Personal Budget Software YNAB 3 Review

By Andy Tenton, on March 25, 2010

It’s been a while since we’ve talked about YNAB (You Need A Budget) here at Moolanomy. Personally, I think YNAB is one of the better personal budgeting software available today due to its zero-based budgeting system. If you’re looking for a good budgeting software, or looking to improve on what you’re already using, you may want to check out YNAB. They’ve recently released a new product, YNAB 3, and I’d like to highlight some of the new and improved features.

What is YNAB?

YNAB is a proactive, forward-looking personal budgeting software. There are a lot of budgeting solutions on the market, but most of them are really expense tracking systems, making them reactive. On the other hand, YNAB is a zero-based envelope budgeting system — meaning you allocate all available funds before you spend them. This helps you decide ahead of time how you will spend your money, instead of wondering where all your money was spent after the fact.

The software allows you to easily import data from bank and credit card from nearly every major financial institution. YNAB imports your transactions into a “Register” where you track and categorize your expenses.

And here are a few highlights:

• Confidentiality – Because YNAB is a desktop application, you don’t have to enter account numbers, PIN numbers or personal information into the system. This is a plus if you’re leery of using online expense tracking software.
• Mobil Access – Although not yet ready, YNAB’s development team is working on the launch of an iPhone app, which would make your budget accessible from anywhere. You can visit YNAB for the iPhone for status updates on the development of the app.
• Works on Windows, Mac, and Linux — Previous versions of YNAB were only PC compatible, but with the recent launch of YNAB 3, it is now compatible with Windows, Mac, and Linux.
• Easy to use – YNAB’s interface is simple and easy to use. They’ve eliminated bells and whistles, leaving you with the features and functions your really need for effective cash flow management.

In short, YNAB is not trying to be everything to everyone — they are just trying to be really good with the budget. By focusing on this on aspect of financial management, they have created a simple and effective system — and “the best money management system on the planet” is the claim on their website.

4 Rules of Cash Flow Management

Another important aspect of YNAB is their principles of effective money management:

1. Stop Living Paycheck to Paycheck — YNAB encourages users to build a buffer fund, gradually saving to the point where they have one month of living expenses put away. The software is designed around the idea of living a month behind your money. This eliminates a significant amount of stress around timing bills and worrying about account balances. It also eliminates the budgeting problem for people living on a variable income.
2. Give Every Dollar A Job — Every dollar that comes into your hands is assigned a job — given a responsibility. Even dollars that are going to be saved will be budgeted into the savings categories until the available sum for the month is equal to zero. This brings tremendous awareness and helps align your spending with your values.
3. Save for a Rainy Day — YNAB encourages the building of an emergency fund. And also putting money aside gradually in anticipation of large expenses like car repairs, insurance premiums, and tax bills.
4. Roll With the Punches — You will never have a perfect month. There will always be overspending in some category, frustration with some aspect of your financial system. YNAB encourages you to “roll with the punches,” maintain your commitment to budgeting — and the software helps keep you honest, smoothing out the bumps month to month.

In a sort of cyclical relationship, using the software will help you live by the principles (i.e., build an emergency fund more quickly by helping you identify and patch financial leaks) and living by the principles will make the software more effective.

In addition to all this, YNAB offers various forms of support through their website. Visit their support page for a complete list of available resources. Below are just a few examples of what’s available to help you get started and help you work out any issues that arise along the way:

• YNAB Quick Start Guide – One page of essential instructions to help you get started.
• YNAB Online Tutorials - An archive of video tutorials with explanations for all of the functionality of the software
• YNAB Coaching - Free live coaching via a webinar.
• YNAB Forums - An active and knowledgeable community willing to answer questions for other users.
• YNAB University – 10 lessons about budgeting.

You can learn more about YNAB 3, at www.youneedabudget.com. They also offer a fully-functional seven-day trial, so you can try it before you buy it. If the 7-day trial is not enough, they also offer a 30-day money back guarantee if you’re not completely satisfied with the software.

Recommended articles:

• How to Budget in Less than 20 Minutes a Week
• Budget Once, Spend (or Save) Twice!
• How To Budget And Track Spending For Your Vacation
• How to Have a No-Spend Weekend
• Is Your Budget Doing Its Job?
• BudgetPulse, Online Budgeting And Financial Management Software
• Never Say We Can’t Afford It

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Andy Tenton is a freelance writer with strong interest in personal finance. He recently started his own blog, Money Destiny.

All posts by Andy Tenton

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