YNAB is to Your Money Like a Dresser is to Your Clothes


(This was originally in response to a customer’s question — something along the lines of ‘How does this work really?’ Her husband is a doctor, which is why you’ll see that mentioned below).

The master bedroom in our house is upstairs, and we have a great, huge chest of drawers there. The dresser was one of our first pieces of furniture, so it has sentimental value.

When the laundry is done, it ALL goes upstairs and is literally dumped on our bed. My wife and I then fold it while we’re watching some show or something.

Your money (and everyone else’s, so don’t feel bad) is not as bad as the clothes all sitting on the bed. If I want to wear my red shirt, I CAN just start rummaging through the clothes. I know it’s there. It takes me a while to find it, it’s not efficient, and I know there’s a better way, but hey, I found my red shirt so the crisis is averted. This money management method doesn’t work long, and leads to stress, and lost clothes (money).

What your money is probably like though (again don’t feel bad) is maybe something like this. You fold all the clothes, and then you remove all the drawers from the dresser and just stuff them into the “shell” of the dresser however they’ll fit. NOW, if I want my red shirt, I KNOW it’s in the dresser, I just have to rummage until I find it. It kind of looks like everything’s fine from the outside (at least when viewing the dresser from the side), but really there’s chaos in there! And it stresses you out. And you know in your heart of hearts that it’s not the right way to do things 🙂 The drawer-less dresser is your main checking account.

YNAB is the drawers.

Each drawer has a purpose. Top-left is for the unmentionables, top-middle for socks, second drawer down for t-shirts and shorts, etc.

Right now you have this pile of clothes in a drawer-less dresser and YNAB’s going to apply some organization to it.

You’ll create budget categories.

Each month your hard-working, educated, super-human doctor husband (seriously, super-human most likely, I have friends trying to make it through residency!) brings home a clean pile of laundry and dumps in on the bed. The way you guys have this working (for every couple, this is different), it’s now basically your responsibility. Your job will be to take that pile of money and organize it into drawers (categories).

Heck, you may have a closet for hanging clothes, and two dressers (a checking account, a few savings accounts, etc.) but YNAB doesn’t care about where the clothes are physically NEARLY as much as it cares about what you’re going to DO with the clothes.

So, back to money.

Let’s say you take home $5,000 per paycheck or something like that. There’s that pile of money. As far as YNAB is concerned, you’ll record that as an Inflow and that’s the equivalent of your husband dumping the piles of clothes onto the bed. Now, that money is ready to be allocated.

You’ll notice the $5k sitting in your Available for that month. You’ll want to modify, create, and delete the default Budget categories to fit your needs. The defaults are good, but you’ll want to tweak.

Now you simply start adding money into the Budgeted column. Have a bill due? Add the money there. Want to start saving for a great vacation? Add some money there. You know the tires are balding…add some money to the Repairs category. Give a little away, save some in your emergency fund, etc.

There are some intricacies to YNAB’s Method that make it a bit quirky (massively effective! 🙂 ) and the first is Rule One. This may be stretching it, but going back to the clothes analogy, if you’re living on Rule One it basically means your husband brings home a pile of clothes in March and dumps it…where would a guy dump it? On the floor.

You don’t care so much though. In April, You (YNAB automatically) take that huge pile on the floor and move it to the bed. You put it all away, organized according to your and your husband’s values/priorities, and you’re feeling really good about things. Because as you’re spending money, pulling clothes out of the drawer for this or that in April (new baby clothes–congrats by the way!) you see your husband — halfway through the month — march up the stairs with a whole new pile of clothes, which he dumps on the floor!

See how good that feels? You’re there spending money and while you’re doing that, your husband’s out there earning money that you don’t even NEED until May!

Rule Two basically says, “Hey, don’t leave clothes on the bed. Make sure they’re all put away.” (prioritized, doing a job, etc.) This is huge psychologically, but we won’t get into that.

Rule Three comes about where you have this HUGE drawer in your dresser that’s pretty empty, but you want to take some sweet vacation. Each month you just throw some clothes in there. As time goes by, the drawer becomes ever fuller until you take that vacation, don’t use any debt, and have the time of your life. When you get home from vacation that drawer is empty and you don’t feel guilty at all, because that’s what it’s there for.

Rule Four helps everything stay in balance by forcing you to pay yourself back if you go over budget. Can’t really extend the analogy too far on this one… 😉