YNAB Tutorial/Overview from a Former Mint User (2 of 2)

Hi, everyone.  This is Lara Hammock from the Marble Jar channel and in today's video I'll do the second of a two part overview and tutorial of YNAB -- a popular budgeting app.

In the first tutorial video, I went over how YNAB treats budgets, accounts, and true expenses.  We had just finished discussing how YNAB doesn't pre-populate budget amounts for you like Mint does each month.  YNAB sort of handles this using

GOALS

YNAB allows you to put a goal in for each budget category.  This may be helpful in categories where you are trying to save a little each month or ones where you won't use the money all at one time during the month -- like for groceries.  So, let’s say you don’t want to spend any more than $700 for groceries for the month. The first paycheck you get, you may not have enough to fund all of your categories (unless you are literally living on half of your salary, in which case, yay, you!), so you are just going to fund half of what you may need for the full month until you get paid a second time.  Here's how YNAB's goals help.  Click on the groceries line item.  Now look over here on this right panel and down here under Goal, click on Create Groceries Goal.  There are three different options for creating goals, which we won't go into in depth here -- but suffice it to say, YNAB will do a little math for you to determine how much you should be putting in this category every month.  If you select monthly funding goal and put in a goal of $700 for this category, the icon in the available column will notify you that you haven’t quite funded this category fully yet by staying orange and displaying a teeny pie diagram with how much is left to go.  So, now that we've discussed a bit of how YNAB works, let's discuss the

Budget Columns

The budgeted column is the amount that you have funded for that category from your To Be Budgeted pitcher.  The next column, Activity shows you how much you have spent for the month.  For example, in my groceries line item, I've put in three transactions for groceries that total $150.00 that I have spent this month.  The final column shows how much is Available.  It's not quite a simple subtraction of what you spent from what you have budgeted since there could be carry over from the month prior.  For example, for this Christmas line item, I only budgeted $50 this month and there is no activity, but since I have been saving $50/month for the past three months, the total Available is $150.  YNAB carries over positive balances from the month before, but not negative ones.  You need to either take money from another category to get rid of a negative balance OR YNAB will take it from the To Be Budgeted amount for the next month. Just a quick comment on how YNAB treats

Credit Cards

This is one of the more complicated parts of YNAB in practice, but conceptually it is fairly straightforward.  YNAB really wants you to treat credit card purchases the way you treat cash purchases.  In other words, once you spend the money, it comes out of your budget for the month.  The problem is that the point at which the money actually comes out of your bank account is different than the point at which you make the purchase.  You may buy groceries for $70 on a credit card today, but you won't have to actually pay that credit card bill until the middle of next month.  So, here is how YNAB handles it.  Let's use that example, I bought $70 of groceries from my $700 budget.  If I was paying cash or using  a debit card, the money would just come out of the glass end of story.  If I'm using a credit card, the money gets added to the available balance for my credit card, which is also a line item in my budget.  Each time I make a purchase, instead of pouring that money into the sink, it gets transferred to the credit card glass.  What that means is that in a month when I am ready to pay my credit card bill, I have all of the money gathered together to pay it right away.  I hope that makes sense.  Okay -- that gives you a little introduction to how YNAB is set up.  But how do you use it on a regular basis? 

