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YNAB revisited

I did not explore or cover YNAB ("You need a budget") when I was looking at personal finance apps recently. This was mainly due to my history with that company. I used to use YNAB, up to version 4, up until about 5 years ago or so.

That was a paid-for app that ran on my Mac. It kept registers for my main accounts and very competently allowed me to set and track a personal budget. It was built on a simple, inflexible approach to budgeting in which existing money or new income had to be fuly allocated to spending budgets, which were reduced as spending happened in each category. Money could be moved between budgets at any time if a budget was likely to over- or underspend. It was a tech version of the old practice of putting cash from your pay-packet into labelled envelopes and then paying from those, so you knew exactly where you stood. When the envelope was empty there was nothing to spend on that category or label until you could put more money into the envelope by borrowing from another envelope or putting new money in.

It worked very well for me, far better than simply tracking spending. If I had money in an envelope I could choose to spend it now, or not and I could have confidence that I was not going to run into trouble from bills or spending on other categories. It meant I had to make plans (budgets). If I changed things, I had to re-plan. I could not simply look at figures and ignore them.

Like a lot of their customers, I parted company when the company decided to make radical changes at the end of 2015. It moved to a web app and a subscription model, significantly increased the price and changed its approach to budgeting, the language it used to describe the process and it became extraordinarily evangelical that the changes it was making were right for its customers, however they felt about it. I felt it killed what had been an effective practice for me. Although the existing software still worked, and was even likely to be updated for a year or two, it was clearly in its death throes once the company committed to its new approach. The frustrations I had with the software (lack of reporting, for example) and feeling mightily annoyed with a company that seemed not want to listen to its customers, meant I quickly found other software, though I never really settled on anything that worked as well for me.

Following my somewhat frustrating recent attempt to find better software, I decided to run a month's trial of YNAB in parallel and see what I thought of it now.

I won't attempt to describe YNAB and how it works. Their site has thorough and well-put-together learning videos and there is a simply wonderful review and get started article and video by Nick True ( that it would be very hard to add to or improve on. I don't necessarily agree with every aspect of his personal approach to budgeting or using YNAB, but his description of the software, its strengths and weaknesses is exemplary. I wish there were more reviews like this about other software, from someone who has lived with it, used it and genuinely thought about it.

It took very little time setting up my accounts and budget categories and I was very quickly running a parallel set-up to Moneywiz, but with a much clearer picture of my real financial situation. I found I was using YNAB to make financial decisions (can I afford this or do I want to?) in preference to Moneywiz every time. I was not sure that I would keep it at the end of the (generous) month's free trial. I then received an email extending the free trial for a further month, because they had not sent me the daily email tips I had signed up for. This was unexpected and means I have now been using YNAB fully for more than 5 weeks. I now think I will pay for and keep it, but I still have a bit of a love-hate relationship with YNAB.

Starting with the positive. The company and its software have a clear, reasonable, approach to personal and family budgeting that works. They back this up with excellent support and learning materials and have implemented a web and mobile apps that embody it well. There is a clear rationale to their approach and they are very focused on helping you to adopt it. The apps are updated very regularly and they tell you what they have done. I have found their support responsive and transparent and I like very much how their values (e.g. inclusion) are reflected in their materials and web site rather than in statements. They seem much less evangelical than they did and have done a lot of work since I last used their products to provide better channels of communication with their customers. There's a lot to like about this company. To give just one example, as well as their free trials being generous and genuine, I am entitled to a worthwhile permanent discount because I bought YNAB4 five years ago!

One the other hand, the service is not cheap. I think their claim that I am likely to save more than it costs may well be right, but it still seems a lot to pay for what is basically a fairly simple web app and mobile apps that access it (but not as well). I think their learning materials, advice and support are extensive and mostly excellent, and that costs lots, but if you have aready done the learning, (e.g. if you have paid down major debt) you are paying for things you do not need. Similarly, users in the USA have the ability to auto-download and import transactions from banks (which must involve significant costs for the company), but that is simply not available elsewhere. That's not an issue for me, as I find manual transaction entry manageable and it helps me to stay on top of my finances, but again, I am forced to pay for a service I do not need and cannot use.

The app is deliberately kept simple, and I understand the approach, but that means it does not do some of the things I would like it to and that can be frustrating. Until very recently indeed, it did not even give you a "running balance" on your accounts. That would have made it very easy to over-draw (e.g. by not moving money from a savings to a current account in time, even if you had budgeted for an expense). It still does not do a good enough job of showing you what you are committed to spend (e.g. in standing orders), and the reports (especially in the mobile apps) are much too limited to be helpful. I'd like to keep track of my car purchase loan and my modest investment account, but all I can do is "track" their total value manually: it means that the reports, especially "net worth" are deeply inaccurate. They argue, probably rightly, that in day-to-day managing of your personal budget these are irrelevant and distracting, but it means YNAB does not give a true picture of my personal finances (e.g. how much I am paying to service the car loan) and so there are financial decisions (e.g. should I pay down the car loan early?) that it does not help me to make. Although they are much better than they were when I stopped using them, there is still a sense that YNAB is an approach and philosophy you commit to, not a tool that you adopt for your own purposes. It's still a mission, even if not as openly evangelical as it used to be. All that means that it is possible (as quite a number of people report on their forums) that you might find yourself running a more traditional personal finance app in parallel with YNAB, which seems plain wrong for lots of reasons.

A few of these frustrations are eased by the existence of the YNAB toolkit. This is a community open-source browser extension that uses YNAB's published API to add (in my view vital) functionality such as showing you committed spending and goals for each category and giving you better reports. Without this, I think YNAB could be too frustrating to live with, but using it requires me to run another browser (Firefox or Chrome as well as Safari which can't run the toolkit) and means I have to trust another (free) provider not to mess up my accounts or to disappear when I most need them.

The bottom line is that I do feel more in control of my personal finances since I have been trying YNAB again. I feel (to use their words) that every dollar has a job, I know what it is and I am in control. Things are moving in a positive direction. I am forced (gently but firmly) to make conscious decisions and to understand the consequences. It's probably, just about, worth it in terms of cash and frustrations and I will probably continue. I just wish there were some viable alternatives. I did look in depth at Buckets, Goodbudget and Moneywell, which all share the zero-sum budget approach, but in my view none of them are fully-fledged, reliable and effective apps, at least yet.