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Why Most Budgets Fail but YNAB Succeeds

Why Most Budgets Fail but YNAB Succeeds

You have no money

    Chances are at least one of your New Year’s resolutions had to do with money. So how are you doing on your budget?

    I can’t count the number the times I’ve created budgets only to throw in the towel and decide that they just don’t work. Usually my frustration is due to any of the following:

    1. The amount assigned to a category just isn’t realistic. After figuring the numbers and seeing I had a little distribution problem, I determined I could eliminate entire categories or set them unrealistically low. I let my excitement and determination to save money and get out of debt cloud reality. Amidst visions of picking up second-hand clothing at Goodwill and planning to cook all meals from scratch using basic pantry staples and spending $100 a month on groceries, I just knew I could make this strict budget work! A month later I was discouraged and feeling like a budgeting failure.
    2. Projected income for the upcoming month never manages to be close to actual income. If you’re salaried, this becomes easier. If, however, you’re an hourly employee or an entrepreneur, it’s much more difficult to predict what you’ll make next month. Without fail, a project will fall through, you’ll have to take days off work, or whatever. I’m sure Murphy has a law about this. Just know it will happen.
    3. Projected expenses are never accurate. If you do manage to come near budgeted amounts in many of your categories, there will be some unexpected expense that hits you and throws the whole budget off. Your car needed a new radiator. Your child had to be taken to the urgent care center.

    Once any of these things happen, it can lead to questioning your entire budgeting philosophy. If you suddenly need to pay toward your insurance deductible this month, do you then take that money from another category? Eventually budgeting can seem like a science that is only for those who have some special know-how, a surplus of income, or are likely living in straw bale houses and making cheese from their goats. All-or-nothing syndrome sets in, and you determine you’re just a free spirit, incapable of being fettered by the tedious nature of budgeting. It occurs to you that since you have some debt already, what’s a little more debt going to matter?

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    How I stumbled on the software You Need a Budget (YNAB), I cannot recall. I imagine it was likely in my search to find answers to these basic questions above. Spreadsheets, budgets on paper, Quicken, Microsoft Money–all of these just weren’t addressing my budgeting issues. After perusing the web site, I decided had nothing to lose by downloading a trial copy. After only a few days, I was so impressed that I purchased the software.

    While you’ll find that YNAB has the same features of charts, graphs, downloading statements directly into the software, etc., that software like Microsoft Money does, you’ll immediately note that YNAB has one major difference: It actually gives you a plan with education and support to help ensure your success.

    The YNAB Plan

    1. Stop living paycheck to paycheck. That’s what all budgeting advice says, but YNAB takes a different approach that I think is the key to making a budget work. With YNAB your expenditures in the current month are based on your last month’s income. So there’s no guesswork about what you think you’ll make or spend next month. You’re working with what you have.
    2. Give every dollar a job. Since you’re working with last month’s income, you will be portioning that money to categories. Every single dollar will be planned for a particular category (or job).
    3. Prepare for rain. It only makes sense to set aside money so those unexpected expenses don’t crash your budget.
    4. Roll with the punches. I like this one. It promises you will fail! Failing is part of the program. Microsoft isn’t going to tell you that. How many times do we quit because of an all-or-nothing tendency? YNAB makes small adjustments if you overspend in a category. And since failing occasionally is part of the program, you can pick yourself back up and resume your budgeting, knowing you’re still on track.

    The company further supports you by offering a free PDF book (upon purchase of the software) and free videos and information on topics of budgeting.

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    One of the keys to the YNAB philosophy is that you must get a month ahead on your income in order to have last month’s income at your disposal for this month’s expenses. This is the hardest part, but if you look at it as a challenge and take joy in watching your savings grow, it becomes easier. Accumulating a month’s savings is expected to take several months.

    A Chat with Jesse Mecham, CEO and founder of You Need a Budget

    I have my own ideas on why budgets fail, but I was curious to see how Jesse Mecham, CEO and founder of YNAB, would answer some questions related to YNAB and the challenges of budgeting in general:

    Q: Jesse, what gave you the idea to create YNAB with a budget based on last month’s income? I am unaware of any other software that does this.
    I was using spreadsheets before marriage, and then after becoming married, I had this idea. I knew I wanted to assign money to categories, but I wondered how I could possibly know how much to assign without overdrafting or getting ahead of myself. When asking someone to create a budget they often don’t even know what they’re spending in the first place. If you go over budget, just keep moving.

    Q: So what would you say is the reason that most budgets fail?
    The biggest reason is people don’t see a reward that matches their work and their input. So there’s a lot of work and thought up front, and for most people the budgeting process is fairly unnatural. What happens is people don’t see the results they’d expect from the work they put in. It’d be like eating really well for three months and not seeing a change.

