YNAB Review: Zero-Based Budgeting at Its Best

This article may contain references to some of our advertising partners. Should you click on these links, we may be compensated. For more about our advertising policies, read our full disclosure statement here.

In order to take control of your finances, you’ll first need to tackle the B word: budgeting.

Whether you use an old school pen and paper, a spreadsheet, or one of the myriad budgeting apps available today, a budget is an essential tool in your financial arsenal.

Today, we’re talking about one of the most well-known budgeting apps on the market: You Need a Budget – also known as YNAB.

YNAB is a zero-based budgeting app that helps you spend your money with purpose. The program encourages you to make a plan for every dollar, track your progress relative to the plan, and adjust your plan throughout each month as needed.

In this YNAB review, I’ll explore how the app works, describe its top features, and explain who will love it (and who will want to take a pass).

YNAB at a Glance

• Dedicated budgeting app
• Based on zero-sum budgeting principles
• Available web-based, as a mobile app, and Alexa
• Automatically imports and categorizes your transactions
• Tracks your spending using custom categories
• Helps you set and track goals

What Is YNAB?

YNAB (You Need a Budget) is a budgeting app designed to help you master zero-sum (or zero-based) budgeting. Their philosophy is based on four rules:

1. Give every dollar a job.
2. Embrace your true expenses.
3. Roll with the punches.
4. Age your money.

Let’s dive in and see what each of these rules means for you.

Rule One: Give Every Dollar a Job

Giving every dollar a job essentially means that you’re making a plan for every dollar you earn by assigning them “jobs”. Jobs include fixed expenses, estimated variable expenses, debt payments, and savings goals.

When every dollar has a job, income minus expenses equals zero. That’s the premise of a zero-sum budget. You can build a budget to suit any income, as long as it follows this rule.

Rule Two: Embrace Your True Expenses

One of the most common budgeting mistakes people make is underestimating expenses. They’ll tally up things like mortgage/rent, utilities, gas, and an average grocery bill, but fail to plan for unexpected expenses.

The thing is, most expenses aren’t that unexpected. If you own a car, you know there will be annual maintenance costs. If you have a pet, you know they will need veterinary care.

Rule Two is about identifying the bigger “unexpected” expenses that wreak havoc on your budget and turning them into monthly expenses. Say you spent $600 on auto maintenance last year. That’s $50 a month. Build it into the budget.

With YNAB, you can create custom categories to reflect your true expenses.

Rule Three: Roll with the Punches

Rule Three is a big part of why the YNAB method works.

When you make a budget, you’re armed with a plan. It feels good, but what happens when the plan goes awry? A lot of times, people give up.

With YNAB, it’s super-easy to regain control of the situation. If you overspend in one category, no worries – you can cover the difference by subtracting that amount from another category.

Let’s say you’ve just overspent on eating out by $20, but you still have a $40 clothing budget. With the tap of a finger, you can subtract $20 from clothing and cover eating out. Now your eating out budget is balanced, and you have $20 left in clothing. As long as you don’t overspend on that, you’re fine.

Rule Four: Age Your Money

YNAB asserts that if you follow Rules One, Two, and Three, eventually you’ll be able to pay this month’s bills with last month’s income.

Whether this becomes a reality for you depends on your income, your spending habits, and your degree of success with budgeting. Assuming you build savings into your budget and stick to it, you should eventually have enough money in the bank to be at least a month ahead.

Try YNAB for Free – Try YNAB free for 34 days! Set up your budgets, start tracking, and get your money working for you. Get started here.

How Much Does YNAB Cost?

OK, here’s where some of you are going to bristle, especially if you’re looking for a solid alternative to Mint.com: YNAB isn’t free. YNAB is a subscription service that costs about $84 a year. That’s just under $7 a month.

I know, I know. Paying money for a tool to help you save money? It feels counterintuitive.

Trust me, I hear you.

But here’s the thing: When you don’t have a budget and spend your money willy-nilly, you waste way more than $84 in a year. You may even waste that much in a month.

Now, I’m not saying there aren’t great free alternatives out there, because there are. But if you like YNAB’s style, if you use it consistently, and if it helps you take control of your income and spending, then $7 a month is probably worth it. After all, you can include it in your budget.

Not sure if you want to spring for it? You don’t need to decide upfront.

YNAB offers a free 34-day trial – they don’t even collect your credit card info during that time. That’s long enough to build a monthly budget, give tracking a go, and see how you feel at the end of the month.

They also offer students 12 months for free, in addition to the trial. And if students subscribe after that, they get a 10% discount. (Jealous).

