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You Need A Budget (YNAB) Pro Review

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You Need A BudgetFor years, my budget consisted of an Excel spreadsheet that documented every purchase I made every single day of the year. As a numbers guy, this wealth of data was amazing and helped me tweak my spending, find my financial leaks, and reach financial goals much sooner than I would have without budgeting. Since then, I’ve been tentatively using online personal finance tools because of the security issue and instead I rely on Quicken’s desktop application, which is one of the most comprehensive tools available.

What if you just want to maintain a budget? Enter You Need A Budget. You Need A Budget, often called YNAB, is a desktop budgeting software package that will help you set, maintain, and stick to a budget. It’s a much better version of what I used to hack together in an Excel spreadsheet. :)

If you’re considering buying YNAB, they just notified me that they created a special YNAB 10% off coupon code for Bargaineering readers. The code is bargaineering.

YNAB Methodology: Four Rules

Before we get into the review of You Need a Budget software itself, I wanted to write about the basic premise of the whole system. Budgeting is almost never about the tools but how the tools establish a framework for which to think about your budget. For example, with my Excel spreadsheet, I molded it to match my own budgeting mentality. If you very good with budgeting and love hacking around with Excel, then Excel is probably right for you.

If your approach to budgeting is similar to YNAB’s methodology or if you have no approach, then you would do well to adopt the YNAB framework, with or without their software. You can budget with a pen and piece of paper, it’s just easier when you have a powerful application guiding you.

The YNAB Methodology is YNAB’s approach to budgeting and establishes a good framework. The steps are:

  1. Rule One: Stop Living Paycheck to Paycheck – A notebook won’t help you stop yourself from living paycheck to paycheck, but YNAB will. You will have two types of income, primary and supplemental. When you start the system, you’ll record all your income, even if it’s from your primary job, as “supplemental.” Supplemental means that you will be spending the income in the current month. You are, in a sense, living paycheck to paycheck because you spend the money in the month you earn it. As you work through the system, eventually you’ll reach a point where your job income will be listed as primary income, to be budgeted for use in the next month. This is important because when you go to the budget section, the income will appear in the next month. The tool has, in effect, taken you off living paycheck to paycheck.
  2. Rule Two: Give Every Dollar a Job – This rule enforces zero-based budgeting, where every single dollar is assigned to a category. The value in budgeting like this is that you have accounted for every penny you have in your budget. So many times we just budget for the big things – food, rent, etc. The act of sitting down and setting these numbers is tremendously valuable because you’re actively making decisions, rather than letting things happen.
  3. Rule Three: Save for a Rainy Day – This rule is less about the tool and more about the idea of creating various savings funds whether they’re for emergencies, annual taxes, holiday spending, etc. This fits in line with the zero-based budgeting because these are entries in your budget.
  4. Rule Four: Roll with the Punches – This is a great feature of YNAB that a lot of other packages don’t have. What happens when you go over your budget? Most other packages warn you, tell you not to do it next time, and probably do nothing about it. YNAB will deduct it from next month’s available funds. This is good.

I especially love Rule Two, Give Every Dollar a Job, because it is the cornerstone of budgeting and, subsequently, the YNAB approach. They work off the zero-based budgeting system where ever single dollar you bring in is accounted for. If you earn $1,000 a month, every single dollar is earmarked for something before the month begins. If you are over or under, you adjust your budget accordingly the following month.

On the tutorials page, there are short videos explaining how YNAB is used to support those four rules. I recommend watching them even if you have no intention of using YNAB because they easily explain some good budgeting principles. I found value in the rules themselves but having a video translate it into how it’s applied in YNAB was great.

You Need A Budget & YNAB Pro

You Need a Budget comes in two flavors, the basic edition and a Pro version. The basic version is going to be phased out soon so I didn’t want to spend too much time reviewing it. It’s a hardcore Excel spreadsheet, costs the same as the Pro version, and doesn’t contain as many features. They both work off the same YNAB Methodology, except with the Pro version you don’t need MS Excel because it is itself an app. (that ends the Basic review :) )

If you had a chance to see the videos, then you have a general review of the features of the Pro version. The Pro version is a full desktop application and the free 7-day trial gives you access to every feature in the application. This isn’t a watered down trial, it’s the real deal. The trial is for seven days, instant digital download, and the full version is regularly $49.95. All that, full support, and it comes with a 30-day money-back guarantee.

Importing Data

Not every piece of data has to be manually entered into the register, YNAB is able to important OFX, QFX, QIF, and CSV files from major financial institutions. It’s the same files used by Quicken and MS Money and YNAB never asks for sensitive information. You visit the bank, you enter your credentials, and you download the files yourself. It’s an extra step but it’s secure because you aren’t giving a third party any sensitive information.

Reporting

YNAB has some pretty looking reporting features that include pie charts and bar graphs. Visualizing your budget is difficult when you’re just looking at a list of numbers and YNAB does a fine job display your spending in three easy to view charts. There is a pie chart that illustrates Spending by category, a bar graph that shows total spending across several months, and then a final one showing current balances of various categories.

