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YNAB Review: Get Out Of Debt And Save More Money

YNAB Review: Get Out Of Debt And Save More Money
Diana Star Oct 25, 2017
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Do you have a budget but find yourself transferring funds from your savings account to cover expenses at the end  of the month, or worse, your account is overdrawn?

Maybe you have plenty of money coming in, but when the furnace breaks down you find yourself pulling out a credit card to cover the expense.

Or maybe you don’t have a budget at all and have no clue where to begin.

Whatever your situation, the YNAB budgeting app may be the hero to your financial woes.

YNAB (pronounced “y-nab”) stands for “You need a budget.”

The app, which is available for iOS, Android and web, was started in 2003 when its creator, Jesse Mecham, was looking for an effective budgeting tool that he and his wife could use as newlyweds still finishing school when money was tight.

YNAB was born.

How Does YNAB Work?

YNAB uses zero-sum budgeting. In a nutshell, zero-sum budgeting takes every dollar you have coming in and assigns it to an expense category until you’ve assigned every dollar. Dave Ramsey is a big fan of this zero-based method.

It takes some getting used to if you’re not acclimated with this mindset; however, the benefits (and savings) of zero-sum budgeting can far outweigh the time spent learning and understanding how it works.

The YNAB Method Is Simplified Into 4 Easy Rules

Rule 1: Give every dollar a job.

Here’s where the zero-sum budgeting comes into play.

When your paycheck comes in, you’re reminded by YNAB that you have money to allocate. You give every dollar a job by assigning it to a category until you have zero left to budget.

Giving every dollar a job as soon as funds hit your bank account forces you to think ahead toward upcoming expenses and budget accordingly. With YNAB, you budget for everything, even fixed expenses like your monthly mortgage.

Thinking about where every dollar will go ahead of time helps budgeters be proactive so that unexpected expenses aren’t so surprising. In fact, according to YNAB, you should “make your money boring.”

Your money should be so boring, in fact, that when your fuel pump goes out in the car, you just shrug and get it fixed because you’ll have budgeted for it, which brings us to the second YNAB rule.

Rule 2: Embrace your true expenses.

With YNAB, you don’t see your unexpected expenses on the sidewalk and avert your eyes. You meet them head-on, bow and say, “Hello, good sir!”


The app makes it easy to budget monthly for expenses like Christmas shopping, car repairs, landscaping work you plan to have done next year or your next family vacation. Don’t forget your insurance premium and license plate renewal.

These aren’t monthly expenses. They’re the ones that sneak up and bite you in the behind if you’re not careful, which often leads to credit card spending, and that leads to debt and, well, just ew.

Because it’s so easy to add categories and budget your funds, you can quickly create a category called “6 Month Insurance Premium” and budget money each month, just like you’re paying a bill, except – here’s the rub – you’re really paying yourself. To be a budget boss.

YNAB also makes it easy to divvy up long or short-term expenses by setting goals. If you’re planning to remodel the bathroom next year and you know it will cost $6,000, you can create a savings goal.

YNAB will tell you how much you need to budget monthly in order to hit that goal.

Rule 3: Roll with the punches.

Let’s face it, nobody is perfect, and sometimes things come up that cause you to overspend in a budget category. You drove three hours to Chicago to pick up your cousin from the airport only to realize she’s waiting for you in Indianapolis.


Your fuel budget for the month just went topsy-turvy thanks to your blunder. No worries.

YNAB lets you know that you’ve overspent in a category in two ways.

First, you’ll get a polite reminder that you made a whoopsie-daisy and you need to take money from another category if possible to fund your overage.

Second, the category will turn from green to orange if it’s underfunded.

All you do is adjust, which just takes a few taps or clicks.

Rule 4: Age your money.

If you’re following the first three rules, then the fourth will fall into place fairly easily.

The goal is to be more mindful and purposeful about what you’re spending and budget accordingly so that the dollars you’ve sent off to work are doing so at least a month in advance.

Basically, if you follow the first three rules, you’ll be paying this month’s bills with last month’s paycheck. You want your money to be old in spending years because it means you’re no longer living paycheck to paycheck.

