YNAB Review: Real-Time Budgeting App

Budgeting can feel like an uphill battle sometimes. Maybe you’re constantly overspending or racking up credit card debt — and playing catch-up at the end of the month is stressful.

What you need is a tool that can help you organize all the moving parts of your daily financial life. You Need a Budget.

YNAB (You Need A Budget) is a premium budgeting app that can help you take control of your finances. It’s one of the only budgeting apps on the market that helps your spending in real-time, instead of just showing you what you've already spent.

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Overview of YNAB

YNAB has a near-cult following, and for good reason. It has built-in educational tools, free training, and a huge community of YNABers who can lend a helping hand. I’d say YNAB is one of the best (if not the best) budgeting apps available.

With YNAB, you plan your monthly expenses by assigning every dollar you have to a specific category. It also lets you set goals, including debt payoff and savings goals, and shows you monthly spending reports to track your progress.

The app syncs with your financial accounts to bring all of your spending into the budget. And you can share your budget with your spouse or partner as well, making it a great app for collaborative budgeting.

YNAB has an extremely helpful community of other YNAB users who offer support to fellow members. You can ask questions in the online forum, or chat directly with customer service right in the app. 

In addition, YNAB offers weekly live webinars to teach new users how to set up the app and get the most out of it. You can ask questions live, too.

How Does YNAB Work? 

When you first download YNAB, you’ll have access to a budget template with placeholders for common budget categories. You can use these to start budgeting or create your own.

YNAB is unique because not only can you plan your monthly expenses in advance, but as your income comes in, you can assign those funds to each budget category. This makes YNAB one of the only real-time budgeting apps that uses the money you have now — not just money you might have in the future.

For example, if you’re debating a purchase, you can quickly check your budget and it will tell you exactly how much you have left to spend — so you can make better money decisions.

YNAB also helps you avoid credit card debt in a unique way that I haven’t seen in other budgeting apps. When you spend money on a credit card, not only does YNAB track your spending in the correct category, but it automatically sets the money aside to pay off your credit card bill at the end of the month. 

The 4 rules of YNAB

YNAB is based on four key concepts of money management, developed by founder Jesse Mecham. These are known as the “The Four Rules.”

• Give every dollar a job. YNAB is a zero-based budgeting app, meaning that you have to assign every dollar in your budget to a category, with $0 left unassigned. YNAB will encourage you to assign all income toward expenses, savings, and debt payoff.

• Embrace your true expenses. We all have expenses that come up outside of our regular monthly budget. YNAB lets you set categories for these and rolls any balances over each month. For example, if you’re saving $100/month for car maintenance, the balance can build each month — then when you get the oil changed, the balance goes down. This keeps you honest about what your true expenses are.

• Age of money. This concept can be confusing at first, but the idea is to grow your money until you have one month of expenses in the bank. This means you can now live on last month’s income, with all the money in your account at the start of the month.

• Roll with the punches. If anyone tells you they stick to their budget perfectly, they’re lying. Every month is different, and YNAB is flexible, letting you adjust as things come up. So if you run out of grocery money with a week to go in the month, you can transfer budgeted funds from another category, like restaurants. This lets you adjust quickly but also forces you to stick to your overall budget.

How To Set Up Your YNAB Budget

Setting up your first budget in YNAB can feel overwhelming, but you can get started quickly.

YNAB starts with default categories, so you can start adding amounts to these, or create your own categories. (If you sign up in the middle of the month, only budget for the amounts you’re spending for the rest of the month.)

Once you’ve created your budget categories and amounts, you can link your bank accounts and credit cards. This connects all your income and expenses into your monthly budget. You can also connect any debt accounts you want to pay off, like credit cards and loans.

Once everything is set up, YNAB will know your current balances from your spending accounts, and you can assign the funds to different budget categories.

This is what makes YNAB different from competitors. Instead of just setting up a budgeted amount and tracking, YNAB requires you to actually assign the dollars in your bank account toward upcoming expenses. This forces you to think critically about your spending and stops you from spending money you don’t have.

READ MORE: How Much Should You Save a Month?

