We’ve been using YNAB for a long time. It was with us through nearly our entire debt-free journey. YNAB 4 was a part of how we handled money in our family and we weren’t ready to part ways when the new online YNAB came along.
YNAB (the company) understood that parting would be hard so they let us keep using YNAB 4 indefinitely. We took them up on that for exactly 3 years! Now we’re making the switch to the new YNAB.
First I’ll explain our reasons for switching and our reasons for dragging our feet so long. Then I’ll share a hack for the new YNAB that helps preserve my favorite YNAB 4 feature.
Why we finally switched from YNAB 4 to the new YNAB
Let me start by saying the decision wasn’t an easy one. But I was thinking of YOU. Yes, we made the switch in large part to conform to the modern budgeting world.
When Six Figures Under was new, I shared YNAB budgeting tutorials filled with screenshots of our actual budget. As time went on I made videos sharing the screen of our actual budget.
This was all well and good when YNAB 4 was around. Readers like you could see how we actually budget, and get a peek inside how YNAB really works and how we use it. Hundreds of you who tried it out back then with a month-long free trialdecided that YNAB 4 would be a good fit for you. I still hear from many of you who became faithful YNABers from my recommendation!
Now that YNAB 4 is not generally available, it doesn’t work as well for me to share our budget with you. I feel like I’m taunting you with pictures of, say, the most delicious “Fancy Berry Pie”.
(Yes, I just made that up, but follow my analogy on this one.)
I share the failproof recipe with you. You’re so excited to make your own Fancy Berry Pie, and then I break it to you that you actually can no longer buy fancy berries anywhere. Sorry guys! My freezer may be full of fancy berries, but you can’t have any. How sad is that?
Well that’s pretty much what has happened with me and YNAB 4. I love to share practical budgeting tutorials using our actual budget, not just the amounts, but also the tips and tricks that make the budgeting tool itself so nice to use. For the last few years, unless you already had a copy of YNAB 4 (a freezer stocked with fancy berries), you couldn’t conveniently implement anything I was showing you!
Now, I could have invented a pencil and paper method, told you it was the bestest, and sold you a budget printable, but that’s not how I budget.
People ask me ALL THE TIME what I use for budgeting. Of course I still recommend YNAB to them, because, well, it’s still YNAB and the methodology is solid, but I’m not able to help people the way I used to.
So the #1 reason for switching to the new YNAB is to be on the same platform as YOU. While still using YNAB 4, you just had to drool over it (mmmm Fancy Berry Pie!) when I bashfully showed it off. With the new YNAB, if you’re not already YNABing, I can at least give you a way to check it out (hooray for a free 34-day trial!).
For full disclosure, if you subscribe to YNAB after clicking on my link and doing a free trial, then I’ll get a free month of YNAB too. But that’s not why I’m doing this. If that were the case I would have done this 3 years ago.
Let me tell you why this change has taken so long.
Why we were hesitant to change to the new YNAB
Some of the features that we loved about YNAB 4 changed in the new YNAB. That made us sad!
The main thing we missed was the month ahead feature. In YNAB 4, once you had a fully funded month-ahead buffer, you could send your paychecks from THIS month to NEXT month’s budget. That money would not be available to budget until the following month.
The new YNAB drops this feature in favor of “aging your money.” Instead of holding all of this month’s pay in a separate and discreet “container” all of your money blends together and “ages.” You can be “ahead” by budgeting out your expenses for future months with any “extra” that you have, but this is definitely not the same as what YNAB 4 does.
As we were paying off debt, we relied on the month ahead feature to budget every penny down to zero and maximize our debt repayment at the end of each month. (Spoiler: you’ll see some historic YNAB 4 images in both of those popular blog posts!)
After playing around with the new YNAB, I’ve come up with a hack to mimic this functionality that we adored in the old YNAB.
