Money?
There are so many things in life more important than that: friends, health, family.
Of course you're right.
I can assure you, I'd also prefer to go catch butterflies in the park instead of devoting myself to that filthy lucre.
If you've read my first post, you know that there were certain circumstances that led me to the decision to dive into this topic a bit deeper. Or rather: I had to do it. But even with a financially sound background, it is totally worth having a look at the money.
My personal financial planning has been like this so far:
I tried to make ends meet with my salary from one to the next payout. Although I have always been earning quite a decent amount of money, that was not really working well. Actually it's logical, because no month is like the one before. Some payments are due monthly, some annually, some are even uncertain or can simply not be planned in advance.
Overview: zero. Frustration level: one hundred!
Hence, a practicable solution had to be found. Trying countless options to record and control my spending, I finally found
YNAB does not simply list all past payments (like most of the other tools), it helps to plan and budget all future expenses. Expenses you are not even aware of yet, are also recorded.
But first things first: How does YNAB work?
The basics
YNAB works on the basis of four rules you should know:
1) Assign a task to every Euro you have
Every single Dollar or Euro coming in, may it be salary or a tax refund, is entered into a certain category. The revenue is budgeted completely, till budget available is at zero. The amount in the particular categories should now be sufficient (maybe there's even a surplus!) till the next payment that is incoming. Annual payments, for which money is saved monthly, are also taken into account in the above-mentioned categories. Setting this up already turned out to be enlightening. You'll be surprised how many payments have to be made throughout the year. That was the ideal opportunity to do a spring cleaning. Things that weren't necessary were dismissed rigorously - even before the contracts could be renewed. At that point, YNAB had already paid off for me.
2) plan for hard times
We all know that: at the moment we least need it, the TV goes on strike, the ivory backscratcher breaks into pieces, the Yacht needs to be painted. YNAB wants us to be prepared for situations like these and have savings.
3) be flexible
Here's where YNAB is very realistic. The hundred bucks you budgeted for petrol quickly become twice as much because you visited your mother-in-law more often than planned actually. That reminds us of point 1: We have already budgeted every single Euro. What shall we do now? We are permitted to make use of the money that was assigned to a different category. We raise the budget for petrol. As a consequence, we have to lower the budget in another category. Money for partying? This month, you will have to be a bit more frugal, sorry.
4) build up a buffer for one month
This is more of a goal than a rule. Assuming you adhere to the first three points, this goal is achieved faster than you might think. YNAB encourages you to keep within budget. As opposed to all the other tools I have tested so far, you never feel as if you had to do without anything. You're feeling comfy with YNAB.
The Software
Originally, YNAB was developed for Windows and Mac. Since late 2015, YNAB has only been marketed as cloud-based web version. I can't quite understand the resulting 'religious wars' on which one is the best version. I've been using the new web-based YNAB since the very first beginning and am very satisfied with it. I recommend that you begin with the new version, as the desktop versions will only be supported until the end of this year. The costs amount to 5$ per month.
How do you know something is not in the budget anymore? Remember: the money from the "partying category" isn't there anymore.
As a special highlight, there's an app to record the daily expenses - for iOS and Android. Entering the data is particularly convenient here, since the recipients of payments (say, a certain store) that have already been entered once are recognized immediately by GSM localization. Payments can be entered in the blink of an eye.
The web-based version and the app are synchronized permanently.
Oops, you've been to the supermarket quite often...
YNAB helps me have a relaxing sleep.
- There aren't any unexpected payments ("But it's only April, shouldn't the car tax be due in May?")
- By regular accruals, I can easily settle non-monthly payments (be honest, do you think of your insurance due in November in March?)
- I can easily collect reserves for one-time payments (and it's an amazing feeling to be able to pay for your new bike without having to worry about your money!)
- it doesn't matter, actually, where your money is, on your bank account or on the kitchen table.
When you're stuck
YNAB offers extensive assistance, may it be during setup or running the application. There are free webinars, countless help documents, and a very supportive community. So far, any question, no matter how exotic, has been answered.