How To Use YNAB To Improve Your Finances

YNAB is designed to keep your spending in check, only allowing you to budget for money you already have — instead of money you will hopefully have in the future. It gives you a sobering look at your current financial situation in real-time, and forces you to be intentional with how you spend the money you currently have in your account.

YNAB also prioritizes debt payoff. Although you can use credit cards and the software will track your purchases, it automatically sets that money aside to pay off the credit card with money you have in the bank. 

This forces you to only spend money on a credit card if you already have cash in the bank — otherwise, YNAB just adds the spending to your debt totals or asks you to take the money from somewhere else.

You can think of YNAB as a built-in accountability partner that keeps you honest with your spending: 

• It will flash warnings when you overspend. 
• It will ask you to move money from elsewhere if you run out of funds for a category.
• The Age of Money feature helps you build an emergency fund.

READ MORE: How To Pay Off Credit Card Debt

YNAB Pricing

YNAB has a simple pricing model:

• 34-day free trial for new accounts
• $14.99 per month after the free trial
• $99 per year if you pay annually

YNAB is more expensive than most other budgeting apps, but it also provides more features and control over your daily finances. It’s really a one-trick pony — it does budgeting really well, but not much else.

Who Should Get YNAB?

YNAB is for people who feel out of control with their monthly spending. Maybe you are living paycheck to paycheck and need to be aware of where every dollar is going. YNAB forces you to only spend money that’s in your account — preventing you from spending money you don’t have.

YNAB is also ideal if you want to become debt-free. YNAB treats credit cards like cash and automatically sets aside the money needed to pay them off. YNAB also lets you set up debt payoff goals and allocates funds toward debt payoff until you become debt-free.

Who Shouldn’t Get YNAB?

YNAB is not for people who don’t want to dig into the details of their daily spending. YNAB takes some time to set up and requires that you assign every dollar a job. If you don’t want that level of scrutiny on your daily spending habits, then YNAB will just be a burden for you.

YNAB is also not great at tracking your investments. While you can connect asset accounts, such as an IRA or brokerage account, it lacks any analysis tools or meaningful investing tracking. Apps like Empower offer much better investment tracking tools for free.

Alternatives to YNAB

YNAB is one of the best budgeting apps on the market, but it’s not everyone’s cup of tea. Here are a few YNAB alternatives to consider instead.

YNAB vs. Rocket Money

Rocket Money is a budgeting app that originally started as a way to track your subscriptions. Rocket Money offers a free version, as well as a premium service with pay-what-you-can pricing (from $4 to $12 per month). 

With Rocket Money you can connect your accounts, track your subscriptions, and even have the Rocket Money team cancel any unwanted subscriptions for you automatically.

In addition to budgeting and subscription tracking, Rocket Money has a bill negotiation service. There’s no upfront cost for this service, but if the negotiation is successful, you’ll pay 30% to 60% of the total savings to Rocket Money.

Read our full review of Rocket Money.

YNAB vs. Simplifi

Simplifi is a money-tracking and budgeting app that offers in-depth budgeting features, as well as investment tracking, bill tracking, and goal setting. 

Simplifi connects to your financial accounts and displays everything in an intuitive dashboard. This lets you see your spending all in one place, with well-designed graphs for seeing how your spending breaks down.

You can also set goals, with specific dates and amounts. This lets you track your progress toward debt payoff or savings. 

True to its name, the app is simple, but some features could use more details, such as its investment tracking. Simplifi costs $3.99/month.

FAQs

Is YNAB safe?

YNAB is a safe and secure budgeting app. The app uses a secure third-party service (Plaid) to facilitate connections between YNAB and financial institutions, and your account credentials are not stored on the app. You can also use YNAB in un-linked mode to remove any connection with your financial accounts, but you’d have to input transactions manually.

Is there a free version of YNAB?

YNAB offers a 34-day free trial, and they don’t even ask for a payment card to sign up. This means if you forget to cancel, you won’t be charged anything. After 34 days, you must pick a payment plan, either $14.99/month or $99 per year.

The Bottom Line

If you need help keeping your spending in check, YNAB can help, by monitoring your spending in real-time. Plus, you can set savings goals and plan ahead for emergency expenses.

It does have a fee, but for an all-in-one budgeting app, it could be worth it — especially if it helps you to pay off your debt.

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