If you’ve been budgeting for long enough, you may have begun to wonder about the particulars of Rule Four, Age Your Money. The idea is that you have money before you need money. For example, if your money is 30 days old, it’s been sitting in your bank for 30 days because you haven’t, yet, had a reason to spend it.
And 30 days is an excellent age of money. It means that you’re a month ahead (a.k.a., living on last month’s income), and it’s an eviable position to be in. If a bill arrives, no problem. Pay it! If an emergency pops up? No worries, just hit your ‘Car Repair’ or ‘Medical Deductibles’ categories. You. Are. Covered.
But, once you’ve hit 30 days, should you continue to age your cash? Let’s consider that.How Old Is Old Enough?
Some of us are inclined to age our money as much as possible, especially if we’ve worked hard to overcome financial struggles in order to, finally, build some breathing room into our budget. If you’ve ever worried about how to keep the lights on and put dinner on the table, then there’s nothing quite like the feeling of extra dollars in the bank, right?
But, how old is old enough—put another way, how secure is secure enough? Well, it depends on your income and tolerance for risk:How Do You Get Paid?
On one end of the spectrum, there are people who count on the steady drip of equally-sized, directly-deposited paychecks. On the other...
One of the best parts of my job as a teacher at YNAB is the interaction I get with the participants in our free, online budgeting workshops. You all ask some great questions! And, lately, one question in particular has come up again, and again: “Should I have an emergency fund category?”
I remember the days, back before I used YNAB, when I considered a car repair to be an emergency. A veterinary bill was an emergency. A lot of things that happened during the ordinary and usual course of life, if they happened more irregularly than my monthly bills? So many of them were emergencies.
I didn’t realize it then, but these were actually just true expenses—the things that we know are coming, if only we think ahead. Which is why, the more I budgeted for these things, the fewer “emergencies” I had.
So, with my newfound preparedness, did I really even need an emergency fund? Does anyone need an emergency fund?What’s Right for You?
If you’re on the fence about whether or not to add an ‘Emergency Fund’ category to your budget, here are a few questions you can ask yourself to figure it out:
How many times have you reached payday and thought to yourself, “I can’t wait to tuck some of this money into savings!”
Yeah, me, either. Well, not until I started budgeting in YNAB, anyway. Still, no matter how much we love budgeting, many of us are still more smitten with spending than we’d like to admit. (Which is no surprise, when you consider the estimated 10,000 branded messages we see each day—we’re primed to buy-buy-buy!)
But there’s something much more satisfying than spending, frivolously, if you’re willing to stop and recalibrate …Spend Less, Have More
Consider, for a moment, how you truly feel—deep down—once you’ve got the new gadget, paid for yet another restaurant tab or ordered the fancy new lamp. At first, you feel great. Euphoric, even. But, if you’re spending mindlessly, that elation is followed by a guilt hangover.
When the feeling of “I really shouldn’t have” washes over you, a lot of us ignore it, but that voice in your head is like a financial canary in the coal mine! It’s begging you, on behalf of your finances, to leave your card in your wallet (or to at least consider the purchase more carefully).
That voice knows something that you may or may not be admitting to your conscious self: every dollar that you spend is one less dollar that have, which means fewer choices. In other words, you’re trading freedom for, well, stuff—stuff that you probably won’t even remember in a month.The Ultimate Spending Detox
Instead of frittering...
When you start your very first budget in YNAB, we prompt you to “Give Every Dollar a Job,” and it’s Rule One of our method for good reason: If you’re looking to heal your broken finances and/or achieve some big money goals, it’s a tried and true formula for success—no matter how broken or big.
And, if you feel like your paychecks are forever getting away from you, and that you’re always coming up short, then bravo! Starting a budget is a superb idea. But the magic of budgeting? The glue that makes it stick? The magnet that attracts your desired outcome? I’m talking about something that’s far more powerful than budgeting software (even if it’s top-notch software) …The Magic Is in Your Goals!
Your goals are your guide—they help you establish your budget and stay on track. And the cool part? Once you’re working your plan, your budget helps you achieve your goals. It’s a win-win-win (your goals, your budget and you). Insert a pop of confetti, here.
And your goals are strictly your business. Do you want to be debt-free? Or buy a house? Start an alpaca farm? Eat only raw, free-range, gold-dusted takeout? Your call! The most important thing about goals is that you have them.
