You Need a Budget - Review of a Budgeting Software Program

© Paula Pant

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You Need a Budget. That's more than just a factual statement, it's also the name of a program that helps people manage their personal and small business accounts.

I tested You Need a Budget (YNAB) by downloading the program onto my laptop, inputting my current checking account balance, and then estimating my monthly expenses. Here were the results:

How to Set Up Your Account


#1: How it Works

Logging in is easy. The user interface is simple, featuring large buttons and big, simple font.

During early setup, I gave my budget a name ("Paula's Personal Budget"), marked whether it's personal or for a small business, and listed other "profile" information details. This will help if I choose to manage multiple budgets within the program (e.g. I could manage one budget for just myself, and another joint budget for myself and a partner).

Once I was inside the program, I manually entered my checking account information. I was then taken to a sheet with my current balance written at the top.

The sheet looked like an interactive version of the​ Budgeting Worksheets.

Because YNAB's sheet is interactive, I could add, rename, delete or hide budgetary line-items. For example, I deleted the lines for "car payment" and "student loan payment," since I don't have those bills. But I added line-items for "health savings account contribution" and "gym membership."

The ease of adding, deleting, hiding and renaming line-items is one of my favorite YNAB features, since it accommodates the fact that most people mentally classify their expenses in different ways.

One person might classify everything she buys at Target, Walmart and as one major line-item, such as "household shopping." Another person, however, might prefer to break down those totals into further categories like "Pet food," "Clothes," "Electronics," and "Toiletries."

(I prefer to classify my spending based on retailers. I actually added a line-item to my YNAB account called "Groupon," a catch-all category that describes the wide variety of Groupons that I buy, which range from getting a vehicle oil change to cleaning my home furnaces' air ducts to visiting a dentist for a routine teeth cleaning.)

Classify Your Spending

You enter the amount that you think you'll spend within each category. As you do so, the balance in your checking account starts dropping. By the time you've entered amounts in each category, you can instantly see whether you have money remaining in your checking account (hooray!) or you've gone over-budget (boo!)

(Remember: You should keep a cash cushion in your checking account to avoid paying overdraft fees.)

This step works especially well if you do it in conjunction with a savings account like SmartyPig, which helps you figure out how much money you should set aside for certain goals. (Read my SmartyPig review here).

For example: I'm trying to save $8,500 within 10 months for the purchase of a replacement vehicle.

That means I need to save $850 per month.

That monthly data is already listed with SmartyPig (which automatically withdraws the money from my checking account each month). So I could look at my savings account statement and see my monthly contribution earmarked toward that specific goal (replacing a car). I could then transpose the information into my YNAB spreadsheet.



Once all the data is in, it's time to review the numbers.

By clicking on "reports," I could see the way my spending breaks down into categories, into timeframe, into payee or by accounts. In other words, I can organize my data however I'd like.

I could compare my income and expenses. I could analyze my net worth and track whether it's rising or falling. I could hide certain accounts if I don't want them to be "counted" within the final analysis. I can also export the data onto my desktop.



The spreadsheet in which you add line-items reminded me of the Budgeting Worksheets. But the "analysis" section reminded me of Quikbooks. It allowed you to schedule future transactions, to reconcile your bank accounts with the data within YNAB, and perform all kinds of other sophisticated actions that higher-end budgeting programs like Quikbooks allows.

The result? YNAB is comprehensive and detailed. It's not a quick-and-easy, glance-and-go budgeting program.

The designers have done their best to make it user-friendly and give it a comfortable interface. But the heft of the back-end budgeting software is so sophisticated that I could never call YNAB "intuitive," per se.

If you're looking for a program that's comprehensive and detail-oriented, go with YNAB. If you manage a small business (e.g. perhaps you have freelance income, or you do some consulting work), YNAB is especially useful, since it can be tough to manage both personal and small business finances.

If you want a basic, glance-and-go program, try something like (read review here), which is free but also far more basic and rudimentary. If you're looking for more detail and heft, though, or if you want a more user-friendly version of Quikbooks, I highly recommend YNAB.

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I Want YNAB. But How Will I Learn the Program?


One of my personal favorite aspects about the program: YNAB offers free online classes. Your can choose between either attending live or pre-recorded classes.

The pre-recorded option is divided into 7 chapters, covering the following topics:

Chapter 1 - Discusses the three key steps to budgeting: Know how much you make, budget those dollars, and stick to your plan.

Chapter 2 - Walks you though setting up an account, changing or re-naming categories, budgeting your dollars and all the other logistics of operating a new account.

Chapter 3 - This is an 18-minute chapter in which YNAB answers some of the most frequently-asked budgeting questions, some of which are system-related (how does the program handle overspending?) and some of which are general (what should I do first - pay off debt or build an emergency fund?)

Chapter 4 - This chapter focuses on credit card use, such as how to handle budget transfers, plan for interest and fees, and so forth.

Chapter 5 - YNAB then spends half an hour reviewing how to handle savings accounts. They cover topics like transferring money between accounts, tracking your interest earnings and appointing your dollars to different savings goals.

Chapter 6 - The next class shows you how to import your account activity into YNAB from your bank accounts.

Chapter 7 - The last chapter discusses using the information you learn in YNAB to avoid getting hit with overdraft fees and penalties.

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