budgeting · debt

How I stay on track…

You need a budget…no seriously, you do! You Need A Budget (youneedabudget.com, also known as YNAB) is the software I use to plan and track my money and I love it. I cannot sing it’s praises enough. When my debt problems got out of control, I turned to moneysavingexpert.com (MSE) – a U.K. based website and discussion forum which covers any money issue you can possibly think of. On the MSE forums, users were raving about YNAB, so I gave it a try and was hooked from day one.

My previous budgeting attempts generally consisted of making a complicated Excel spreadsheet in which I planned all my outgoings, and then trying to log actual expenditure against these figures. This would result, usually in a matter of days, with me either a) discovering something big I hadn’t budgeted for, and then throwing a tantrum whilst deleting the budget or b) forgetting to input transactions, getting in a muddle and then giving up (usually with a rebellious “sod it” spending binge….budgeting is so much like dieting…).

Before YNAB I had not managed to run a budget for more than a couple of days. And at the age of 42, that’s nothing to be proud of. But now I’ve been going a couple of months and it’s becoming more natural (I won’t say it’s a habit yet, but I hope it’s getting that way).

YNAB homepage

So what is YNAB?

YNAB is a zero-based budgeting system. Basically, to start with, you enter your current bank balance, and then set up spending categories (like little envelopes for allocating your money). This includes categories for all your monthly expenses, but also ones to put money aside in for annual and adhoc payments, and future saving goals like holidays or Christmas. Then you allocate all your money to the pots,  starting with the highest priority pots, until your fund is zero (hence the name). When you next receive some income, you allocate that to pots, and so on. When you spend money, you can enter the transaction on the app or the website, and see how much you have left in the pot, e.g. for groceries that month.

You can link YNAB to your bank accounts, but I don’t like the idea of having my bank log in details stored by any company, so I manually enter my income and expenditure – it’s very quick to do.

It brings so many benefits… I know where my money is going, I can clearly see how much I have left in each category. I’m not scared of checking my balance or spending money when I need to. Having kids, January is a tough time, financially – all the termly bills like after school club and music lessons are due, but I’d already budgeted a small amount each month for these, so this January was so much easier. And I’ve already put aside £150 for my car service next month.

I have made huge discoveries about the way I spent money in the past. For example, I’m actually pretty good at grocery shopping on a budget…but I eat out WAY too much. And I’m ashamed to admit that my expensive coffee shop habit cost me nearly £200 in one month last year. No wonder I was in debt (I was only brave enough to work that total out after I had cut back, it was just too embarrassing even to admit to myself).

I also set myself pocket money…so instead of spending money on myself and feeling sick and guilty that I can’t afford it, I now enjoy spending it. I know I can afford it as long as I don’t go over my budget. And if I do? No need to scrap the budget, just tighten up somewhere else – move money from another envelope into that one.

I know I sound like an advert! I’m not claiming that other software won’t do the same thing or that YNAB is unique – it was the first one I tried, and I loved it. All I know is that I swore I’d never pay for a budgeting system, but this is worth every penny of the $50 annual subscription. Start with the 34 day free trial like I did, but don’t blame me if you get hooked…


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