How I make the new YNAB budget income like YNAB 4
If you’re a visual or auditory learner, then watching the video below will be most helpful. Otherwise keep reading and I’ll do my best to explain it in words and pictures.
How it works in YNAB 4
In YNAB 4 when you enter income you choose either “Income for [current month]” or “Income for [next month].”
If you choose next month, that money moves over into the next month’s “available to budget” total. You can start allocating it to next month’s expenses right then, or you can wait until the 1st of the month.
Life is good. You budget one month at a time down to zero.
My hack for making it work in the new YNAB
Since adding income in the new YNAB just adds money to a timeless pool of “available-to-budget” money, I want to earmark money earned this month so that I can wait to spend it until next month.
I don’t want to leave next month’s money in the general “Available to Budget” balance because it is too easy to cheat (inadvertently or intentionally) when I’m moving money around to different categories throughout the month.
I don’t want to cheat myself out of next month’s money and lose my buffer. If you can’t appreciate the benefit of being a month ahead read my post about living on last month’s income.
To avoid this potential problem, I made a specific holding category for “income earned this month that I don’t want to spend until next month.”
When a paycheck arrives, I enter it as new income.
The amount immediately goes up to “To Be Budgeted” at the top of the budget.
I then budget that exact amount to my special holding category.
Throughout the month all of our paychecks builds up in this category.
At the end of the month when I’m ready to make the next month’s budget, I release the funds from the special holding category by changing the budgeted amount to zero. Now all of those funds are released to the “To Be Budgeted” total.
Now I budget the new month completely, until the “To Be Budgeted” amount is zero. Any new paychecks are treated as above (entered as income and budgeted to the special holding category).
Throughout the month if I overspend in a category, the “To Be Budgeted” amount goes into the red and I immediately pull budgeted funds from another category to cover the overspending without stealing from the future.
The sad part about this hack is that there is not a beautiful record left. In the old YNAB I could easily go back to any month and show you with one click the income that funded that month’s spending.
But it works and keeps us precisely one month ahead. Everything over our monthly expenses goes to funding our goals (currently paying off our mortgage).
Should YOU switch to the new YNAB?
To put it simply, “If it ain’t broke, don’t fix it!”
Just because I decided to switch doesn’t mean you need to. If you are using YNAB 4 and it’s working for you (it was working great for us!), then there’s no need to switch.
There are some perks with the new YNAB, like automatic syncing of accounts (though we opted to still enter our checking account and credit card manually so we can be aware of our spending) and setting goals for categories.
Like any subscription, though, it also has a fee. I believe it’s totally worth the cost (it will save you WAY more than you spend on it), but if you don’t have to pay for it, then you can save that money! If you already bought YNAB 4, you can keep using it forever without having to pay for it.
So it’s up to you! You can try the new YNAB and see how it compares, then decide for yourself!
If you want to try YNAB, be sure to do this
As you may have gathered, YNAB is a different from other budgeting methods. The YNAB methodology will teach you to manage your money differently than you’ve probably done in the past. The rules in YNAB are different enough to be startling to long-time budgeters but intuitive enough that you’ll end up thinking, “Why doesn’t everyone do it this way?”
Because it’s different, it’s crucial that you check out their free classes during your trial so that you can learn HOW to use YNAB. This isn’t the kind of thing where you just throw away the instructions and wing it. If you try that, you will probably not have a good experience.
So go grab your free YNAB trial and then sign up for their free classes and learn how to use this powerful, finance-altering tool. You’ll be so glad you did!
Oh, and if you have questions about how WE use YNAB that you’d like us to address in future posts or videos, just let me know. Now that I don’t have to feel guilty for showing you mouth-watering pie made with fancy berries that are no longer for sale, I can start sharing the technical side of budgeting again!
Don’t worry, I’ll still keep showing the personal side too. This is, after all, personal finance made public!
How about you?
- Do you use YNAB? Which version?
- If you’ve used both versions, I would love to hear your comparison and what you love or hate.