster struck with a redundancy at work, and eating into my savings for a while until I secured a new job, unfortunately with a significantly less pay. As some expenses can’t be reduced – mortgage, rates, water bills, body corporate fees, etc I have made cuts in other areas to keep my head above water so to speak, using YNAB as a fantastic tracking system (highlighting how much I actually spend on cluttering up my home with things I really don’t need), I know that once tax time rolls around, I will be looking at a healthy refund and I can once again pay off the nasty credit card, pay extra on the mortgage and save for the next holiday. And use YNAB for the purpose it was intended!

    Reply
  10. Jay

    This is a great post in that it reminds me of all the great resources YNAB gives users to help them use YNAB and stay on track.
    I’ve managed to stick with YNAB and budgeting since I started in late January of this year, partly because of the amazing support in the form of the resources you mention above, but also because I am simply determined to get out of debt and start living a less stressful life. The way I stay motivated too is by constantly revisiting the resources above (to the extent that I have practically memorised certain parts of the tutorial vides!).
    (By the way, I use YouVersion’s Bible app to keep up with my scripture on my iPhone).

    Reply
  11. Allison

    I’ve been on the budgeting wagon since March 2012 when I asked my sister what her family does to keep track of finances. She told me about YNAB, and I was delighted to find it as awesome as she described. Admittedly, my situation was probably about as easy as it gets to wrangle things in- I’m single (only me spending/making money), no debt or credit cards, with a salaried bi-weekly income. Furthermore, I LOVE spreadsheets and I find graphs and charts fascinating. I’m one of THOSE people.

    Anyway, I have had my times of going a few weeks without entering any transactions where I feel like I’m about to fall off the wagon. Receipts will just pile up next to my PC. Then it just builds into this daunting task. I don’t want to have to jump into that mess and find out I’ve overspent at Chipotle (which according to my YNAB reports is my most frequented eatery). Eventually I come to face the truth that whether it has yet come to light or not, the fact of my overspending is still there. I’m going to have to face it, roll with the punches (ie move money over from Clothing or Misc to cover my burrito pitfall), and move on with my life.

    Reply
  12. Cat

    I’ve never been good with money. No, that’s actually a gross understatement.

    My best friend recognized that both of us could use some help and started doing some research. (He’s good that way.) He surprised me with YNAB for Xmas — and it’s *completely* changed the way I think about and handle my money.

    For example, I took my motorcycle in for service a couple of weeks ago and the bill that I expected to be about $150 ended up being almost $800. Instead of panicking and dipping into savings to make up the difference, I already knew exactly where all of my cash was being allocated and just moved a few things around. No stress at all!

    I appreciate that it’s pretty easy to master. The hardest part for me was unlearning old habits; I’ve been tracking my finances on a spreadsheet for about 10 years and budgeting well into the future. Rule 1 was the most difficult for me to accept.

    I started using YNAB in January and let go of the spreadsheet in March because I finally realized there was no reason to keep it up anymore.

    Now I understand all of the comments about this being a life-changer. Two thumbs up!

    Reply

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