YNAB (You Need A Budget) Review, Financial Budgeting Software

Have you checked out YNAB yet? We review this desktop financial budgeting software here.

Do you need a budget? These days, we could all use one, I think. This was what Jesse Mecham had in mind when he developed a great budgeting tool some years ago. Today, his product has become a popular contender in the personal finance software market.

Mecham married his wife Julie in 2003. As full-time students with part-time incomes, the duo recognized that they would need to stay on top of their finances. Mecham developed an Excel spreadsheet to help them with this task. Within a few years, that Excel spreadsheet that was designed to help the Mechams with their finances evolved into YNAB (You Need a Budget), a powerful piece of financial budgeting software that is available to everyone.

YNAB (You Need A Budget) Review

YNAB is based upon four simple rules:

1. Stop Living Paycheck to Paycheck: Mecham acknowledges that it takes most YNAB devotees between four and six months to get to the point where the money they make in one month is the money they live on the next month, as opposed to what many of us do now: desperately wishing for payday to arrive so that we can pay our bills.

2. Give Every Dollar a Job: Most people set up a budget with major expenses (housing, utilities, food, transportation) deducted from their income, and whatever is left over is what goes to everything else — dining out, clothes, entertainment, savings, etc. The goal when setting up a budget in YNAB is to have nothing leftover. Every penny should be allocated to one category or another.

3. Prepare for Rain: By budgeting some money every month toward those infrequent expenditures like property taxes, insurance premiums, etc., the arrival of the rainy day is less traumatic.

4. Roll with the Punches: You will occasionally overspend in a category. Rather than declaring your budget a failure, understand that these things happen and get a handle on your spending before it gets out of control.

The original YNAB Basic is Excel-based, and has since been replaced by YNAB 3. You can check out the the YNAB website for more information. YNAB 3 is an enhanced version that works on both Windows and the Mac, and is available in either soft or hard copy. You can also check out the YNAB store, where you can find other extras, including an ebook called “The YNAB Way”, which explains the budgeting and debt management methodology built into the product.

So what can you expect from YNAB 3? Several well thought out features. YNAB 3 allows splitting of transactions into different expense categories, import of financial data from banks, and other features that you won’t see in the Basic version. The various parts of YNAB itself (Ledger, Register, etc.) all appear to be tightly integrated, and quite a bit of automation has been built into the system. The website promises that the budgeting software you get is very user friendly.

Thoughts on YNAB.com: In addition to offering the software, YNAB.com is also a great destination for personal finance enthusiasts; it’s a site that offers a wealth of information for YNAB users. Here you’ll find online tutorials, user forums, FAQ and Wiki sections, and even free online coaching classes.

Guarantee and Payment Options: What I found particularly impressive about YNAB was the 30-day money back guarantee, and the willingness of Mechem to make other payment arrangements with those who do not have a credit or debit card with which to make the online purchase. This is, in my mind, indicative of someone who truly believes in the product they are offering. Also impressive is Mechem’s claim that the average YNAB user pays off $500 in debt and saves $235 in the first 31 days of use.

Before I looked into it, I assumed that YNAB was just another system like Quicken, which I bought last year, or the now defunct MS Money. Having done a little homework, however, I’ve got to admit that I’ve got a bit of budget-envy, and am planning to make the leap to YNAB.

If you are interested in ordering YNAB, you can get more details here.