How long does it take to get it?
I am ready to throw my laptop out the window. I HATE HATE HATE this software. Do I just need to wait for the epiphany moment? I get the concepts. I am good with numbers. I am a CPA in my day job. I am just finding the navigation to be cumbersome. How long does it take, 3 months, 6 months? I have been using it for a month and pretty much ready to throw in the towel.
I found the 34 day trial sufficient to fall completely in love. Try using the chrome toolkit for YNAB to smooth out some of the edges (https://www.youtube.com/watch?v=x4-igXQLEkw). Or maybe take the concepts and 4 rules and use them with a spreadsheet for a while. That's where the magic is anyway.
What about the navigation are you finding cumbersome?
After you set up your budget, you only enter transactions until the next time you are paid. Unless you’re paid every day, the interaction with the budget itself should be minimal. If it’s not, you’re probably doing something you don’t need to do. How can we help?
Also an accountant here and I fell in love with it instantly and never looked back. I don't mean this as a jibe at you, but from observation the people who seem the most frustrated by the software are those who keep trying to fight the system because they don't want to give in fully to the YNAB method. YNAB is not something that works well if you only want to half-heartedly follow the method and the rules.
But that is just a guess. What parts of the software are frustrating you? There might be a little piece you weren't aware of that might make it click.
Sea Green Trumpet said:
I dont want the rollover from April
For something like Electric, the rollover is a good thing. I budget the average, which builds up a surplus in the category during low months and draws from the surplus in the high months. The advantage is I don't have to scramble and rearrange my budget to pay a $400 electric bill in the summer.
A consistent amount makes it much easier to plan.
I'm not a CPA but used YNAB 4 for 10 years (the desktop version of the software). I switched to "new" YNAB in January (so I would have a clean end of year cut-over).
It took me 3 months to learn the new software mostly because of the things they improved (fixed) that were a pain in YNAB 4 were ingrained in my head. So my adjustment was "unlearning" ...
I loved YNAB4 !
In the 4th month of new YNAB, I love it even more because :
1) new YNAB forces me to look further ahead
2) it automates things that I had to do manually, like adjustments to balance overspending in a category
3) reconciling is ridiculous easy and in fact I know reconcile weekly
Maybe stick with it a few more months. Since you are a CPA you may be unknowingly bringing some of your professional expectations and experiences to this tool. This tool is about budgeting and managing cash flow. Yes there are clearly accounting principles built in as Jesse Mecham (the founder of YNAB is a CPA).
My other suggestion is to do some on-line training and to ensure you understand the 4 rules.
Best of luck!
Thanks all for the tips! In particular the ideas to sweep amounts back to “to be budgeted”. It is just a little more manual work than I expected. It sounds like I will have to do some more training and hone my own unique practices within the bounds of the software. I’m not sure I can ever unlearn accrual accounting. I don’t really think it’s that different - you’re doing the same thing when you assign an amount to a budget, that’s an accrual, but the reconciling is different. I also need to relook at goals- I entered a bunch of money as a starting balance in my “emergency fund” goal and ynab counted that as a huge “outflow” for the month so maybe I did it wrong.
I recommend taking a few of the YNAB classes, either live or watching the pre-recorded classes. I've been using YNAB since 2014. I've gotten to the point where most of my categories get the same base amount budgeted every month (there's always a few hundred left over that I allocate based on need/priority after doing the base budget) - I use the Quick Budget all categories option and then make a few tweaks. I sweep groceries, eating out, and fuel down to 0 at the end of the month. Also the categories where I budget a round number knowing that the actual bill will come in a few cents below (mobile phone, cable). Electric, gas, admin, and entertainment get swept down to the point where the next month's normal allocation will bring the categories up to a certain cap. All of those sweeps go up to TBB and then based on a formula of my own devising these sweeps get allocated to Income Replacement, extra funds to my investment account, kitchen remodel, giving, and whatever my priority saving category is (currently a new piece of furniture).
I have 70+ categories and it takes me less than 10 minutes/month to set up my monthly budget. Now, that's also because I am a month ahead and all of my May paychecks will be used to fund June (the old version of Rule 4) so I'll do my June budget all at once after my last May check clears (I get paid on the 7th and 22nd. Until I go to budget those paychecks, they are assigned the category of Income for Next Month. When I'm ready to budget them, I change their categories to TBB and then use the Quick Budget).