Think of a goal or two. Now, imagine accomplishing them. Mmmm. Exhale. That’s a good vision, right?Make Your Goals Work for You
So, back to Rule One. When we ask you to Give Every Dollar A Job, you might get the teensiest...
To truly understand how credit cards work in YNAB, let’s start at the beginning: 15th century Italy (I just like to be thorough).
In case you weren’t lucky enough to study accounting in school, like I did, in 1494, Luca Pacioli published an encyclopedia of math that included a description of double-entry bookkeeping—a system developed by Venetian merchants to track their business activities.
The double-entry method forces you to balance your books. Or, in other words, assets must always equal debt plus equity. This revolutionized the way people did business by highlighting what sold, what didn’t sell, and bringing attention to where they could make better decisions for a more profitable business.Flash-Forward to Now
YNAB’s treatment of credit cards is based on the concept of double-entry. To help you understand how it works, let’s take a closer look at that equation:
Assets = Debt + Equity
We break down “Equity” just a little bit further, into income minus expenses, and it looks like this:
Assets = Debt + Income – ExpensesWhat This Means in Dollars
So, if I have $100 in income, no debt, and no expenses, then I have $100 in assets. It looks like this:
Assets = Debt + Income – Expenses
$100 = $0 + $100 – $0
or, $100 = $100
If I spend $50, then my assets go down by $50, like this:
Assets = Debt + Income – Expenses
$50 = $0 + $100 – $50
or, $50 = $50
If I borrow $50...
Student loans are a fact of life for many (most?) college grads these days. I wish I would have understood the consequences of taking out so many loans before I used student loans to help pay for Spring Break in Vegas. But it was just so easy…
Fast forward to graduation. And student loans switch from easy money to, quite possibly, one of your biggest expenses. It’s tempting to just try very hard not to think about it, and just make your payments like we eat our vegetables, slowly, begrudgingly and with sufficient complaining.
But keeping your head in the sand can lead to some costly mistakes during repayment. And let’s face it, at this point, the last thing you need right now is more costs!
So pay early and often and avoid the following (common) mistakes:Not Paying At All
I get it. Life happens, nobody is perfect. You might still be looking for a job, or get surprised by some unexpected expenses. Or maybe you just didn’t realize your grace period was over.
Whatever the reason, not paying your student loan bill can have serious consequences. Your credit score can suffer, and if your federal loans go into default, the government could decide to garnish your wages or withhold any tax refunds.
If you are having difficulties paying your loans, contact your lender immediately and work out a different payment plan. Whatever you do, don’t let your payments lapse altogether.Not Using Auto-Pay
This is an easy one. Often times, signing up for your lenders’ Auto-Pay...
Every time I explain the credit card float to people, I feel like I’m breaking bad news to them. It’s not fun, but it is an important concept to understand, so I’m going to take some time here and explain it.
When you charge on a credit card, you’re given a grace period to pay things off. It’s usually around 25 days. As long as you pay it in full within that time frame, you are not charged interest. Many people take advantage of this. They charge this month, then pay it off next month.
First, let’s be clear: That’s debt. It’s debt from the second you charge on the card.
It’s like a library book. If I go to the library and borrow a book, they’ll say, “No problem, take the book! Just make sure you get it back to us in two weeks.” I have to return it. It’s not my book. Even if I plan to bring it back tomorrow, that doesn’t make it my book today. I may have possession, but that doesn’t give me ownership: there’s a difference.
Keep that in mind. Now, let’s step back for a second and talk about what YNAB recommends when it comes to cash flow.
We teach people to live on the money they made last month, so they’re a month ahead. (Rule Four) That’s the goal. That’s nirvana. It works like this: Money comes in, then you budget those dollars. Then you spend, letting the budget guide your spending decisions.
People who are...
If you’re serious about jumping into the sweet, soothing waters of financial literacy (and peace), the best thing to do is orient yourself. (It’s hard to make an effective entry when you don’t know where you are in relationship to the pool, right?) And, you’re in luck, this quiz could be your lifesaver …
Answer seven simple questions to find out your—completely scientific*—budgeting personality type, and we’ll give you some tips to help you manage your finances, swimmingly.
When you’ve finished the quiz, share your result on the social web with #YNABtype. We can’t wait to see what you get.
* Not really, but this quiz is completely fun.
The post Can a Simple Quiz Predict Your Money Management Style? appeared first on YNAB.
You might think that the entire point of budgeting is restriction. And, there’s a little truth in that. See, it helps (a lot) if you spend less than you earn. But the bigger truth—the one you don’t want to miss out on—is how good life gets when you’re not worried about how to pay your bills.