If you buy YNAB and decide part way through the year that you’re not getting value from it, you can cancel your subscription and delete your account. You’ll get a prorated refund for the time you didn’t use.

One last thing on price: YNAB offers a No-Risk, 100% Money-Back Guarantee (their words). That means that if you subscribe and decide it’s not working for you, you can contact them to get a full refund.

Top Features of YNAB

Build a Zero-Sum Budget

YNAB helps you quickly and easily build a zero-sum budget by having you assign a job for every dollar. You can create your categories so they reflect your unique earning and spending patterns.

Every month, you’ll use the budget template to make a budget for each category. YNAB compares your budgets to the balance in your connected accounts and keeps track of how much you have left to budget. For example, if your account balance was $1,000 and you budgeted $800 of it, the top of your screen would say you have $200 to be budgeted.

Automatic Imports

Like most budgeting apps, YNAB connects to your bank and credit card accounts and automatically imports your transactions. It can take up to 24 hours for transactions to show, so it won’t always be in real time.

Currently, direct importing is only available with U.S. and Canadian financial institutions. If you live outside these countries, you can still use YNAB, but you’ll have to import files from your bank. You can also manually enter your transactions.

Track Your Spending with Custom Categories

YNAB comes with factory-set categories, but you can edit them and create new ones as you see fit.

As transactions roll in, YNAB attempts to auto categorize your purchases, but sometimes it’ll get it wrong and you’ll have to adjust it. As transactions are sorted (or as you sort them), YNAB tallies your running total in each category and shows you how much you have left to spend.

You can also split purchases into multiple categories, which is useful when you buy things from several categories at one time (like at Walmart).

If you overspend in one category, you can steal the difference from another to keep things balanced. That way, your budget doesn’t go off the rails every time you deviate from the plan.

Set and Track Goals

YNAB allows you to set and track five types of goals:

• Monthly funding goals for each category
• Target category balance
• Target category balance by a certain date
• Pay off credit card balance by a certain date
• Pay a specific amount on a credit card each month

YNAB tracks your progress towards each goal and prompts you to take action to meet your goals. Unfortunately, you can’t create custom goals outside of these five categories.

Who Should Consider YNAB

Anyone Looking to Crush Zero-Sum Budgeting – YNAB makes zero-sum budgeting dead simple. Rule One is to give every dollar a job. That means thinking about your spending categories and making a plan for every bit of your money. But of course, sometimes things don’t go according to plan. No worries! If you overspend in one category, you take the difference from another to keep your budget balanced. If you adhere to this system consistently, your monthly spending will always be in check.

People Getting Started with Budgeting – If you’re just getting into budgeting, you want a tool that’s straightforward and not overwhelming. YNAB fits the bill. This software is all about budgeting. It tracks your income, expenses, and goals, and it does it well. This sole focus on budgeting makes YNAB easy and fun to use. Oh, and they have a ton of free tutorials and 20-minute workshops to help you learn the ropes.

Students – YNAB offers everyone a free 34-day trial, but students get an incredible deal – an additional 12 months for free! If they subscribe after that, they also get a one-time 10% discount.

Who Should Avoid YNAB

Anyone Looking for a Free App – If you’re not interested in paying for a budgeting tool, YNAB is not for you. There are a ton of free apps you can check out instead. May I suggest Mint?

People Who Want to Track Their Whole Financial Picture – In my humble opinion, YNAB rocks as a budgeting app. But for those of you who want a robust set of tools to track your whole financial picture—I’m talking investments, debt, net worth, the whole shebang—well, YNAB ain’t it. For something more comprehensive, I recommend checking out Personal Capital.

Anyone Who Doesn’t Use a Zero-Sum Budget – YNAB is best for zero-sum budgeters. It forces you to give every dollar a job, so you have a plan for all your money. That works for me, and I think it’s the best way to approach budgeting. If another budgeting method works better for you, find a tool that matches your style.

YNAB Review: Final Thoughts

If you’re willing to pay for an easy-to-use, zero-sum budgeting app that connects to your accounts and lets you create custom spending categories, YNAB is a great option.

Just remember, it’s a budgeting app, nothing more. If you want a tool that tracks your total financial picture, then YNAB won’t cover all your bases, and you should keep looking. Thankfully, there are plenty of options out there.

Have you used YNAB yet? Let us know your thoughts in the comments!

Take the Stress Out of Money – Build your own budget, connect your accounts, and watch your financial life fall into place. Try YNAB free for 34 days!