Before I gave up work to look after the kids I had tried to keep to a budget using Microsoft Money.
But in all honesty I failed miserably.
I wouldn't think twice about spending the money in my bank account.
What did it matter? I had access to an overdraft facility if I overspent.
Back then, my wife and I held separate bank accounts as well as a joint account.
Our salaries went into our own accounts and we pooled some money from them into the joint account to cover bills.
Anything left over was fair game.
A Different Mindset
It was clear as soon as I gave up work that something drastic needed to happen.
With only one wage coming in for the foreseeable future, we needed to be much smarter with money.
Otherwise we'd be in trouble pretty quickly.
We had no idea how much we were spending on anything and I wanted to make money simpler to keep a handle on.
I closed my bank account and the joint account and we made my wife's bank account into a joint one.
That's where her salary was paid into so it made sense to keep that one and make it joint.
I decided to do some research on budgeting software to help us out.
Many of them were geared solely towards the US market and offered little value to us.
And then I discovered You Need A Budget or YNAB for short.
Taking Control With You Need A Budget
I love working with numbers. It was what I did in my day job.
When I started using YNAB, it felt completely alien though.
Accounting for everything and I mean absolutely everything just wasn't in my nature.
Even the small change in my pocket was up for scrutiny.
But it was exactly what we needed. We were in dire need of You Need A Budget.
I remember when I first sat down and worked out all the budget categories we needed to cover it seemed overwhelming.
YNAB makes it easy to fund those and see if you have anything left over to save or put to another use.
When you receive your salary each month, you fund each category until you've given all of your money a job.
You enter transactions against each category and you can then see how much money you have left to spend.
There's a mobile app so there's no excuse not to check if you have enough money set aside before you make a purchase.
And if you do go over budget in a particular category, you can move money from another category to cover it.
You Need A Budget really does keep you on the right side of the bank manager.
When we first started using it, we had credit card debts as well as a couple of personal loans.
Since using it, we've managed to pay those off and save towards the things we want as well as covering the things we need to.
You Need A Budget Rules
When you use Rule One and Give Every Dollar a Job, life doesn't simply claim your money. Instead, you'll decide on priorities first, then assign dollars (only the ones you have right now!) to those priorities until each dollar has a job. Because your money is going towards your highest priorities, your spending has to clear a higher bar.
Rule Two, Embrace Your True Expenses, combines the power of thinking ahead with taking action here and now. Whether expenses happen like clockwork (rent), feel impossible to predict (car repairs), or are just far-off dreams (cash for a wedding!), they are all part of your true expenses. The key is to prepare a bit at a time by treating them all like monthly expenses.
Rule Three means you Roll with the Punches, whatever comes your way. Your budget is a plan – but plans change, and your budget should too. Spend more than you expected on dinner out with friends? No need for stress. Just take some money from clothing. You haven't failed at budgeting, you've adapted with the best of them, and your money is still lined up with your priorities.
Rule Four reminds you to Age Your Money. When you increase the time between receiving your money and spending it, you're more secure, more flexible. You're breathing easier. If you're implementing the first three rules, you'll be aging your money before you know it. When your money is about 30 days old, you can officially say goodbye to the paycheck-to-paycheck cycle.
Then It Went Online And I Lost Faith
I was excited to hear that YNAB would be going online.
It always felt like our budget was stuck on my PC even though there's a mobile app.
But You Need A Budget, the online version, was a departure from the desktop version.
They said it wasn't ready for existing users because it didn't have the same functionality as the desktop version.
When I did get my hands on it, I discovered there were more reasons why existing users might not like it.
- changes to the four rules behind YNAB;
- direct import only available to US customers;
- loss of functionality such as overdraft (in the European sense) and work expenses workflow;
- no manual import available;
- no reporting facilities.
Their fanatical community were divided and many were up in arms about the direction things were going in.
All the negativity surrounding the missing features made me wonder if I had made the right decision to sign up.
So I decided to find out what the alternatives are and whether they could offer a better experience to me.
Alternatives That Didn't Work For Me
Mint is aimed at US customers only but I signed up to take a look anyway.