Sea Green Trumpet said:
I entered a bunch of money as a starting balance in my “emergency fund” goal and ynab counted that as a huge “outflow” for the month so maybe I did it wrong
Yes, that sounds wrong. Is this possibly in a separate account? All you needed to do was create an emergency fund category and enter an entry in the budget column for the desired amount.
You will have to learn to think of location and intended purpose as separate concepts. The account corresponds solely to location. The category in the budget grid defines purpose. You can change either one without changing the other. This is in contrast to common usage of having a Christmas account, a Bill account, an Emergency Fund account, etc. where the account is used to define both purpose and inherently a location. You'll find the independent approach is extremely flexible and actually simplifies things once it clicks. This is mandatory reading:
The budget (aka categories) don't care about which account dollars live because money is fungible. Accounts don't care about which categories are "in" them, again, because fungibility. If a category has $X in it and an account has at least $X in it, then you can regard that category as being in that account.
If you find yourself trying to synchronize an account balance and a category balance (or group balance), you're making things more complicated with conventional (non-YNAB) thinking. Read that article again.
Lastly, the best way to assess cash-flow is by looking at the running balance in conjunction with scheduled transactions. Again, this is an account thing, so the categories in question are irrelevant. There is only outflow and inflow amounts. Most will keep enough in their checking account to handle outflows through the next 2-4 weeks and funnel the rest into a higher-rate (a.k.a., "savings") account.
Hopefully it's obvious to you that money is "saved" -- reserved for a particular purpose -- by budgeting it to a category. Transferring that same amount to a savings account is optional. (Again, it's fungible.)
Sea Green Trumpet said:
- I entered a bunch of money as a starting balance in my “emergency fund” goal and ynab counted that as a huge “outflow” for the month so maybe I did it wrong
I don't know official accounting terms, but these words don't make sense from the YNAB perspective. See especially how the words "account" and "category" are not the same.
A starting balance is entered in the transaction register of an account. Savings, checking, whatever.
That starting balance (or any inflow, ever, categorized to TBB) is displayed at the top of the budget page in the TBB (available to be budgeted).
To "save" the money, you type the amount you want to save in the budgeted column of the category you want to save in.
There should not be an outflow transaction involved in saving money.
Categorized outflow transactions are for when money is leaving your hands to be owned by someone else (or go to investments, which should not be on budget).
Goals are only in the budget side, and exist to make typing/calculating your budgeted amounts each month easier. Inputting a goal should also not result in a transaction.
YNAB allows you to see a few abstract levels beyond the concrete realities of your actual cash, which is represented in transactions/accounts. The budget is a plan or overlay of buckets/envelopes/jobs to sequester parts of your money to focus on being available for different jobs.
Goals are an overlay on the budget of what you plan to plan when you budget.
You use these abstract derivatives to make concrete spending choices that align with the patterns of the plans you have made.
Learn the 3 rules. Read them over and over until they're ingrained in your head. Then follow them. Don't fight the software and try to do what you want to do.
1. Give every dollar a job. Budget all of your available funds until you have none left. To Be Budgeted should be $0 at all times unless you've just been paid or received new income and haven't budgeted it yet.
2. Embrace your true expenses. Categorize ALL of your expenses. Not just ones that occur like clockwork every month. You need categories for the holidays, gift giving, tech upgrades, auto maintenance, home maintenance, etc.
3. Roll with the Punches. If you don't have enough in a category that you want to spend from, what is lower priority that you can take from and move into this category? There is no perfect month. You may need an extra $100 for groceries this month due to the pandemic. Figure out what lower priority category or categories you can take that from and then add to your Groceries category.
Sea Green Trumpet said:
I had an excess of $30 which it rolled over as “available” for May, plus any additional amounts I put in the budget column. I find this confusing...to me, I dont want the rollover from April. April is done, I want to close the books to retained earnings, ie my checking
or savings account. I think I am missing a step. Am
I supposed to go thru and manually “move” all the excess funds? I dont get it!!!!
How can you follow Rule 2 and Embrace your True Expenses if categories balances don't roll over? I want $1000 to spend at Christmas therefore I save $83.33 every month starting in January.
You definitely don't want to move all excess funds otherwise they could never accumulate. On monthly spending categories, it's up to you if you want to reallocate those funds or just add to them in the following month.
As far as your savings account is concerned, it should be in your budget, not a tracking account. Savings is just a different location that gains more interest. If you transfer funds from checking to savings, it will have no effect on your budget. It will just hopefully gain a higher interest rate.
