A while back I commented
that, in an effort to tighten up the family finances, I'd be trying out the software You Need A Budget
(YNAB). I also promised to let y'all know what I think of it after trying it for a few months.
While $50 for the software is a bit steep, I honestly have to say it was well worth it for us. The problem I had before keeping track of all of our spending was (a) records were not all in one place, (b) it was a hassle to track everything, and (c) I really had no overarching financial goals driving me to be serious about it. Thus it kept under the radar for quite a while. I knew we were spending less than we took in, but the details were a bit (okay, a lot) fuzzy. No software can help you with (c), but YNAB does an admirable job of addressing (a) and (b).
What YNAB does is a loose digital interpretation of the envelopes budgeting system
. Step 1 is informing the program of all banking/loan/credit accounts you have, and their current balances. Step 2 is creating a budget. Their website has some guidelines on what you should include, but you will have to create a budget that will work for you, and there's really no way they can do much to help with that.
What follows is a breif description of how the software operates. See their tutorials for more info, or skip this paragraph if you're not that interested. The budgeting system, however, is quite slick. They allow you to create two tiers of categories for spending, master categories, and sub-categories. Thus in our budget, the master category of "Recreation" contains sub-categories for things like the cable bill, date night, Netflix, and plain old fun money. At the beginning of each month you budget for the month, and as you spend money you enter the transactions into the register for your accounts, and you also categorize the transaction as to which of your budget categories the money should be drawn from. Thus you have three columns of figures for each month's budget: the budgeted amount, the amount spent so far this month, and the amount remaining in the category. Unspent money from a category stays in that category and accumulates from month to month, allowing me to do things like put aside $20 per month into an auto-repair and maintenance category, which will keep adding up until the inevitable car trouble. If you spend more than the money remaining on a particular category, that overspending is deducted from the amount you have to budget for the next month.
You can also create savings categories, like "Christmas gifts," or "emergency fund," which I found incredibly helpful. Now, instead of just a pile of cash in a savings account, we know exactly how much money we have and what task(s) it is designated for.
I don't find YNAB's reporting or scheduling features very useful, so I have no comment on those.
Now for criticism of the program. The setup is a hassle. You need to inform the program of all banking/loan/credit accounts you have, and their current balances on day 1. This takes time. And then figuring out how to handle the initial balances on your credit cards when you pay them off is not easy either. It would be great if you could automate downloading of transaction info for various accounts, but that's not possible. It would also be helpful if I could move money from one category to another without having to change the "budgeted" number, and screwing up my monthly budget.
All in all, though, this experiment has been a rousing success. This has made it enough easier for us to track our spending that we now actually know where every dollar goes. This makes it far easier for us to plug holes in our spending (like the $4 fast-food lunches that add up disturbingly fast) and we are now able to save a significant portion of our income.
So, while $50 is pricey, it has certainly saved us far more than that in the few months we've been using it. I highly recommend it.
They do give a free 7-day trial, but that's not really enough time to evaluate it, so I don't really think that counts. You'd need at least 60 days to see if it's working for you.
Note: They will be coming out with a new version sometime in the next few months, but anyone who buys between now and then gets to upgrade free.