I don't know what all the fuss is about to be honest. The Mint dashboard looks chaotic to me and not user-friendly.
I had a play around with it to see if it would be usable by anyone outside the US and came to the conclusion it wasn't.
If they bring it to the UK at any point, maybe I'll take another look then.
Everypocket looks and feels a lot like You Need A Budget.
It almost feels like the desktop version of YNAB and includes some of the features which were lost from that version.
That includes the work expenses workflow which many people felt aggrieved about when it was removed.
At the moment EveryPocket is in beta and it's free.
I've given it a go and I like how close to YNAB 4 it feels but for the life of me I couldn't figure out how to keep track of credit cards.
EveryPocket is one to watch for the future.
Mvelopes has a retro look about it (although not in a good way) and it takes ages to load.
I had thought it would be the perfect alternative to You Need A Budget but I couldn't get it to accept my bank account information.
The bank was listed but Mvelopes wasn't asking the right information.
I experimented with using it without directly linking my bank account but gave up.
A bit like Mint, the user interface isn't great and it feels a bit cumbersome to get around and actually manage your money.
I assumed it wasn't only geared to the US but the "checking" account gives it away I guess.
Mvelopes is one I won't be taking another look at.
I actually signed up for Buxfer after the initial uproar about You Need A Budget going online.
It's a great app and allows you to set up budgets, forecast into the future and it supports direct importing from banks.
Unlike Mvelopes, it does work with my bank here in the UK.
I was all set up to use it as my personal finance app of choice but I had become so accustomed to YNAB and how easy it is make fine adjustments to your budget.
Buxfer does budgeting well but it's not quite an envelope budgeting system.
You can rollover budgets to the following month but you can't move money around in budgets the way I want to.
So I cancelled my account and continued looking elsewhere.
Toshl looks like a good alternative to You Need A Budget.
When I was first looking for alternatives, Toshl seemed perfect apart from there was no import available for bank statements.
That was the only thing at the time that stopped me moving over at the time. This has subsequently been rectified and you can now import statements.
Similar to Buxfer though, there's no easy way to move money around in your budgets should you overspend.
I got so reliant on that feature of YNAB, I couldn't do without it now.
Goodbudget is another one that looks a bit retro and something like my granny might use.
And it is a strict envelope budgeting system.
You want to update anything, it'll get recorded in your transaction history.
If your budget isn't the same every month then tough, because every month is the same in Goodbudget.
Some people like rigid control to keep them on track.
Me, I found Goodbudget to be a little too restrictive to be useful.
Finally, one just for the UK! Money Dashboard is touted as a personal financial assistant.
It allows you to connect all of your bank accounts to directly import your transactions so you can see them all in one place.
You can categorise transactions and assign goals for saving money or paying off your debt.
There's also a rudimentary budgeting system which will be enough for many people.
You can keep track of your spending against goals that you set up for various categories of spending.
I want to be able to adjust budget goals on the fly though each month and that is something you can't do with Money Dashboard.
I've tried them both and decided I no longer wanted to be restricted to software on my computer.
That's not to say that they have some decent features however.
They both have budgeting options but like many others before them, they're quite rigid in how they work.
I want to be able to budget for absolutely everything I do and have different totals each month if I need to.
I couldn't see how I could achieve that easily with either Moneydance or Moneywiz.
You Need A Budget Won The Day
If you want to know exactly to the penny where your money's going then You Need A Budget is perfect for you.
I love the fact you can move money between budget categories so easily.
It makes me think before I purchase things because I need to check if I have enough in the budget to pay for it.
Assuming I do, great but if not, then it's a toss up between whether I make up enough money from other categories.
If I can't then I don't buy it unless it's essentials like groceries.
Whatever app or piece of software I looked at, I kept coming up to one barrier.
The problem is I'm so used to how simple and effective YNAB is that none of the others came close to being able to do what I needed.
I know there's been a lot of negativity from long standing YNAB community members to do with the online offering.
It was a change in direction for You Need A Budget and not everyone likes change, me included.
But I've embraced it and now they've introduced manual statement imports, I'm going to stick with what I know.
How about you? Do you use budgeting to keep on top of your finances?
Do you use any of the software I've mentioned or something else?
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