Rule 4 means you’re a whole month ahead. You can officially stop stressing about bills every month.

The app has a nifty little tracker at the top each time you log in that lets you know how many days old your money is. According to YNAB, once you see that your money is at least 30 days old, you’re golden.

Does The Method Really Work?

The YNAB team would say so. In fact, their website says that on average, a newbie can expect to save $600 in the first two months and over $6,000 after only one year. Those are pretty bold claims, but there are plenty of testimonials.

This doesn’t sound too far off the mark from Ramsey’s claim that people who use the zero-sum method pay off 19% more debt and save 18% more money, according to surveys taken from his Financial Peace University program.

Holly Porter Johnson and her husband Greg Johnson, the jetsetting duo famous for traveling the world for free and founders of Club Thrifty, wrote an entire book about zero-sum budgeting because they love it so much.

There must be something to it.

YNAB makes the method easy to implement into your daily life. 

Is YNAB Easy To Use?

At first, no. If you’re not familiar with zero-sum budgeting, using this app for the first week may make you want to throw in the towel.

The aesthetics of the app are great. It looks simple and streamlined without a lot of added fluff, which is an advantage over apps that try to do too much. YNAB only does one thing: budget.

But finding your footing takes a bit of practice. Setting up categories and bank accounts is pretty simple. Yet once the categories are established and you’re ready to rock and roll, you may be left thinking, “Wait a minute. I don’t get it.”

If you’re someone who wants your YNAB checking account balance to match your online bank statement exactly, then starting out can be frustrating. Aligning your transactions with your bank account can be slightly tricky because you have to clear your expense transactions.

It’s easy to look at the balances and think they don’t match, when they probably do, but you haven’t cleared your transactions. Or you’ve cleared transactions in YNAB that haven’t cleared the bank.

The good news is that you won’t be left head-scratching for long.

YNAB has a full complement of educational resources at your disposal. They’re quick and on-point so that you can dust yourself off and get back in the game if you start to think it’s just too complicated.

If you’re considering YNAB, you should definitely check out some videos and other material so that you fully understand how it works, thereby avoiding confusion out of the gate (like the whole clearing your balances thing).

If you stick with it, the concept feels less and less complicated until, finally, it clicks. Once you are in-tune with the zero-sum method and the four YNAB rules, the app really does become user-friendly.

In fact, creating new budget categories, moving funds from one category to another and adding transactions are all done in a few clicks or less, whether you’re in the web application or on your mobile device.

Bonus: You Can Schedule Future Transactions.

That means any bill payments you have set up to automatically withdraw from your bank account or bills that come due at the same time each month can be scheduled out in YNAB.

This is a great feature. Not only does it eliminate surprises, but you always see what’s coming up. YNAB goes a step further.

When you click on a budget category, the app lets you know you how much money you have allotted in that category, whether there are any upcoming transactions and how much money will be left in that category once that transaction is deducted.

Visually, the mobile app is simple to navigate. Your budget shows the category, how much you budgeted for the category and how much is left. The dollar amount in each category is color coded:

  • Green: you have money left in that category to spend. When you consult your budget before purchasing movie tickets, you want to ensure your “Entertainment” category is green and that funds are sufficient for the cost of the tickets.
  • Gray: you’ve spent your allotted amount for that category, or you’ve neither spent or budgeted anything to the category. The balance is zero.
  • Orange: the category is underfunded based on an upcoming transaction or savings goal, so you need to budget more toward that category when funds are available or move money around so that all categories turn green.
  • If you budget more money than you actually have, YNAB turns the “To Be Budgeted” box at the top bright red so you can easily spot if you’ve made an error or if you need to really take a look at your budget for ways to cut back. Remember, this amount should always be zero.

Does YNAB Link To A Bank Account?

You betcha. But you can choose whether or not to use this feature. If YNAB links to your accounts, you can automatically import the transactions each day and categorize them.

The benefit of this is that all of your transactions will be captured. No more, “Oops, forgot to put that in the budget!”

If you’re more of a control freak about spending, or you want an up-to-the-second pulse on your budget, you can elect to add transactions manually with just a couple of clicks or taps. Updates to your budget occur in real time.