Think of a budget as a lifestyle design blueprint. It’s a working plan for taking your life from where you are now, to where you really want to be: Zero debt. Home ownership. Retirement plans. Travel. More money for eating out. Much less frustration and anxiety. Pick a goal that speaks to you and budget your way to success!
Here are five simple steps to get you going:1 – Know How Money Much You Have.
This one’s easy. What’s your bank balance right now? If you have more than one checking account, or a mattress stuffed full of cash (lucky you!), add those in, too. This is not a projection—or how much you think you’ll make—this is literally just the amount of money you have right now. Cool? (It’s probably a good idea to write this down.)2 – Know Your Financial Obligations.
Now that you know how much money you have, ask yourself, “What do I need to pay for, before I get paid again?”
It’s such a straightforward question that it feels, almost, too simple to be helpful, right? And it is simple: what do you need to spend your money on? Maybe your electric bill is...
In case you hadn’t heard, April is Financial Literacy Month in the United States (and it has been for fourteen years!). In 2004, the Senate unanimously agreed—without amendment—that it was high-time we all learned a little more about managing our money. And if you’re in Canada, don’t think you’re off the hook, November’s coming for you.
But regardless of the ‘when’ I think we can all agree on the ‘why’: no matter where you live, smart money habits are life-changers, and knowledge is power.Master Your Money & Win at Life
So, what exactly does it mean to be financially literate? It means:
And when you apply that knowledge? Your stress levels plummet, and doors that you never even noticed begin to open. The real value of managing your money well isn’t the things you can buy, it’s the choices you can make. It’s freedom.A Salute to Financial Literacy
This month, to help spread the word, we’re flooding the blog with some of our favorite content that covers the basics of financial literacy—everything from how to budget and spend, to paying off debt, to saving and investing for the future. Join us?
Here’s to lessons learned and taking control of your cash! And, if you’re feeling all revved up and impatient,...
“Over the past six years, we’ve moved from Los Angeles to Washington, D.C., to Minnesota to New York … that leaves residual financial heartburn if you’re not using a system,” said Eric. And, unfortunately, they hadn’t been.
In 2016—when they moved with their four kids to upstate New York—he and his wife, Melissa, had reached a tipping point. They were excited about Eric’s new position as an engineer for a biopharmaceutical company, but the up-front costs of the move magnified their financial weak spots. Eric said, “In a couple months, we paid over $10,000 in moving expenses, but had no idea how long the reimbursements would take. This made our credit card balances that much higher.”
It wasn’t just the moving expenses, either. Eric and Melissa were strapped by credit card debt, back taxes and overdue medical bills, not to mention the cost of running their household.Not Budgeting Wasn’t Working
With all of the changes brought on by their move, by May 2016, Eric’s head was spinning. He said, “I felt we were drowning financially. We’d made the trek across the country, paid tens of thousands out, had paychecks, bonuses and reimbursements coming in … and we had absolutely no handle on what was coming and going. I’m the sole provider, and there was a huge weight on my shoulders.”
It was around that time that Eric and Melissa decided to make a list of their outstanding bills and anticipated living expenses for their new city. Eric said, “It felt like a hopeless...
Home-cooked meals—yes, even the ones cooked by you—can be delicious and easy, in addition to being cost-effective. And here are ten-ish recipes and meal ideas from actual YNABers as proof. (I’ve included links to similar recipes for each, as a reference.)1. Toad-in-a-Hole
Although there’s some debate about what, exactly, to call this meal (eggs in a nest, perhaps?), the prep is simple: make a hole in the center of a slice of bread—you could use a cup to stamp out the hole, or take a stab at it with a knife. Then, butter both sides before placing it in a hot frying pan. Crack an egg into the hole. Cook, then flip, then cook. Toad-in-a-nest is served!2. Egg Bake
For a portable breakfast, whisk up some eggs and whatever cooked meat, vegetables and cheese that you like. Then pour the mixture into muffin tins or a baking pan to cook. Egg bakes are healthy, portable and easy to prepare ahead of time.3. Naked Burritos
If a burrito were to hurl itself onto your plate so fast that the tortilla wrapper flew clean off, this is what you’d get: a serving of meat, spices, vegetables, rice and beans. Make enough naked burritos to satisfy your household for a few meals, and cut down on your time in the kitchen!4. “Old, British Favorite”
During my two years of graduate school in London, I never came across this “old, British favorite,”...
