Please explain: $600 savings
"On average, new budgeters save $600 by month two and more than $6,000 the first year!"
What does this actually mean? How does YNAB get this data?
I've always assumed it is self report and probably skews high. They don't have access to your budget so they're not monitoring it or anything. That said, I personally increased my cash net worth by about $10,000 in my first year which was a little less than a third of what I was earning at the time.
Personally, just looking at my nYNAB history, I'm up about 150% (way beyond the "$6k in the first year" they claim) in the 2+ years I've used it. Obviously, your milage may vary, and it partly depends on your life situation, how focused you are on your financial goals, and of course a bit of luck.
So basically it's marketing BS?
Edit: That sounds ruder than I mean it.
My point is:
- I can't see any actual evidence for this claim. I have to take it at face value and I'm naturally skeptical.
- I assume it's a mean and not a median and that will skew the number high.
- Do they count all the zeros ("didn't save any money") when making the calculation?
I've had a two month trial (now coming to an end) and have not saved any money so I'm surprised at this claim. I'm certainly more aware of where my money goes but that's not the same as saving money.
We were down $10,000 after one year in our budget. But we bought a house in month 5 and were down about 50% at that point, and climbed back up pretty quickly. Our budget after 4 years is sitting about 50% higher than the day we started. But that's just our budget, as we've jacked up our 401k deferrals and invest money not needed for the budget.
Every budget is different. It's hard to tell what criteria they used to come up with that number, because there are so many variables.
Ben I can think of lots of things that could be said (as a blog post?) that could back up the claim. For example, I would love to see savings by income.
Our users in these income ranges have reported saving this amount after a year of use.
<20k -- $250
20-50k -- $1,000
50-100k -- $5,000
100k+ -- $10,000
That would give me a more realistic sense of what might happen for me.
It's an enormous claim! $6,000 is a huge amount of money to me. Of course things are different for everyone but it is used frequently (in these forums for example) to encourage people to subscribe. I think it's reasonable to have some further information on where that number comes from. Otherwise, it feels manipulative to me.
As you've quoted, Navy Blue Cyborg , they don't say that new YNAB users save those amounts. They say that "new budgeters" save those amounts on average. (https://www.youneedabudget.com/pricing/ ).
I've always imagined it to be a general statistic from some sort of accounting research. But maybe I'm wrong.
Since it's "on average" any zero savings should have been factored in, although who knows what the sample size and selection process was.
I've definitely been saving money since using YNAB, and also have stopped using up existing savings due to disorganisation and poor prioritising. I think the YNAB functionality and methodology is better than other budgeting approaches. I'm a big fan.
Having said that, I think they should really give a reference or citation for a claim like that. Janelle , could you or someone else in the support team give us more information?
I think the change depends on your income, expenses, and how well you're budgeting.
I don't have $6K in my checking (i could if I didn't have a car loan to pay off), but because I've made more money this year, and I'm budgeting wisely, I've managed to add $1000 more to my emergency fund, and I have not dipped into that fund for at least six months or more. And that's because I'm budgeting for my true expenses.
So I wouldn't get sidetracked by the marketing claims. If you keep working on your budget, and if possible add or increase your income, you'll benefit from the ynab system.
I've largely ignored the "$6,000" number that YNAB throws around, in part because it's meaningless to me and in part because I don't believe in the accuracy of it. I have definitely saved more than $6000 in the year since starting YNAB.... but I also would have saved more than $6000 without YNAB. To me, YNAB is just a tool that I like the interface of, not a tool that I *need* to use to budget or to save money.
As for the accuracy, even if it is based off user data, people like me would be skewing the numbers heavily since I already had a high savings rate before switching to YNAB. The only manageable way I can see of actually attributing growth to YNAB usage is to ask new users what their net worth was a year before joining YNAB, and then compare that to net worth growth every year afterwards.
All I know is my own experience. When I came to YNAB I had no budget or any idea what I was doing. Today I have around 200% of what I had when I started, around 3 years later. Progress was slow initially, while learning about the bad choices I made in the past and learning to make better choices going forward. Today I finally feel I’m in control of my money, instead of being controlled by it. I have saved much more than the stated $6K. My recommendation would be to give it a chance and see what it does for you, then in a year let us know what happened.
Navy Blue Cyborg said:
truth in advertising
What is this exactly? I don't understand. I know each of the words, but in that context it makes no sense. /s
Sorry to be so flip, but all advertising is hype. Not condoning it; just interpreting it. Lots of grains of salt being consumed, to the detriment of my blood pressure.
What is this exactly?
Maybe it's a cultural thing? I'm not American. In a number of countries that I've lived there are consumer agencies that help to combat misleading, deceptive and fraudulent claims from companies. Truth in advertising is a goal and if companies don't live up to that goal they are fined or otherwise punished.
I'm not saying that this IS a misleading, deceptive or fraudulent claim but it feels misleading and possibly deceptive to me. I respect businesses that are truthful and I wanted to give YNAB the chance to allay my fears, hence the question. I didn't think it was going to be so controversial!
Though I'm still interested in the answer and I'm sure there are others out there also interested we don't need to continue this conversation since I've decided not to subscribe.
My main reason is the ongoing subscription cost. I could justify CAN$110 as a once off fee but it does not feel worth it to me to have to pay that every year. I know y'all here think it is worth it! Maybe I'll report back in a year to see if choosing not to use YNAB was a wise financial decision. Good luck to you all in your financial journeys.
FWIW, I don't think new YNABers necessarily should sign up based on $600/$6k claims. That's not why I signed up for YNAB in the first place.
I signed up for YNAB (I haven't been using YNAB for more than a week yet), but have already seen benefits of using YNAB over the long term (I'm a financial geek so I can quickly see if something is or is not for me). I can *totally* see how I'll increase my personal cash net worth over time.
By just using YNAB to make more intelligent budgeting decisions (and to control my spending because I'd know if I'm overspending on a category), I'm probably going to increase my cash net worth, unintentionally.
Therefore, I wouldn't even consider $600/$6k claim a "bold" one..
I don't think that's too far off. I have been on a 3 month trial ending in a few days, just from actually making decisions on how much I wanted to spend on things like eating out instead of just letting it happen has saved me about $600 over the last 3 months. (I guess I'm slightly below average? Lol)
Disclaimer: I started out with a balance of $10,000 and a net worth of $1,700. My single household gross yearly income is now at around $50,000.
After two months I had saved another $1,700 while after one year I had saved $17,000. Don't recall if I participated in the survey or not.
Would I have saved as much without using YNAB? I don't know.