I talked previously about how something had to give after our expensive 2016 and 2017 years. My husband has never budgeted, but I used to have complicated budgeting spreadsheets. Trying to mesh those two strategies resulted in us not really staying on top of our spending as life changed over the last year, so at the end of December, we set up YNAB.
One of the lessons I’ve learned so far about married finances is that the tools and systems that worked for each of you single are not necessarily the same tools and systems you should use when you are working together as a couple. It’s important to take into account both spouses’ preferences when you’re figuring things out.
My spouse and I have similar money values (living below our means, saving for retirement, index funds, high-interest debt is bad, etc.), but we have very different personalities. For us, I am very detail-oriented, worry about money, and check in on it regularly while he is very easy going, likes automatic payments and checks in on things on a less specific pattern. His form of budgeting has always been to carefully consider purchases and then buy things he values and plans to get good use out of. That means that we respect each other’s purchasing choices fairly well, which is good, considering how different our money personalities are!
Our previous systems all involved a bunch of manual reconciling into spreadsheets by me. Mint didn’t work for us because we didn’t want to associate say all of each of our Chase credit cards – we just wanted to partially share credit cards. PC was better in that it let us pick which specific accounts to associate from our Chase logins (as an example), but I didn’t like that you had to wait until transactions posted for them to appear in the app. Neither of these tools were very good with the various special assessments our condo association has been doing or the fact that no month is really normal for us, so I was left with a lot of spreadsheets and manual tracking. Last year, I had a spreadsheet that I used to manually track against our budget for the year, but there was no system for when we eventually started going vastly over the budget, other than every time the checking account balance could no longer pay the credit cards at the end of the month, we put in a few thousand more dollars. The good thing that came out of our method of budgeting last year though was that my husband learned that I’m not going to stop buying groceries just because we used up the grocery “budget”, so he was cool with us trying YNAB. Needless to say, our cash flow needed some improvement.
We have now used it for two full months and it really feels like the best tool we’ve tried so far! It marries all of the features we had liked about the previous systems and (for us) minimizes the cons of each of them.
We both have the app on our phones and iPads, which is a huge improvement of visibility versus my husband not wanting to damage my spreadsheets.
It has manual entry with the phone app, which even has geo-tagging for where you were when you logged the transaction. That means that both of us enter the transactions on the go at the time of purchase now and subsequent times you go back to a place, the entry is usually even easier since it populates the category and account info based on what you used on your last transaction at that merchant. This beats our previous system of me collecting all of the receipts and spending an hour or more manually entering them every weekend. It also beats Mint/PC not knowing about checks we wrote (we write about 25 per year) or getting the wrong amount at the gas station or being full of pending transactions that never post. New con of this: receipts now pile up in my wallet for months since I never check on them.
I like how the app has an “inbox” of tasks you should do, which covers approving scheduled transactions, approving imported transactions that it matched to ones you had manually entered, and categorizing transactions that you did not enter.
The app lets you pin categories to the top of the budget screen. I pinned most of the food categories so that I can easily see them since those are the main categories I spend on while out.
We learned that a lot of our cash flow this year is in the first half of the year. Hopefully with YNAB, we’ll feel less of a cash flow crunch at the beginning of 2019 since we will use our low spending months at the end of the year to set aside for the expensive things at the beginning of the next year. Why is more stuff due at the beginning of the year? Car insurance comes due in January and July, but we hadn’t been setting aside money to pay for the January car insurance, so we had to pay the full amount in January. Property taxes are paid in April and October, but we only started setting aside the money in January. Utilities are more expensive in the winter months. Condo and umbrella insurance is due in July. This year, we only planned on trips in March and July, aka they will be mostly paid for in the first half of the year. Our theater subscription renews in May. Our condo association did a small special assessment that is due in June.
I like that it’s really flexible and forces you to cover your spending you didn’t plan for, before rolling over to the next month. That’s a key piece that was missing from our previous system. It does roll over positive category balances to future months, which is great. It wants you to “roll with the punches” as you overspend, but so far, we have determined we would rather keep a $1,000 buffer in the checking account and then deal with the overspending at the end of the month unless there was something big since that way, we can both sit down together more easily to look at it instead of just one of us dealing with it throughout the month.
YNAB has significantly reduced my stress about where the money is coming from to pay the bills because now I know that we will be ready to pay the county the over $2,000 for property taxes next month and all of the credit card balances are covered by the checking account because it’s all accounted for in YNAB. I do really hope it is a long time before we have a $10,000 credit card payment again like we did two months in 2016 and one month in 2017, but if we do, it’ll be accounted for with far less stress.
To me, a budget is less about being restrictive in how you spend your money and more about managing cash flow. Our end of month checking account balance in 2017 averaged $5,659.12 and now it’s almost $20,000. No wonder I am a lot less stressed about paying the property taxes this year!