At YNAB, we have rules. Yes. We. Do. (And they’ll do wonders for your bank balance—try them!)
… but beyond the rules, there are endless ways to customize your budget that we encourage you to explore. Case in point, cash management. Today, let’s look at two completely viable options. Which is better? Well, that’s up to you!Option 1: The ‘Cash’ Category
If you don’t use a lot of cash, and you’re not worried about tracking precisely where every penny goes, then a ‘Cash’ category might be exactly what you need. With this no-fuss approach, you’ll record your cash withdrawal in YNAB, and then you’re done! Spend the cash however you like. Here’s how it works:Step 1
Create a category for cash in your budget. YNAB has a default category called ‘Fun Money’. You can use that, or create a new category and label it ‘Cash’ (or whatever else tickles your fancy!).
If you share your budget with a partner, consider adding a separate cash category for each of you—like in the example, below, where we’ve labeled the categories “His Spending Money” and “Her Spending Money”.Step 2
When you’re paid, budget money for your cash category. Our example couple has allocated 60 dollars, each, to cash:Step 3
When you take cash out of the bank, record it in YNAB as an outflow and categorize it to your cash category. In our example, the woman has withrawn 40 dollars:
Veronica and Drew, of Chandler, Arizona, were married in 2007. She’s a customer support manager at YNAB, and he’s an audio engineer. Although they felt that their wedding day was, ultimately, “perfect,” they skimped on a few details to stretch their dollars:
Veronica said, “My family gave us a budget of $5,000 for the wedding which was out-of-state and had about 45 guests … we spent only on the things that mattered to us and cut down, big-time, on the rest. I bought my second-option dress because it was cheaper, we had the ceremony in Drew’s home church, and we had a friend take our pictures.”
Funnily enough, Veronica and Drew were wedding photographers, themselves, for the first nine years of their marriage. They know the importance of capturing wedding memories, which made cutting back on their own photos an interesting choice. Veronica said, “ … it was always a nagging reminder that ours just didn’t amount to what we wanted. There were no pictures from our wedding hung on the walls in our house. It was a pain point.”
So, it was a doubly-good thing that, early in their marriage, they agreed to renew their vows every five years …Go Big or Stay Home?
With their tenth anniversary approaching, Veronica and Drew decided that it was time they had some beautiful wedding photos. Veronica said, “We had been using YNAB for about a year, and we made a category for [the ceremony]—we ended up using that category to cover...
Hopefully, by now, you’ve filed your tax return. Well, did you? There’s less than a month left until they’re due! But, even more hopefully, you’ll get a little something back from Uncle Sam (although, not too much—if your refund is extra-large, check your withholdings for the next go-round).
Now, back to that refund. Rather than splurging on a purchase that you’ll forget all about in a few months, why not give your tax refund dollars a job that will keep paying you back, even after the money is gone? Let’s take a look …Four Ways to Make Your Tax Refund Work Harder for You 1. Pay Down Debt
Depending on where you’re at in your budgeting journey, your reaction to paying off debt could range from complete aversion (like, can we talk about, literally, anything else, please?) to glee. Now, maybe it’s the circles I run in, but I’ve noticed that the more organized your finances (ahem, budget!), the more exciting it is to throw chunks of money at a debt.
And, if you’ve not, yet, reached that stage, this is your chance!
With the average credit card’s annual percentage rate of 16.15 percent, paying down your balance with a tax refund won’t just dig you out of the hole, it’ll save you a ton on interest: On a $500 balance, that’s $80!
If you have more than one card, maybe pick the one with the highest interest rate and throw your refund at it. When your...
If you feel like you’re throwing cash into a bottomless pit just to keep your household fed, then today’s post might help. The big secret? Cooking at home.
Now, this clearly isn’t rocket science. Cooking at home is a tried and true method for cutting corners—but toss in a dash of technology, and you’ll ramp up those savings like never before. I’m talking about recipe managers and meal-planning apps!
These apps help you plan ahead to maximize the value you get from your grocery haul. They help you to:
Now, of course, you could do your meal-planning the old-fashioned way: with a pen and paper. But if you’re busy and less inclined to plan out your eats, a recipe manager and meal-planning app might be just what you need to actually do it. So, let’s take a look at a few options.Cook’n
So, what’s Cook’n? With so many features, it’s entirely up to you! One of the cool things about this app is the flexiblity for importing your recipes—you...