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    Q: How, in this economy, can people get a month ahead in income? Is that advice still feasible? This seems like the hardest step.
    It’s definitely is the hardest part, and with the hardest part comes the most rewarding part as well. Consider sales of belongings. The goal is not so much having a month saved. What you’re really trying to do is just last an entire month without touching that month’s paychecks. Look to your current employer first; do some overtime. Most of the time it’s people ridding themselves of clutter that makes the fastest progress.

    Q: I was using your software before being surprised with a diagnosis of cancer in my 30s in 2007 (I’m cancer-free now, thanks). For individuals and families facing major financial crises, what advice would you give them for making budgeting work when there simply isn’t enough money available for expenses? Can YNAB still somehow work for them?
    That is tough. First, make sure every dollar has a job. There are parts of the budget that can be done even if you’re in the red for long periods of time. No matter what you do, still record everything you spend. Maintain some awareness as much as possible. When people get in emergency mode, they lose control and awareness. The best way to fight back is to simply record what you’re spending. It’ll rein you in much quicker than not doing it at all.

    Q: Your web site states that YNAB makes small adjustments to your overspending. How does it do this?
    YNAB is like a virtual envelope system. The software wants you to maintain your savings but still have money for Christmas or your vacation you just borrowed for, so when you bring in money for the next month, you take that wad of money and drop that back into other envelopes that need replenishing. Every overage is automatically deducted from next month’s income.

    Q: I do see you have a 60-day money back guarantee. Do you also have a free trial?
    There are both. The trial is not advertised. People were getting the software and not understanding the why behind it. Weekly webinars are available with a live teacher to see. However, if readers want the free trial, they can go to http://www.youneedabudget.com/test-drive .

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    Q: It doesn’t appear that YNAB automatically downloads transactions from financial institutions on a regular basis. Is this feature coming?
    Technically it’s not very difficult, but it is very expensive. That expense would either have to be passed on to the customer or we would have to find another revenue source to support it. Banks and credit cards want to keep us separate from what we’re actually spending, which is contrary to YNAB philosophy because it reduces awareness. The feature is planned, but we also want the customer to look at the methodology. As far as time lines, the new Mac/PC version is first priority. After that, we would look at implementing automatic downloads of transactions.

    Q: I see that you have the guide in the form of a PDF file. I really like the idea of a paper book. How long before this is available?
    I’m currently trying to see where the book is fitting the overall system. We are considering a paper book.

    Q: Are there any new features in the works that you’d like to share?
    Our next software version will be using Adobe Flex AIR technology. The methodology will be the same, but the design will be different. The interface will be easier to use. Reporting will be much more dynamic and flexible. We hope to have that in beta in May/June.

    Q: Is there anything else that we haven’t covered that you would like to add?
    If people don’t want to worry about the 60-day money-back guarantee or purchasing the software yet, I’d recommend they just sign up for the free budgeting course at http://www.youneedabudget.com/course. It’s not a sales pitch. In 10 days people walk through the methodology and get down to the nitty-gritty of budgeting, money in relationships, why cash flow is sometimes so stressful, how it can be made easier, talk about rule number four, and discuss why people don’t talk about budgeting.

    The Downsides?

    I haven’t found many, but they are:

    • No integration with a handheld device. If you like to enter purchases on the fly on your smartphone, it can’t currently be done with YNAB. According to Jesse Mecham, YNAB wants to store the data online so people can get to their transactions and category balances through possibly an SMS approach, mobile web interface, and/or an iPhone application perhaps the middle of this year or later.
    • Since the company has never taken any funding or loans, some major features like integration with a handheld device tend to take a bit longer to roll out.
    • YNAB Pro is not Mac-compatible (the basic version is). However, a new Mac and PC version is expected to be available in the summer of 2009.

    The Bottom Line

    YNAB’s philosophy and software features combat many of the reasons bugets fail. It’s inexpensive, bug-free, and worth checking out. YNAB ($24.95) and YNAB Pro ($49.95) can both be downloaded from http://www.youneedabudget.com. The software comes with a 60-day money-back guarantee. If you want to try it out first, a trial version is available at http://www.youneedabudget.com/test-drive. Both YNAB and YNAB Pro include a free copy of the PDF ebook “The YNAB Way.” The Pro version comes with bonus features, such as a car maintenance schedule, income tax forecaster, and more. The developers are very responsive to customer feedback and will support you with visual and written materials that help you understand the psychology of successful budgeting.

