Why you need a budget (and how to save $6)

I realize that I’m probably breaking some rule about blogging.  This is my second post in the same day.  I’m sure I’m supposed to spread it out or something.  I’m sure I’ll learn this over time.  But for now, I had to share this.

Four and a half years ago, my wife Carol and I began using a new personal financial package called YNAB (You Need a Budget).  We have aligned ourselves with the Dave Ramsey principles for many years, but have never been able to find a good software solution that merged my nerdy tendency to put our finances on the computer with a solid cash-based budgeting process.  We used Microsoft Money for several years, but the time it took to keep my own “cash flow statements” was too much.  So, in 2009, I began a search that led me to demo (and in some cases purchase) various solutions until I finally landed on YNAB.  And it has changed the way we do our personal finances.  Let me tell you a little about it.


First and foremost, YNAB is a methodology… an approach… to solving the personal finance challenge.  Their process urges you to stop living paycheck to paycheck, manage money like it should be managed using cash flow and budget category tracking, and does so with 4 principles or rules that are taught:

Rule 1 – Give every dollar a job.  Dave Ramsey refers to this as “Zero-based budgeting”.  Every dollar that you bring in must go somewhere that you tell it to go.  If you decide to spend $400 on eat out each month, that’s fine.  Just decide to do it intentionally.

Rule 2 – Save for a rainy day – It is not a matter of “if” it will rain, but “when”.  So, save for it.  On purpose.

Rule 3 – Roll with the punches – Look at each month as a learning opportunity.  You’re getting smarter every month you budget, as you see things you left off.  Adjust the current or next month’s budget accordingly, and move ahead.

Rule 4 – Live on last month’s income – This is where the magic happens.  A process is defined by which you work toward having enough money set aside at the end of a month to “fully fund” your expenses for the next month.  YNAB calls this the “buffer.”  And it is wonderful!

Feature Highlight – Cloud sync

So, YNAB started as a Windows/Mac “desktop” application.  All data entered is kept on the machine you’re working on.  With YNAB version 4, “cloud sync” was introduced.  Using Dropbox, you now can sync the YNAB data “in the cloud”, and seamlessly use it on other computers and iOS and Android devices.  And this is where the magic happened for our family.

Though we certainly have not yet arrived, YNAB has finally providing a digital personal finance platform that my wife and I could work on together.  Now, we can both enter expenses as they occur (in the grocery checkout line, at the gas pump, etc.), and these are synchronized automatically.  So, as I spend out of the “grocery” budget, Carol has a nearly up-to-the-minute picture of what is left in the grocery budget.  It is AWESOME!

We believe we are to be good stewards (managers) of the resources God has given us.  YNAB has helped us really become accountable to ourselves in terms of managing the monthly budget.  Another fantastic feature of the methodology and one that had a huge impact on our finances has been the monthly buffer.  For years, we always had a bank account “buffer” that allowed us to cash flow the entire month without requiring our paychecks in advance.  However, eventually, through family expenses, medical bills, and other financial challenges, that extra reserve dwindled down, and we began having cash flow challenges.  The buffer has allowed us to really change this and change our way of thinking about it.

How to save $6

So, this software is not cheap.  There is a one-time software purchase cost, and another for major upgrades (I paid for YNAB 3, then again for YNAB 4 – but there were a significant number of free incremental updates provided for both versions – they work really hard at making this a great software solution).  This one software license allows you to run it on both Mac and Windows machines (which we do at the Raetz’ home).  The cloud sync service is free.  AND… because I am a licensed customer, I am able to share a link with people I know.  By purchasing through this link, you will save $6 on the full cost of the software.

I hope this is helpful to you.  ‘m happy to answer other questions you may have about it.   I hope you find it as useful to your finances as we have.

3 comments on “Why you need a budget (and how to save $6)

  1. Janna December 28, 2013 10:37 am

    We tried this for about two months. could never get it to sync to john’s phone. bought the app for both of our phones. I bought it through Suzanne Mosely’s blog. Had to replace my phone a couple of times and lost the app. I had honestly forgotten about it. We have kind of given up on the whole zero based budget idea. The chaos that has surrounded us for so long and the constant accrual of medical bills has been frustrating. John has created a not so nice phrase that we will never be out of debt and we will always owe medical bills, so we have kind of given up on the idea of it. Maybe we can get together after the new year and you can give us a pep talk to get back on board.

    • kenraetz December 28, 2013 10:53 am

      Wow… I feel a little bit like I’m on hallowed ground to even begin to speak into your lives regarding medical bills and finances. So, I’ll simply say this… YNAB has been a great tool for us to manage our budgeting and spending, especially on the categories that tend to get overspent each month (groceries, eat out, etc.). When I’m at the grocery and I buy something, I enter it right there on my phone, and it is immediately in our YNAB database. So, Carol has an up-to-the-minute view of how much grocery money she has. It is still not a perfect system – we are the weakness :). We still overspend, but it definitely has helped us. Regarding your specific situation, Carol and I would love to give you guys a pep talk… in fact, anything we can do to help you all we would love to do. You are in our hearts, minds, and prayers often Janna. We love you guys!

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