Toss your smartphone aside, ladies and gentlemen. If you’ve got a calculation, YNAB’ll solve it—check out our new and improved, built-in calculator!Now Available in the Budget and Account Screens
Last fall, we rolled out YNAB’s inline calculator for your budget. Since then, we’ve spruced it up and added it to your account screen(s), too. Now, whenever you’re in the ‘Inflow’, ‘Outflow’, or ‘Budgeted’ fields, look for the math icon.
Simply click the icon to select an operator (or just type it!) and voilà—inline calculations! Visual learner? No problem, here’s an animation showing you just how easy math can be:
Piece of cake, right?Sharing Is Caring
We’d love to hear what you think. Please, give the calculator a whirl, and send your feedback to firstname.lastname@example.org.
At YNAB, we build the world’s best budgeting software. But we’re even prouder of teaching people how to align their money and their priorities, and in turn changing their lives.
We have big plans for our iOS and Android apps. In the Summer of 2017 we brought most of the functionality of the web app to our mobile apps, and now we’re looking to take them even further.
If you’re the one we’re looking for, you have extensive experience with iOS or Android and are excited to help us with *both* platforms. Heck, you’re also excited about getting to work with the TypeScript and SQL we use in our shared library. This isn’t your first rodeo. You’ve got 5 or more years of experience, and can point to multiple applications you have helped ship.
That’s a super-brief intro of what you’ll be working on. But first, you need to know if you’ll even like working with us. We think you will.Apply Now A Bit About Us
We build the best budgeting software around, YNAB or “You Need a Budget” if you have a lot of extra time on your hands. For more than a decade, people have been buying YNAB and then telling their friends what a difference it has made in their lives. (Google us, and you’ll see what we mean.) We love building something that has a huge positive impact on people’s lives.
We’re profitable, bootstrapped, and growing. YNAB started in 2004 and we haven’t taken any outside funding—we’re...
“Coffee is one of those things that costs money slowly—the worst kind of drip, where it’s so subtle that you don’t see it,” said Bill in a recent Facebook post.
As a fellow budgeter and coffee lover, my interest perked up. Coffee is an expense that affects a few of my budget categories: groceries, eating out and electricity (though I hadn’t really considered that last one until I read Bill’s post). Lucky for me, he performed a cost-benefit analysis of his caffeine habit. Let’s take a look.The Cost of a Cup
Bill’s calculation for his daily cup includes coffee, water and the electricity he needs to brew it. He said, “I have this little device … plug it into the wall, then plug anything into the device, and measure the electricity the thing uses.”
(Thrifty tip: Another YNABer, Amy, commented on Bill’s post that she borrowed an electricity usage monitor from her local library!)
After measuring his inputs, Bill said, “[Drip coffee costs] 15 cents per cup. The bulk of the cost (about 12 cents) was the coffee. One note on the electricity; I use a coffee maker that goes into an insulated stainless steel carafe, so my burner does not stay ‘on’ under the machine.”Drip Coffeemakers v. Single-Serving Coffee Machines
When his wife suggested they try a single-serving coffee machine, because they’re “super fast and fresh,” Bill wasn’t so sure. He said, “I did the math. At Walmart an off-brand, pre-loaded K-Cup®, with tax, costs about 56...
You know that feeling when you’ve perfectly adhered to your budget, all month long, and everything seems right in the world? When the bills are paid, and there’s plenty left in your grocery category to last until your next paycheck?
That’s how I felt two Sunday nights ago—on track and getting ahead, bit by bit. It’s not a feeling I take for granted, either. The last few years were tough, with rough times whooshing by at such a velocity that they completely washed away every trace of my financial stability.
I got through it, though, and feel grateful to have just barely kept a roof over my head. Well, my head and my cats’ heads. Will and Lu make up the rest of my household. And that brings me back to my story …A Not-So-Lazy Sunday
So, there I was, sitting in my living room when I hear a rare, but unmistakable sound: Will was losing his lunch (breakfast, actually). I figured, “Hairballs happen,” and cleaned it up. But then it happened two more times, and then he wasn’t interested in dinner.
Will is never not interested in dinner. That cat sits by his food bowl at 4:45 p.m., daily, chirping to remind me that it’s nearly chow time.
And, then, he started to go limp.Drive Safely. Don’t Panic. Repeat.
At the emergency animal clinic, the vet explained that Will’s plumbing was blocked. He couldn’t go. It’s a common, but deadly, situation for male cats. We had...