Frugal Living: You Need A Budget

The budgeting software that we use is YNAB (You Need A Budget) and it is so so great, I literally cannot recommend it highly enough. It’s the best thing that we’ve done for our finances, and our marriage. So here is a little introduction to this fantastic piece of software.

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The most basic function, is that you can set up categories to plan and track your expenses. You could do THIS part for free on an Excel spreadsheet, but it’s the most basic function of YNAB so I thought I’d start here. They recommend putting in as many categories as you need to track everyday, weekly, monthly and annual expenses. Things like your WOF and registration, which are annual or bi-annual expenses, you would still budget for monthly – you would just take the total it would cost you in a year, divide that by 12 months, and put that aside each month so when the bill comes you know the money is there. They also recommend having a misc or “things I forgot” category, as there will no doubt be surprise expenses that you had forgotten about when drafting up the budget – and this way they won’t have to come out of your savings or emergency buffer either!!

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One of the best functions, that makes it extremely user friendly – and great for couples spending out of the same account – is it’s mobile interface. It syncs to your phone as soon as you input an expense, so you can always tell how much left there is in your grocery fund, or your coffee fund. You need to get used to inputting it as you go as well, so it will deduct the amounts straight away when you make your purchases. It will also cut down on the time you need to take to reconcile the budget each week.

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YNAB also has GREAT customer service. You get a free course to do along with the download (the first months trial is free as well by the way!) which teaches you how to budget, how to communicate with your other half about your budget and where the compromises need to happen, and these four rules which are core to everything.

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Not only do they help you learn how to budget, and plan the budget out, but they also help you to track your spending. There are several different graphs which help you to track spending by payee (ie: Coundown, Landlord etc), by category (Ie: Groceries, Bills, Savings, Automotive etc) and even track your net worth and how that is growing.

This is an example of one of the graphs.

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This is an example of the net worth graph (not sure what currency that is!). This is one of our favourite graphs, because although it feels like we spend so much of our income paying off debt, it’s so encouraging to see that it isn’t sucked into a void – it’s slowly getting us uphill one step at a time.

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As you pay off debt, the red line should sink until the blue line (your assets) grows bigger. By the looks of this graph, this guys been saving a lot of his income, but not paying debt which is why the red line is about the same, but the net worth line (down the bottom) is steadily going up. He broke into the positives at the end though, so it’s obviously working for him.

I really encourage you to give it a go, whether you use it for your personal budget, home business or both, it’s so versatile and there are so many free courses on how to make it work for you, whether you earn monthly, weekly or if it fluctuates due to freelance work. The trial is free for the first month, then you can choose whether to buy it or not. Full price it’s US$60, which is what we paid for it, but I hear you can get a discount if you are a student, and it also has gone on sale through Steam at least once before.

Before getting into this myself I had no idea what I was doing, but it’s definitely helped me to Tame The Beast, and I’ve read of a lot of other success stories too. Have a look through the forums, or click here to try it out for yourself.

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