I have tried many budgeting software programs over the past twenty years. Initially, I wrote my budget on pen and paper, which worked fine when I was single and for the first year or two of married life. Then, when our finances became more complex, I tried several electronic budgeting programs, but I didn’t find success until I started using YNAB (You Need a Budget). I have used this program for many years, and while I’m YNAB broke sometimes, I’m no longer broke.
What Does It Mean to Be YNAB Broke
For those who haven’t used YNAB, YNAB broke means you still have plenty of money in the bank, but you’re all out of money in one or more designated categories until the next payday. For instance, I have money in an emergency fund, a new car fund, a house repair fund, etc., which gives me a large balance in my bank account. However, currently, payday is four days away, and I have no grocery money left in my grocery category. Therefore, I won’t buy any more groceries until payday because I’m “broke” in the grocery category, even though I have plenty of money in my bank account.
Our Lives Before YNAB
Before YNAB, my husband and I had money in one big chunk. If we needed a car repair, we pulled money from our account. Groceries and gas came from that same account, and so did fun money.
We might have $5,000 in our account, but we didn’t designate the money for different expenses, so it sat there, seemingly waiting for us to spend. If we had car insurance due in three months, we thought we had it covered because we had $5,000 in the bank. We felt that way with every expense, even though the upcoming costs might add up to more than we had in savings. In addition, we’d dip into it for fun money because, hey, we had $5,000 in the bank.
Why Being YNAB Broke Is Good
Once we started using YNAB, we learned to budget for true expenses, which are all the expenses we have for the year, even the ones that only bill yearly or every six months. So, we separated that large chunk of money into different categories—all the expenses we’d have in a year.
In the years since we’ve started using YNAB, our income and our savings have grown. However, we’re still YNAB broke sometimes, which means the program is working. We are currently YNAB broke for groceries, but that will change in a few days when we’re paid. We spent a lot on home improvements for our new house this year. That category is almost exhausted, so we’re YNAB broke until we save money in the home improvement category again. We likely won’t make any more home improvements until next summer when the fund is larger, even though, on paper, we look like we have plenty of money to use. However, that money is designated for other future expenses.
Being YNAB broke is good because it means the system is working. YNAB broke is not actually broke. If you use this budgeting software for a few years, you’ll likely find you’re in the best financial position of your life, even if you are sometimes YNAB broke.
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York where she loves the natural beauty of the area.