So if your partner buys lunch at work one day and you want to know if you have the funds to buy yourself a little lunchtime treat, you can check to see what you have left to spend and the dollar amount will be updated, provided your partner remembered to enter the transaction.

Having both options offers flexibility to base the decision on your own needs and habits (and personality types).

Will My Account Information Be Safe?

Whether or not you choose to link your bank account, YNAB assures its subscribers that their privacy and account information is secure.

The YNAB security page outlines, in detail, the lengths the company goes to in order to keep users’ accounts safe. It states, “All data sent between your computer and YNAB is bank-grade or better encryption.”

They go on to provide a hearty synopsis of their security measures with regard to access, infrastructure, traffic and social engineering security.

Is YNAB Free?

No. But they have a robust 34-day try-before-you-buy program that does not require a credit card for the free trial.

Getting excited about a free trial only to find that you still have to give credit card info is really annoying, not to mention it puts the burden on you to remember to cancel before the trial period ends in order to avoid charges if you don’t like the app or service.

YNAB’s free trial without requiring a credit card is rare and a pleasant surprise. It also lets users know that the YNAB team stands by their product. They don’t need your credit card information now because they know they’ll get it later once you’ve experienced the app.

While YNAB isn’t free, the fee is nominal. It also gives users some peace of mind knowing that, because subscribers pay for the service, YNAB really has to stay on their A-game to retain their customers.

When the 34-day trial is over, the subscription is $50 per year, charged up front. This breaks down to $4.17 per month – a fee that’s worth it if you’re saving hundreds of dollars every month by using the app and following the four rules.

According to the YNAB pricing page, students even get one year of the service for free if they send proof of attendance. Once the free year runs out, students get a one-time 10% discount.

You can also cancel at anytime with YNAB’s no-risk, 100% money-back guarantee.

It’s worth mentioning that there is also a referral link you can share with friends. Each referral equals one month free.

What If You Need Support?

Help is just a click away. YNAB offers an impressive collection of support, including FAQs, help documents, podcasts and a newsletter. (Don’t worry, they don’t spam or sell email addresses.)

One of the best support features that YNAB offers are the classes. Subscribers can sign up for free 30 minute workshops on a variety of topics.

The workshops aren’t just once in a blue moon. They’re available multiple times per month in various time-zones and there are several to choose from based on your goals and interests.

In addition to these resources, the website offers a blog to keep you motivated. The blog stays current by providing almost daily posts on a variety of topics that include tutorials, tips and features about real people saving real money.

Additional YNAB Features

If you think you’re stumped using YNAB, chances are, with a little research, you’re not.

The app seems prepared for just about any scenario.

Do you have a receipt for groceries, a birthday present and socks and undies for your kid all in one trip? No problem.

YNAB makes it easy to split receipts into multiple categories so you can add the transaction and divide it between groceries, gifts and clothing budget categories.

Do you use a rewards credit card for all of your monthly purchase and then pay the balance in full each month?

There’s even a method for setting up your YNAB budget so that it updates automatically based on any expense transactions entered for your credit card.

Remember that pesky issue of getting your account and YNAB balances to match? If you’ve gone through your account statement and cleared everything in YNAB and you just can’t figure out where you went wrong, there is a handy-dandy reconciliation button.

With one click, you can reconcile your account to stay balanced and accurate when budgeting.

Is YNAB Worth It? 

YNAB has the potential to be a financial game-changer.

If you’re someone who either has no budget, or you find that your budget still leaves you living paycheck to paycheck, YNAB is a great solution that produces results when used correctly and in conjunction with the complementary educational resources offered.

It’s use of zero-sum budgeting and foolproof 4-rule method provide a pathway toward increased savings, debt payoff and kissing the paycheck-to-paycheck lifestyle goodbye.

The free trial and no-risk, money-back guarantee all make trying YNAB a no-brainer. You have nothing to lose and literally hundreds, if not thousands, of dollars to gain.

We hope you enjoyed this full YNAB review. If you have anything you’d like to add, please let us know in the comments below. Thanks for reading and happy frugaling!

Diana Star

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