Your Crucial First 20 Minutes with YNAB

Jesse, Chance, and I have an office neighbor named Matt who sells insurance to truck drivers. Great guy: former military, trains dogs for police forces, married, couple kids – and one of the nicest guys you could meet.

And…a brand new YNABer (woohoo!). Several times in the last couple of weeks I’ll be dropping my bike off in the office lobby and hear Matt chatting Chance up down the hall about this or that feature, and what’s the best way to do this, and yep – my wife and I both have it on our phones now.

I’ll tell you what – it warms the heart. Matt tells us YNAB has allowed him to drop his multi-spreadsheet, multi-bank account, hours-and-hours-per-month system for managing the family finances, and his stress is lower than it’s been in years. You can probably tell the same story. I know I can. Matt’s family is on track.

But one question Matt asked us the other day always stresses me out. Not because it’s hard to answer, but because I’m afraid there could be hundreds of families per month who start their 34-day trial, trip over this one issue, and give up on YNAB.

Here’s the question:

“So…while I’m getting everything set up should I go ahead and plug in the category numbers for next month?”


We explained to Matt that you only want to budget money already in your possession (avoiding the introduction of Monopoly money into your budget), otherwise it throws off your “Available to Budget” number and causes general confusion and mayhem.*

I love how Erin and the education team present this concept in the live Getting Started class:

Enter income > budget income > follow budget.

When you’re starting with YNAB, your “income” is the current balance in your bank accounts. That’s the only money you have available to budget until you get paid again. When more money enters your life, you’ll assign it to your categories. If you want to keep your budget clean and minimize confusion, never assign dollars to categories in your budget until those dollars are in your possession.

A couple questions inevitably pop up when people hear this advice:

What if the money I have in my possession doesn’t cover a full month of bills? How do I time things to make sure the bills get paid but I don’t throw off the budget?

Many of us in the YNAB community are still working check to check. Read this post about using your category names to keep track of the amounts and dates due for your typical bills.

Also, check out this post where other YNABers shared their stories of building their “buffer”, allowing them to live on last month’s income and finally get off the the check to check treadmill. Erin (YNAB education lead) has also shared her story of achieving a full buffer.

If you’re new to YNAB, following this one principle (only budgeting dollars in your possession) will save you from confusion, overspending, stress, and maybe even keep you from quitting on your budget.

By the way, you’ll see me post about this same issue every three months or so. Yes, it’s a little repetitive, but between each post a few tens of thousands of people take trials of YNAB, and I want to reach as many of them as I can. 🙂

*Many experienced YNABers follow a workflow where they budget a month in advance without causing confusion and mayhem. This post is geared toward beginners who are still trying to wrap their brains around the Four Rules and the software.