Total Spending Month to Month Spending by Category
Total Spending Chart
Spending by Category

Five Bonus Spreadsheets (with Pro)

Five bonus spreadsheets come with the YNAB Pro package:

  • YNAB Debt Snowball – Based on Dave Ramsey’s debt snowball strategy
  • 2009 Income Tax Planner – This can help you plan for your 2009 tax return.
  • YNAB Retirement Planner – You can use this spreadsheet to help plan your retirement, including contingency plans.
  • YNAB Mortgage Analyzer – If you have a mortgage, you can use this spreadsheet to help figure out how to pay it down faster, whether a refinance makes sense, etc.
  • YNAB Car Maintenance Schedule – Need a little help figuring out when you should be bringing the clunker in for maintenance? This spreadsheet can help you out on that.

I have not seen these spreadsheets first hand so I can’t make a determination of how good they are.

YNAB Version 3.0

YNAB is going to get a huge facelift for YNAB version 3.0 and will include significant feature additions. Here’s a look at the Register screen getting an update. It looks a lot slicker, doesn’t it? Well in addition to a new look and feel, they’ll be adding a lot of search capabilities, improved scheduling features, a more customizable approach to rule four, and many other features. It’s set to launch in November 2009.

If you purchase YNAB before YNAB 3.0 is released, you are upgraded to YNAB 3.0 for free. It’s unclear how much YNAB 3.0 will be selling for but you can lock in the price if you purchase YNAB 2.0.

Live Online Budgeting Classes

Another nice feature I am 100% certain other budgeting packages don’t offer are free classes. If you are not good at budgeting or would like to take advantage of live classes that introduce you to the YNAB system and how to manage your finances, YNAB offers absolutely free classes several times a month. You can review the schedule to see what’s available. Classes are free, are limited to forty attendees, and include a live Q&A at the end of the session.

Finally, don’t take my word for it, you can see a ton of reviews on Amazon.com for YNAB Pro. The vast majority of reviewers rated it a 4 or 5 star product. One warning, I recommend you buy it directly from YNAB because if you buy it from Amazon you may not be able to upgrade to YNAB 3.0 for free.

Conclusion

Whew! That pretty much covers the YNAB system, YNAB 2.0, and even a look forward to YNAB 3.0 scheduled for release in about a month or two. When I first started this, I had no idea what I was getting myself into. This is quite possibly one of the longest reviews I’ve written in part because the product has so many features, is built on a sound financial foundation, and is about to release a brand new, soup to nuts, version in 3.0.

If you’ve been searching around for budgeting software, I recommend giving YNAB a look because with their 7 day trial, you can get a good sense of whether it’s right for you.

You Need A Budget
7-day free trial of YNAB
{ 21 comments, please add your thoughts now! }

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21 Responses to “You Need A Budget (YNAB) Pro Review”

  1. Paul says:

    Pricing for YNAB 3 has been finalized. All the details can be found in a forum post by Jesse Mecham, the creator. The link is below.

    http://www.youneedabudget.com/forum/viewtopic.php?f=38&t=5688

  2. Thanks for this full review!!

    The founder of YNAB, Jesse Mecham, writes about budgeting at FiLife sometimes. He is such a genuinely enthusiastic guy who is excited about helping people with their budgets. I’m happy to hear they are continuing to improve the interface.

    Kristen

    PS: here’s a piece by him: http://www.filife.com/stories/a-twist-on-emergency-funds-that-will-transform-your-money-management

  3. zapeta says:

    I just installed the 7 day trial last Thursday and I haven’t had much time to mess with it. The interface seems pretty easy to use but I can’t say much else. Hopefully I will have a chance to build a budget with it today and post some more thoughts later.

  4. Shock says:

    YNAB seems like a critical component to personal financial managment. I’m going to install the trial and give the program a whirl. But, in trying to simplify my family’s financial life, post-first child, having another personal finance program is counter to that. I was happy when MS discontinued Money support. One less component to worry about. I decided to stop using the software cold turkey and just use my bank’s (BofA) online banking to manage my finances. It has a budgeting feature, but nothing as detailed and thorough as YNAB. What I’d like to see is online banking software add YNAB’s 4 rules and budgeting philosophy. That would make online banking a complete personal financial application.

  5. Caitlin says:

    I’ve tried the free spreadsheet and the free trial of YNAB Pro before.
    I actually really, really liked how YNAB Pro worked.

    Unfortunately (for me) like all budgeting software/spreadsheets, I just couldn’t get into the habit of entering stuff all the time. That’s a flaw with me, though, not the software.
    I’m going to wait for 3.0 to come out and try the free trial version of that. Hopefully I’ll be able to stick with it next time!

  6. matk54 says:

    Your article indicates that: If you purchase YNAB before YNAB 3.0 is released, you are upgraded to YNAB 3.0 for free. It’s unclear how much YNAB 3.0 will be selling for but you can lock in the price if you purchase YNAB 2.0.