Import and automation
Even though YNAB suggests you manually enter your transactions, the online version which we are using automatically imports transactions from the banks you connect to it, which means that it if you forgot to enter a transaction, it brings it in for you. It also means that it automatically clears our manually entered transactions when it finds them through the bank, which is awesome. That used to take me so much time logging into each bank to check on the transactions!
Scheduled transactions, even recurring ones, are awesome. My manual system didn’t have recurring transactions, though it did have scheduled transactions. I also like that YNAB makes you “approve” a scheduled transaction when its day comes, reminding you that you are still paying for this thing. We don’t have a ton of recurring transactions, but it is useful.
Budget categories (and groups!)
We both love that you can name category groups and categories however you want. Mint, for example, doesn’t let you make new category groups, just categories and you can’t make new categories from the app. PC doesn’t have category groups, just categories. I really like to be able to see all housing items together, for example. We each have our own category group for personal spending and then we get to make our own categories in there as we prefer.
I like how for each budget category, you can set a separate goal. This is great because we made a budget category for each specific thing. So for example, in our “Housing” budget category group, we have the mortgage, condo fees, cell phones, and internet with monthly funding goals. The property taxes have a target balance date goal, so right now we are setting aside 1/8 of the bill each month; in May, we will set aside 1/12 of the bill; in November, we will estimate an increase for the 2019 year. For the utilities, we budgeted for the estimated winter bills and then in May, we will start setting aside an average for the year. For the condo insurance, we are setting aside 1/7 of the bill until July and then after that, we will set aside 1/12 each month. This sounds somewhat complicated describing it, but YNAB makes it really simple and I don’t have to do the constant different fidgeting with formulas that I did before. Plus, now I can see all of these things in the app! This all is especially awesome because I find that no month is really “normal”. I also like that all of these balances just build up until we actually need them and don’t require much effort to work towards.
If you have goals set up for your budget categories or scheduled transactions, then when you’re budgeting for the next month, you can select a number of budget categories and use the “Quick budget” functionality to cover those amounts, which makes having many small categories really easy to budget for.
My husband thought I was silly to suggest budgeting for driver’s licenses, trusted traveler programs, passports, etc. until we added up how much we should set aside for those and it added up to about $20/month for both of us combined, which surprised him.
Credit cards and accounts
I really like how it handles credit cards. It seems to confuse people on the subreddit, but it makes SO MUCH sense to me and is really how I handle them in my head. For much of 2017, I manually paid all of the credit cards on the 1st of every month to help me feel comfortable with the balance in the checking account, which was an annoying time sink. Now, I’m happy to let them go on auto pay again and not worry about it. (Though I did pay one in full recently when we got the statement and the card hadn’t had any activity in most of a month and its under $5 balance was annoying me.) The side effect of this is that our checking account now has a ridiculous amount of money in it (almost $20,000), but it is all accounted for, so I’m happy with that. Basically, they say that if you had $100 allocated for Groceries and you spent $50 on Groceries on a credit card, then they move the $50 allocation from Groceries to that credit card.
I like how easy it is to manually create an account for something, like the gift card balances on each of our Amazon accounts.
I like that YNAB mostly shows you the “working balance” for an account, so for example, your checking account with all of your uncleared checks already subtracted from it. PC wasn’t very good at that, which would bug me when *I* knew I had spent money, but the app I was using didn’t know about it yet!
The slightly weird thing to me is that they want you to assign jobs to all of your dollars that YNAB knows about, including to any savings accounts. We haven’t had a lot of extra monthly cash flow lately with only one income, but we do have a target category balance goal for our primary savings account to get up to three months expenses in our joint savings account. I also have a budget category for “Vanguard taxable” that we will soon assign some dollars to.
I like the online spending reports. They are generally sufficient for my interests. You can see a pie chart or a stacked bar chart of your spending for any date period you specify and if you pick the stacked bar chart, it gives you one for each month. You can also exclude categories from it. (I’ve excluded the mortgage payment, for example.) You can also get a pie chart or stacked bar chart for a category group too. The phone and iPad apps have “Age of Money” and “Net Worth” reports, which I care less about than the spending report, since I really prefer to only check on “Net Worth” on the last day of the month.
The time cost feels way lower than our previous system. 30-60 seconds to enter a transaction at the source, especially with 3D Touch to get into the transaction screen of the app. I spend a couple minutes most mornings checking the “inbox” of transactions to approve and leaving my husband to categorize his. Now that we have things mostly set up, our end of February “budgeting meeting” took about 30 minutes to consider our February over spending and set up a budget for March. I try really hard to not tinker with the system other than that meeting. Every couple weeks or so, I log onto each bank and make sure that the balance on each account is the same as what YNAB knows about (which it usually is) and click “reconcile”.
We both like that they are actively working on the software, which is not something that we have the time for with my homegrown software.
As always, this post is not sponsored – this is simply my review of how we’ve been using this system.