Getting Started with Three Steps | YNAB
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Getting Started with Three Steps

When can I start using YNAB?

The most important thing is that you can start today. You don't have to wait for the first day of a month and you don't have to go and gather a bunch of historical data. We recommend the following three steps:

 

These steps will work regardless of how often you are paid and regardless of when you are paid.  (See end of article)

Step 1 - Enter your income.

When you enter income you’ll decide whether you need it right away in the current month or can defer it to the next month. Based on this decision, you'll categorize it as either Income for (the current month) or Income for (the next month). 

If the transaction has a May date, the choices will be: Income for May or Income for June.

If you need it for May’s Budget, choose Income for May. If you don’t need it in May, choose Income for June.

This sends the information about that money over to the Budget.

Step 2 - Budget your income.

This is Rule One in Action: Give Every Dollar a Job.

At the top of the Budget is the header.  This gives you information about how much money you have to work with this month.

Below that is the budget. This shows your work throughout the month.

If you enter income and categorize it as Income for the current month,  it becomes Available to Budget.

If you budget some (or all ) of those dollars, they flow into the Budget.

When budgeting, prioritize by considering what’s going on at the moment. The big question is : 

What does this money need to do before I am paid again?

It’s okay to prioritize, in fact it’s critical! Take care of immediate needs first. You need to eat and get to work, so make sure you budget for gas and groceries. Then ask:  What’s due next? Budget for any bills that are coming up immediately.  

Once all your bills are taken care of, start building some rainy day funds. Set some money aside for car repairs, medical costs, maybe start saving for that vacation or emergencies or some things you’d like to do around the house. This is Rule Two in action. Save for a Rainy Day.

Don’t forget to work on that buffer as well! Let some dollars roll forward so you can get ahead. Any money not assigned to the current month by you - is assigned to next month by YNAB. This way you can slowly work your way out of the paycheck to paycheck cycle.

Let some money roll forward each month until you've saved enough to get through the month without touching your paychecks. This is Rule Four in action. Live on Last Month’s Income.

After you’ve finished budgeting, then you’ll just need to follow that plan and track your spending.

Step 3 - Follow your budget.

Now you’ll make spending decisions by checking your budget. Instead of checking your bank balance, let the budget you created guide your decision making process.

Follow the plan you’ve set and track your spending.  If something goes wrong, just adjust and adapt. This is Rule Three in action: Roll with the Punches.

This is a much more efficient approach to money management. You may not know how much money is going to come in, but you know what you have on hand right now. This will also help you prioritize your spending. You’ll take care of the things that need to be taken care of.

Follow Up

If you are paid weekly, bi-weekly, fortnightly, twice a month, etc., you may be wondering how these three steps will work in your situation.  The truth is these steps make managing your situation much easier!

If you are paid every two weeks, you'll enter that money, then ask yourself: "What does this money need to do before I am paid again in two weeks?"   Budget toward those priorities and track your spending according to the plan you've set up.  As long as you can answer that question, you'll be fine.

You may find that different category organization helps you as well.