    However, The YNAB link you provided indicated the upgrade would be $39.95. Can you clarify?

    • Jim says:

      If you go to the order page, it says that you will get a free upgrade if you purchase YNAB 2.0 after September 1st.

      • Nate says:

        To further clarify, if you purchased YNAB Pro sometime in the past (for $49.95) the upgrade will cost $39.95. However, if you purchase YNAB Pro now (since Sept 1) you will get a free upgrade to version 3. If you wait until 3 launches, it will cost $60. Cheapest route: buy Pro now and upgrade for free.

  7. Jesse Mecham says:

    @Jim, Jesse from YNAB here. Thanks so much for the thorough (extremely thorough!) review! I like how you emphasized the methodology throughout — that’s the key.

  8. emma says:

    I’m trying out the trial version now. I take it that it doesn’t have much of the functionality of the real version?

    Seems like you have to start your budget at the beginning of the month (we’re halfway through, it tells me I’m in the red, though I’m paid biweekly). There are no line items for school loans, credit cards, etc. I suppose you could rename some of the other categories you’re not using?

    Also feels weird that I can’t enter all my bank account info, or it assumes that’s what I’m spending for my budget (I have sinking funds & emergency funds, but it’s adding them all together as if that’s my salary).

    I have an excel spreadsheet that looks a lot like this, but with tabs for sinking funds and other account tracking info. Not really sure what this offers that you can’t do in excel fairly quickly…

    • Jim says:

      It has 100% of the functionality of the real version, it just expires after 7 days. I’ll defer the other questions to Nate.

      • Nate says:

        Great questions Emma. I’ll try to help…

        You should have all the functionality of the full version.

        You can start at any point during the month. Check out the QuickStart Guide for more help getting started (http://www.youneedabudget.com/support/quick-start-guide/).

        Yes, the categories can be created completely by you.

        This shouldn’t happen – sinking funds is one of the primary functionality pieces and part of the YNAB Methodology – Rule #3 “Save for a rainy day.”

        Good job for using Excel. Once you get started and get the hang of YNAB you won’t go back to Excel. The organization and functionality would take days to create in Excel – not worth the time.

        Contact support@youneedabudget.com with additional questions.

        Good luck!

  9. Safeway Sage says:

    I am a current user of Mint.com…

    Is there any value in moving to this other platform?

    S-S

  10. Nate says:

    Safeway Sage:
    Mint is a great tool. Here’s why I would switch – YNAB is a pure budgeting software, Mint is an expense tracker. What’s the difference? YNAB is designed to give you control by having you decide how the money will be spent “before” you spend it – Rule #1 and #2 (www.ynab.com). This appears simple, but will make a big difference over time in at least the following ways:
    -you will be able to save more, faster;
    -you will align your spending more with your values

    Give it a try. With Jim’s coupon, plus a coupon they already send out to buy w/in 48 hours, you can get it for 20% off.

    Best of luck.

  11. Mikey says:

    Nate,

    What is the coupon they send out to purchase within 48 hours? I see the coupon code that saves you 10% but would love to get the extra 10%?

    Is it something you get when you download the free trial version?

    Thanks.

    Mikey

  12. Jun says:

    I’ve been using YNAB since Feb 2009. Started living paycheck to paycheck, and now, I have 6 months worth of emergency fund! Previously used MS Money and Quicken, and the switch to YNAB wasn’t easy at first, because the philosophy is so different. But YNAB is definitely better for budgeting. Quicken/MsMoney only tracked where the money went at the end of the month; YNAB lets you decided at the beginning of the month how you spend your money.

  13. Jim says:

    YNAB 2 is somewhat confusing but it covers everything. I went to install ver 3 and they have changed the installer to Adobe’s POS (and i ain’t talkin point of sale) AIR installer.

    I CANNOT run ynab 3, Uxepected error crash. Why oh dear lord why did you choose this method of installation??

    Now I’m trying to find v2 cuz my key prob won’t work for v3 anyhow

  14. DCO says:

    I wouldn’t call this guy genuine by any means. YNAB is a perfect example of why you don’t put free content on the web. See, YNAB is a rip off of a FREE excel template I used (and still do) back in 2003. This guy ripped off the same format even. The only difference is a fancy appearance, not in excel format. Why pay $60 when you could of had it for free. Seriously it’s the same thing. You guys are fooled by Marketing, and he was trained by the biggest marketing scammer of all time, Ramit Sehti. How do you make a million dollars? Write a book called, “I will teach you to be rich”. Come on people wake up, it’s all about marketing. You didn’t have to pay anything, it was free all along.. the author clams that he used an excel template, why change? Looks? I work for a billion dollar revenue company and we still use excel templates for biding that mimics this accounting format. Wake up people, stop wasting your hard earned money on a Honda dressed as a Porsche.

    • John says:

      DCO, way to bring the tone of the comments down. If you want all of us to stop spending our money on a dressed up Honda, then why don’t you post the Excel template for us all to use. Or should we send you $20 for it?


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