YNAB to the rescue

23 April 2020

You Need a Budget is a website/app that has revolutionized the way I think about money. I am surprised that I haven’t blogged about it before (besides a brief mention in January). I did write a bit about it in the January issue of my newsletter .

Today I was reflecting on my gratitude for YNAB, as it’s called, during this current economic crisis. Because I’ve been using YNAB in combination with Profit First for Peace of Mind Organizing since November 2018, I now feel in control of my finances. One of the principles of YNAB is to give each dollar that comes in a job, which allows you to put away a little every month for an annual bill, for example. When you spend money, you tell YNAB which category it comes out of. And if you have unexpected expenses, you can move money from a category you’ve funded and make up for it later. (One its principles is that you should roll with the punches. I love a flexible system.)

The upshot of this is that I’ve had the delightful experience of having the money at the ready when big bills, like my liability insurance, come due. Because I took the time to write down and budget for these annual expenses (which YNAB calls True Expenses), I am aware of how much money it costs to keep my business going. Thanks to Profit First, I’m allocating all my income among the following categories: Profit, Taxes, Owner’s Pay and Operating Expenses. So not only am I paying my business’s bills, I’m paying myself, putting away money for taxes, and I’ve even amassed some reserves, thanks to the profit category.

Using YNAB has cut way down on financial surprises, which was a most welcome change. But then the biggest surprise of all came along: COVID-19. Because I work in people’s homes, my income slowed to a trickle after the stay-at-home order was imposed. Thanks to YNAB, I didn’t freak out about that. I had a very good first quarter. I actually have money in my bank account. And I know how much I need every month to fund my business’s monthly and annual expenses. That is such a huge gift for my peace of mind.

If you’re intrigued by YNAB, here’s what I suggest you do:

Sign up for a free 34-day trial of YNAB. (If you use that link, we each get a free month after your trial is over. YNAB costs $12 a month or $84 a year, if paid annually.)
Read articles and watch videos at YNAB’s help center
Check out YNAB YouTube videos (I particularly like the ones by Nick True.)
Consider joining the YNAB Fans Facebook group and, if you’re a small-business owner like me check out the Fans of YNAB for Small Business Facebook group
Figure out your monthly expenses and your true expenses and give YNAB a whirl!

My friend, Shannon Wilkinson, has been using YNAB for years. She’s been raving about it to me all that time and it took me forever to give it a try. I really had to change the way I thought about money, so it took a little while for me to really see its benefits. But I’m in it for the long haul now.

Shannon and I talked about YNAB in Episode 87 of our podcast, Getting to Good Enough. That episode is called Financial Peace. You might enjoy listening to that episode if you’re considering YNAB.

I should point out that while I use YNAB for my business (my husband handles our personal finances), it’s fantastic for personal budgets as well.

Tagged with: budgeting, covid-19, money