Back to YNAB

YNAB has always been an excellent tool for me. I started using it around this time last year when I discovered the snappy Youtube videos, and the free demo. Within a few weeks I was hooked on using it, and I saw the massive advance quickly when I was able to manage my Christmas pay and put a hefty lump of money into a savings account, and all I needed was something to track my money.

After 7-8 months the sheen worn off as I was fighting with 60+ categories, a newly added credit card, and quirky statement importing, and around October I essentially gave up. From there my financial situation didn’t get worse, but I started to slip on the credit card and with them upping my limit another £1,000 really didn’t help matters.

So, another year, another fresh start with YNAB. Looking back I identified a few problems which really started to kick me after time and made my budget a hell of a lot more complicated;

Multiple categories for the same type of things

I found that I had multiple categories for essentially the same thing. Best example is my personal site hosting which was split down into Linode, Digital Ocean, Amazon, and Domains. I suppose splitting out is a good way to identify and budget for specific recurring bills, but for me Amazon store purchases got mixed in with my AWS charges and it started getting messy quickly.

So this time round i’m having a generic “Hosting” category to budget into, £15 a month should cover all my costs and also save up some money for those 2-3 year domain renewals. Sticking to one category should hopefully make my money a lot easier to manage in this area.

Make use of split transactions

For a long time I would do our weekly shop at Tesco and end up picking something up for the house, either new bulbs, paint brushes, or a duvet. The problem is I never sat down and split out the transactions into the food shopping and the house budget, which usually ended up with the food category taking a beating all the time while the various smaller categories never get touch, and end up being raided to make up the shortfall in other areas.

I suppose this was compounded by split transactions being unavailable in the mobile client up until the middle of last year, by which point I was already in a bad habit and wouldn’t change so easily. The lesson here is that splitting your transactions will pay off, even if it does feel like you’re wasting time doing them.

Simplify your categories

At the end I had 72 categories for my spending, as you can imagine trying to fill out the budget on payday took some time. I spent so much time flicking through my categories and assigning £10/£20 here and there that by the time I got down to my savings accounts I was putting in around 10-20% of what I originally was doing in January. Because I had a budget for damn near everything it seemed like I could validate spending it, on new techy toys and vaping gear.

At the restart i’ve settled at about 20 categories that seem to represent the core spending in my life. I have the bonus that my girlfriend takes care the household bills from the joint account, which simplifies my view as a single payment to the account on a monthly basis. If you get too far down into the categories then you’ll be in danger of validating any type of spending, just as I did.

Reconcile your accounts

At first I never bothered using the reconcile function within YNAB as my totals always “worked out”. After a few months of using it I discovered strange situations where the total amount of budget money didn’t match up to the total available, its a common problem with YNAB and its heavily covered in various forum posts.

One of the biggest tools to assist you with any oddities is reconciliation. Grab your statement and sit down with YNAB and comb through your statements, its a great way to pick out that incorrectly categorized purchase or the missing 53p you can’t find anywhere.

Also, if your bank offers the feature, import and match your bank records. It takes a few minutes to do and can quickly pick out oddities. Also it has the bonus of marking items as “Cleared” so showing you within YNAB your cleared balance, which is handy if you’re out and about with just your phone.

Use the community

YNAB has a large and popular forum community, make use of it to answer your questions or generally get support with your financial situation. While its mostly keyed towards the American audience, they’ll help you with YNAB. In the UK i’d suggest using Money Saving Expert for asking any financial question without paying for legal or accounting support.

So, I hope this has been helpful to you, i’ll keep you posted with how I do in 2014.