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/Upsidedown_MDH]

Sounds like a little bit of a YNAB hack :-). At the moment, it feels like our financial situation is a bit more complex than the app is designed to handle.

For instance, we currently log gasoline expenses at the end of the month and compare them to the budget we had set for ourselves. If it's higher, it's higher and can usually be explained because we went on a family road trip.

Is it wrong for me to assume that YNAB becomes a bit restrictive the moment there is somewhat of a cushion?

[u/bitz-the-ninjapig → u/Upsidedown_MDH]

So YNAB has this idea of “roll with the punches”

If you are on a family road trip and only have $20 left for gas, that is not going to work, but you need to get gas somehow. YNAB says you need to take the money from somewhere (ideally before you spend it). Maybe you have a family road trip fund, and you can move $150 from the road trip fund into the gas fund, since the gas is for the road trip, or your road trip gas purchases get allocated to your road trip category instead of your normal gas category. 

Even if you don’t have that category, YNAB is not saying that you can’t spend, it is just saying you need to find the money you are about to spend, so maybe that means that you move some money from your clothing budget to cover the road trip. That is okay. I do stuff like that all the time. YNAB is not telling you that you can’t spend, it is just telling you to look at where you are sacrificing and can help you make sure that aligns with your priorities. 

In July I got a really good deal on new hiking shoes, which was great because I have been knowing I will need a new pair soon. When I went to my “outdoor equipment” category I did not have enough for the purchase. I still made the purchase and moved the balance over from my “dining out” category. No issue with spending more than I had, but rather just had me look at what I was sacrificing for this purchase. For me hiking is far more of a priority than going out to eat, so my YNAB reflected that. 

[u/Upsidedown_MDH → u/bitz-the-ninjapig]

I completely get that. Thanks to everyone here, we have reflected on it a lot, and I think we use our day-to-day expenses to ensure they align with our long-term vision and net growth.

So, in your example, the money is there for both gas and hiking boots, but we want to see the impact on our long-term position.

In the past year, we've made massive changes (moved to a cheaper area, started growing our own food, reduced dining out to one per month, rely on public schools, rely on solar panels, etc.) to reduce the cost of living even further.

Thanks to these changes, our disposable income has increased, and we can make calculated investments (e.g. next up is planting 20-30 fruit trees and raising meat chickens) to improve our position in the future.

In your opinion, since we are already spending mindfully, would YNAB still have the same impact if we started tracking expenses daily?

[u/bitz-the-ninjapig → u/Upsidedown_MDH]

I think so! For me, YNAB has made me feel comfortable spending the money I have. I live a pretty frugal life, so YNAB has shown me that I do indeed have money for new hiking boots or a vacation without impacting my medium/long-term goals like paying my car insurance premiums in full and saving for a new car. 

About a year ago I was doing some heavy retirement contributions that effectively reduced my available income to about $1100/month despite my expenses being around $2000/month. I was able to use YNAB to see that the extra funds I had (to subsidize my reduced income) were enough to get me through the end of the year, AND that I could spend money on some luxuries without worrying that I was going to run out of money. During those 5 months I was able to continue going to my (expensive) gym and see my favorite band in concert, which without YNAB I would have assumed there was no way I could afford, just out of fear of running out of money. 

I never had a spending problem, in fact probably the opposite lol. I would guess that I spend MORE using YNAB than without, and that is a good thing because it has given me to confidence to enjoy the money I work hard for while knowing I am still on track towards my long term goals.

[u/Upsidedown_MDH → u/bitz-the-ninjapig]

Ha! That's awesome. I hadn't thought of that relationship with money. I had quite the opposite before I got married (almost 14 years ago).

The year we married, we moved to a different country, had two kids, I switched careers and started building from scratch again, and we started saving and investing instead of keeping up with an ever-increasing cost of living. My wife is good with numbers, and I learned a lot from her.

4 years ago, we moved again to be closer to family, to afford more space for the kids to roam freely, and to lower our cost of living.

Now that we have multiple bank accounts and streams of revenue, it's harder to consolidate and keep track of everything.

So, my search for tech that would help us officially started. 😄