Budgeting is Easy with YNAB & a Giveaway!

Last week I mentioned that this time of year is when a lot of people let their budgets slip a bit.  The easiest way to stay on track with your budget is to have an easy and effective way to keep track of your budget.

My favorite budgeting tool is YNAB Pro. I’ve been using it for a couple of years now, and when I’m consistent about using it, I can see a positive difference in my spending habits.

The Basis of YNAB

YNAB (or You Need a Budget) is based on four rules.

1. Live on Last Month’s Income
2. Give Every Dollar a Job
3. Prepare for Rain
4. Roll with the Punches

The software is really set up to help you through these four steps, so you step away from the financial edge of disaster and are prepared for anything that comes your way.  Of course you have to do the hard work, but YNAB does a good job of guiding you.

Stop Living Paycheck to Paycheck

YNAB is set up to help you live on last month’s income, rather than living paycheck to paycheck.  For a new user, who is currently living paycheck to paycheck, you enter all of your income as supplemental, rather than regular, income.  Every month you put money toward your buffer, until one day you have a month’s worth of income as a  buffer.  It takes a while to get there, but it’s worth it.

Once you have a month’s worth of income as a buffer, you enter your monthly income as regular income.  That income will show up as available to spend next month, not this month. So every month you have at least a month’s income in reserves.

Ideally, of course, you want to have three to six months worth of expenses as an emergency fund, but if you’re currently living paycheck to paycheck, having a month in reserve makes a huge difference.

Give Every Dollar a Job

Jesse Mecham, the creator of YNAB, believes that every dollar should have an assigned job.  Dave Ramsey would say the same.  And I agree.

If you don’t have a plan for your money, it tends to evaporate a dollar here and a dollar there, instead of helping you reach your goals. When I’m consistently keeping up with my budget, I do a better job of paying down my debt.  No matter how committed I am to getting out of debt, when I let the budget slide, I don’t do as well, because I don’t see the results.

By keeping track of my budget in an easy to use software like YNAB, I easily see where my money is going and where I’m overspending.  I can nip bad habits in the bud and get back on track right away.

Prepare for Rain

I live in Oregon.  And every year, it rains.  Without fail.  I never know what day the rain will start, but I know it’s coming.

It’s the same way with finances.  Everything is going smoothly for a while, and then suddenly the rain starts.  Medical bills.  Car repairs.  A leaky roof.  An unexpected expense blows the budget.

I recently experienced this as last week our car needed new tires (which we were anticipating) and then the radiator cracked (which we weren’t anticipating).  We had an emergency fund to cover the expense, but it took a big hit.

And that’s the meaning of Rule 3.  Unexpected expenses will come.  So be prepared. In YNAB you are encouraged to save an emergency fund above and beyond the one month of income you have tucked away.  Know the expenses are coming and have the funds on hand to cover them.

Roll With the Punches

No budget is perfect 100% of the time.  Overspending happens.  But what are you going to do about it?

Well, if you overspend one month, take the overspent amount from your available income the next month to make it even.  YNAB automatically calculates this for you, so you can see how much money you have available in each budget category currently, and how much is available next month.

And if the amount you have budgeted in a certain category really isn’t working for you, it’s easy to adjust your budget to reflect a new amount.

YNAB Pro/YNAB 3 Giveaway

This post is getting long, so I’ll save the rest of it for another day.  But before I sign off, I have an exciting giveaway!

I’m giving away one copy of YNAB Pro, worth $49.95! But even more exciting than that is the fact that YNAB 3 is coming out soon, and the winner will get a free upgrade when YNAB 3 is released! YNAB 3 will include lots of cool upgrades, and it will be Mac compatible, so you Mac users, feel free to enter the giveaway, too!  I’ll be writing about YNAB 3 later this week, so stay tuned.

Since I absolutely love this software and think everyone could benefit by using it, I want to get the word out.  So here’s how you can enter.

• Leave a comment
• Tweet about this giveaway on Twitter (you tweet an entry once a day)
• Write a post about this giveaway, linking back to this post

For easy tweeting, here’s a short url for this post to use.  http://budurl.com/wx95

To make it easy for me to count the entries, please leave a separate comment for each way you enter. So if you enter all three ways, first leave a regular comment.  Then leave another comment with the link to your tweet.  Then leave a 3rd comment with a link to your blog post.

If you tweet or write a post, please leave a link to your tweet or post, so I can make sure the entry is legitimate. I hate to have to do that, but it’s necessary.

I’ll close comments next Sunday at noon PST and draw a winner with a random number generator.  The winner will have three days to contact me, or I will draw a new winner.

For those of you who can’t wait for the contest to end, you can get 10% off your copy of YNAB Pro by using the code “beingfrugal” (without the quotes…good through the end of November). In addition, if you download the free trial and purchase your software within 48 hours of starting your free trial, you will get 10% off, for a total of 20% off!

AND people who buy YNAB Pro after September 1 (so that’s everyone making a purchase after the time of this posting), will be given a free upgrade to YNAB 3 when it comes out!  Not a bad deal!

I just love this software, and I know you will too!