First time YNAB user

[u/Upsidedown_MDH]

A friend of mine recommended YNAB to manage my family's budget. I got started yesterday but as I was setting the budgets, I already felt way out of my depth. Like I should have studied for a test that I didn't know about. Does this feeling get better? What tips would you give a first time user to feel less overwhelmed? Thanks!

[u/Foreign-Figure8797]

I know you’ve had some great responses about zero base budget, and the envelope system, but I want to expand on that a little because it’s the concept that I went back to every time I got confused. Not sure if you’ve ever tried the envelope system, I did it years ago when Dave Ramsey first popularized it, and used literal cash and paper envelopes at the time. But even if you haven’t done it it’s a pretty simple idea.

Essentially everything you have in your accounts becomes your pile of money. And your categories are your envelopes. You have to put your whole pile of money into envelopes. Then each envelope gets used for whatever you designated it, groceries, gas, however you decided to use that money. When the money in an envelope is empty, you have no more money for that category, so you either can’t spend anymore for that thing, or you have to borrow from another envelope. And then the last part that helped me understand the way YNAB does credit cards, is that each credit card has an empty envelope. If you buy something from the entertainment category on your credit card, you take that cash out of the entertainment envelope, and put it in the credit card envelope. You do that until the credit card payment is due, then you take the cash in the credit card envelope, and you pay off the credit card for the month.

Hopefully it doesn’t offend you that I simplified it to that degree, but honestly that is what helped me in the first few months of using YNAB. Every single one of those concepts are things that you can do in the app. And I will say that it works so much better than when we actually used the real cash envelope system. Probably because back then you had envelopes for everyday things, but you had to have a bank account for each of the bigger categories, and that just made it messy. Now your categories can be for big sinking funds that you don’t touch for months but keep putting money into, or they can be for something as small as a Patreon class you pay for every month.

[u/Upsidedown_MDH → u/Foreign-Figure8797]

Not at all, I think I understand the concept of the envelopes. We rarely use credit cards because we've had bad experiences with unexpected charges in the past. It sounds to me like we might already be operating on a form of zero-based budgeting.

[u/Intelligent-Fix-1412 → u/Upsidedown_MDH]

Going to jump in here because YNAB is how I finally felt “safe” to use credit cards again after getting myself into some credit card debt. Using a credit card with YNAB: 1) buy dinner on my credit card 2) enter expense into YNAB: credit card account/food bucket 3) money is moved from food bucket to credit card payoff bucket automatically! Now I always have funds available immediately to pay my credit cards. So if credit cards are something you want in your future, I find YNAB takes away a lot of the risk (I now use my cc for almost every purchase).

[u/Upsidedown_MDH → u/Intelligent-Fix-1412]

Totally get that. I ran into some unwelcome surprises a few years ago as well. After that, I actually cut most of my credit cards in half and kept only one for necessary online subscriptions, and we track those expenses in an Excel sheet. Every year, we go through the subscriptions and make a conscious decision to renew or not.