I think your biggest issue is you. It's a zero based envelope budget. If you allocate this much in May, but don't spend it, leave it in the envelope and just top it off next month. Due to your mindset and occupation, it appears you are fighting the method. YNAB, more than anything, is a method.
You shouldn't really be moving money around once you gave that money a job. If $100 was given the job of paying the electric bill, the fact that you only spent $70, doesn't change the fact that the other 30 dollars is still supposed to pay the electric bill. It's just that it will have to wait until next month.
When I started, I had a pretty good sense of what was going on EXCEPT with credit cards. I finally watched Nick True's video (Search youtube for his name) on YNAB and credit cards and it was like a light going off.
For example, I got paid on Friday. All my expenses for the month are budgeted IN FULL. That means my next two pay checks (for May) will be paying for my expenses in June and so on. Eventually, I will be months ahead on my bills/debts, etc.
I'm not a CPA, but probably the most difficult thing for me to get my head around was that YNAB doesn't care where you keep your money. In the beginning, I kept getting hung up on the fact that my savings account did not equal my savings categories. I was associating my savings (dollars) directly with the bank account of the same name. (If the account had been called something else, I might have caught on to things faster!)
Eventually I realized that my checking account was getting quite large because, when my paycheck was deposited and I budgeted dollars into my true expense and savings categories, I was not moving the money to my savings account at the same time. My "savings" were still accounted for in my budget even though the dollars were sitting in my checking account. That was the eye opener for me. When I finally moved an arbitrary "excess" amount from my checking to my savings account, it was just a blob of money being relocated. I no longer worried about where the money was sitting; it only mattered that it was still assigned to the category where it would be needed.
Sea Green Trumpet said:
Do I just need to keep an offline mental or physical note of these buckets?
Like nolesrule said, there is no need to keep a not of this because it simply does not matter. I have 3 savings accounts and 3 checking accounts (just for me) for reasons related to fees and better interest rate and international ATM access. I have no idea where my Income Replacement Fund "is" in these accounts. It's in all of them and none of them. Because it simply does not matter. The money is allocated in a category so as long as I keep all my categories green (which I do, if I have to reallocate, I do it before I spend), I know that every single penny listed in Income Replacement Fund category is available to me whenever I need it for its stated purpose.
Sea Green Trumpet said:
how much of your savings or checking is for what purpose
Every dollar in all accounts is indistinguishable from each other. The category is "in" whatever account you want, and you can change it's location by *changing your mind*. The only requirement is the account you pick has a sufficient balance (at least that of the category Available).
The only time location matters is when you spend, and the store is perfectly willing to accept dollars that are already in your checking account.
P.S. by the by, this is the hardest thing to grasp about YNAB. Most PF solutions are based on the idea that accounts = purpose. For example, I Will Teach You To Be Rich lays out a complicated 3 or 4-account solution for spending and saving. Capital One 360 offers unlimited savings accounts so you can set up a savings account just for Christmas. Ally has "buckest." PNC has their virtual wallet product where you have a short-term checking, a long-term checking, and a savings account. I was brilliant at budgeting by account. I always knew what money was where and I was absolute aces at minding the checking account balance even if I had thousands upon thousands in savings. If it was savings, I didn't spend it, no matter how much I wanted more money in checking for fun things.
But what I was fortunate to realize early on was that if I could respect a savings account, certainly I could respect a savings category in the same way. And because money is fungible, and it really doesn't matter if you're spending money from account A or account B, all I have to do is make sure the right amounts of money are budgeted to the goals I have. And so if I am finally ready to pull the trigger on the new dining table and checking happens to have $500 that I won't need before I get paid again, I can just buy the table using the money in my checking account. It doesn't matter that the $500 is "savings;" what matters is that I set aside $500 of my total money for a table, and now my total money will reduce by $500 and my household will increase by one table.
Friendly_gal I guess I just compulsively have to know as a final audit of sorts - to have a pile of cash in savings and totally rely on the software that I clicked all the buttons and set the goals accurately is not enough for me. Maybe when I am more comfortable with it over a number of months? To me it's not really any different that the "reconcile" where you reconcile to your bank balance just like you would and old school checkbook. I think I am just wanting to take it a step further to ensure the sum of the parts = the goals.
Sea Green Trumpet said:
I can appreciate the envelope concepts and the money is fungible etc. I think I just have control issues. I need to audit :) I will maybe eventually let go. Give me 6 months!
OK, deal! We will give you 6 months but not a day more! 🤪
But seriously, it is such a freeing concept. You will keep MORE in savings once you shift your paradigm.