Every Day Use

There are four things you will do with YNAB regularly. The first is

• Approve Transactions - Most of you will choose to have your bank and credit card accounts linked to YNAB.  It makes life a lot easier than having to input each transaction manually.  When you have new transactions to approve, YNAB for the web lets you know by putting a dot to the right of the account where there are new transactions.  The mobile app has a notification badge lets you know how many transactions you have to approve, plus you can see that number down here under accounts as well.  In the web version, you can click on the specific account, but it's usually easier to click on All Accounts so that you can do them all at one.  On this banner up here, hit View, double click to open the transaction, choose the correct category, and hit Approve.  YNAB remembers your vendors and will default to the last category that you used for that vendor, which is SO HELPFUL.  Once you've approved everything, the badge and dot go away.  On the mobile app, it's really easy as well.  Go into Accounts, hit the light blue banner on the top, select each transaction and choose a category, add a memo, or if everything looks good, just hit approve.  
• Enter Transactions - So, YNAB is different than Mint since it waits until the transactions have totally cleared your account before bringing them into the app.  That is good in some ways, Mint was really weird about the way it dealt with uncleared transactions, but it does mean that sometimes you have to wait several days before your purchase will show up in YNAB.  Why is that not great?  Because if you are trying to stick to a budget, having real time information is vital.  How can you determine how many groceries you can afford to get this week if your purchase from two days ago still hasn't cleared?  This is why many people go ahead and enter transactions as they go -- particularly for categories where they are trying to control spending.  So, lets say you want to stick to your budget for dining out.  My family just ate dinner on the road at Subway.  Let's put in that transaction.  We've already done this on the web version, so let's do it on the mobile version.  Right at the bottom here is an Add Transaction button. Put in the amount, the Payee is GPS-based in that the app remembers which vendors you've entered in which locations so those show up first.  The defaulted category might be correct as well, so you might have very little to enter before saving the transaction.  One of the best things about YNAB is that when new transactions are imported from your bank, YNAB uses the dollar amount to suggest a linked transaction.  Here's an example of a linked transaction, which YNAB combines so that you don't have a bunch of duplicates.  If it gets it wrong, you can always unlink the transactions.  The next thing you'll need to do regularly is deal with 
• Overspent Categories - So, you are really watching your dining out, right?  Unfortunately, the split bill from the restaurant that you went to with friends last night was a bit more than you anticipated and now your dining out category is overspent.  The web app will indicate this by making the available amount a negative for that category.  It's more dramatic in the mobile app since you get a badge on your budget and a banner for your overspent category.  This lets you know you need to make an adjustment.  What does that mean?  YNAB doesn't let you carry negative budget amounts to the next month.  You have to figure out how to cover the overspending using a different budget category.  If you still have money in To Be Budgeted, you can always take from that -- although leaving money in To Be Budgeted is frowned on by YNAB.   I have a Miscellaneous category that helps for unexpected expenses and a reasonable amount of overspending.  But if neither of those apply to you, you will have to take money from a different account.  Say, you've overspent on dining out.  Well, you might need to take that money from your grocery budget.  Here's how that would work.  On the mobile app, click on the Overspent Category banner, click on the category and it will ask you what other category you want to take the money from.   Again, you can choose To Be Budgeted here, a Miscellaneous account, or Groceries.  YNAB makes it really easy to be flexible and transfer money around, but it really encourages you to stay on top of overspent accounts so that you maintain the broad outlines of your budget.  The last thing you need to do to maintain your budget is
• Distribute Money from To Be Budgeted - When you receive a paycheck or any other income, it will go into your To Be Budgeted pitcher.  You will need to stay on top of distributing that money into your budgeted categories to keep from overspending your budget and to make sure you are fully funding all of your accumulating budgets -- for true expenses and for saving for future purchases.  As you add money to the Budgeted column it will automatically subtract from To Be Budgeted.  Okay -- so the last area I'll touch on comes under the umbrella of

Reporting

I really don't understand the difference between Reports and Toolkit Reports, but the Reports screen has reports that are slightly customizable for Spending, Net Worth, and Income vs. Expense.  The toolkit reports has some of those same reports and some that are different.  No idea why they are deserving of two separate screens, but you can play around with these to see if they are helpful to you.  One thing I will tell you is that if you are looking for the transactions that went into To Be Budgeted, there isn't a way to see that from the Budget screen.  You can't get a transactional breakdown, but you can get an idea by looking at the Income vs. Expenses report.

Also, it's helpful to know how to get to the transactions that make up your activity in a budget category.  So, if I want to see all of the transactions for this month for Groceries, on the web app, I go to the Budget screen, the Activity column and click on the amount that turns into a link.  On the iPhone app, it's a little more convoluted, since the screen is too narrow to give you the available column.  You have to select the category, hit details where you can now see the amount spent this month, and then hit Activity for July to take you to a list of transactions.

Finally, if you are a budget nerd like me, you appreciate all of the reports YNAB provides, but would still like to slice and dice the data in your own way, there is a link from the web app to export all of the data from the system.  Hit the My Budget button, go down to Export Budget and follow the instructions to create two csv files containing your data.  One will be your budget and one contain all of your transactions.  

So, this has been an overview and tutorial of YNAB's system and software.  I've switched from using Mint to using YNAB for lots of reasons.  My next video will tell you what I love and what I'd like to change in YNAB.  Comments are always appreciated and thanks for watching!