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    Last Updated on April 19, 2021

    40 Healthy And Really Delicious Meals You Can Make Under $5

    40 Healthy And Really Delicious Meals You Can Make Under $5

    Ever had those moments where you really wanted to eat something delicious and healthy but didn’t have the financials means to do so? Whether you’re a student or parent, this compilation of 40 great, healthy, and inexpensive recipes will make every night special and help you get fit! No more meals where you have to force the food down! It’s time to make that budget your best friend and turn it into great recipes. Enjoy!

    1. Fish Tacos in Crunchy Shells ($3.56 per serving)

    Is there a better way to end the day than a Fish Taco dinner filled with protein and nutrients and is easy on the wallet? This recipe calls for a boys’ or girls’ night in front of a good movie or game.

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      2. Mini-Meatball Noodle Soup ($3.43 per serving)

      We’ve heard of the delicious spaghetti and meatballs recipes, but imagine having that same meatball goodness in a soup? It’s like Christmas in a bowl. Healthy, warm, and only $3.43 per serving.

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        3. Spaghetti and (Vegan) Meatballs ($2.13 per serving)

        Now it’s time to look at the traditional spaghetti and meatballs recipe, but with a little twist: vegan meatballs. This way, you can enjoy the Italian tradition without adding on the extra calories. I’m sold!

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          4. Kabocha Squash and Lentils ($3.12 per serving)

          Absolutely delicious way to end the day with a Kabocha Squash and lentils dinner. The beauty of this recipe is that you can actually make many other things from the mixture, from dips to full-on meals. All under $5 per serving.

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            5. Baked Coconut Lentils ($0.91 per serving)

            Coconuts are always a good idea, but it doesn’t have to be eaten only for dessert or breakfast. With this great recipe, you can now eat a lunch or dinner filled proteins and a coconut twist. Yum!

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              6. Easy Marinated Roasted Chicken ($3.40 per serving)

              We love chicken and at less than $5 per serving, we are in heaven with this recipe. Add some vegetables and rice on the side and you’ve got yourself a full meal!

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                7. Organic Greens and Goat Cheese Gratin ($2.36 per serving)

                This is absolutely divine. You get in your healthy greens and your fat macros with this great recipe. Takes only a few minutes to make and it’s easy on the wallet. Bon Appetite!

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                  8. Beef Pot Roast ($3.22 per serving)

                  One word: perfect. This meal will warm your insides and fill you up with the high protein content.

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                    9. Fajita-Style Quesadillas ($0.43 per serving)

                    If you want to eat Mexican tonight but want to stay in your budget, this Quesadilla recipe is your best friend. It’s tasty and filled with healthy ingredients for less than a dollar per serving.

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                      10. Fish Tostadas with Chili Lime Cream ($2.82 per serving)

                      Another great lunch idea for the busy days ahead. Prep this in the morning or the night before and you’ve got yourself a healthy and cheap lunch meal!

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                        11. Beef and Black Bean Chili ($1.36 per serving)

                        Might not look like much, but this amazing chili is actually extremely healthy for you. The protein from the beef and the carbs from the black beans will fill you up in no time, and keep you full for a long period of time. Delicious and warm, just right for the winter!

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                          12. Crispy Fish and Peppers ($2.18 per serving)

                          Amazing recipe for anyone looking to change up their meals while keeping their macros in check and not going overboard on spending. Satisfies your crunch tooth (see what I did there?) and gives you all the protein you need to stay full and lean.

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                            13. Vegetarian Gumbo ($1.50 per serving)

                            You have the perfect macro mix here with the carbs, fats, and proteins. At less than $5 per serving, you’ve got yourself a meal that will last for the whole week!

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                              14. Mexican White Bean Soup ($0.99 per serving)

                              With the cold weather creeping in, it’s not a surprise that soups are coming back in style. This great Mexican White Bean Soup dish will keep you warm for winter without making a hole in your pocket.

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                                15. Black Beans with Mango & Cilantro ($0.38 per serving)

                                Mangoes make every dish a little bit sweeter, which is why we absolutely love this recipe. A normal rice and bean dish might be a little meh, but add the sugary taste of mangoes and you’ve got yourself a party!

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                                  16. Bean Burritos ($0.71 per serving)

                                  If you’re having people over tonight and don’t want to spend too much time or money on food, this dish is a great option! You can even cut up the burritos into pieces and make finger foods while everyone’s watching the game or gossiping.

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                                    17. Five-Spice Beef Kabobs ($2.43 per serving)

                                    The spices in this recipes add a delicious twist to the beef kabobs, which is definitely worth trying!

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                                      18. Cornmeal Crusted Pork ($1.92 per serving)

                                      If you like the fried crunch but want to opt for a healthier alternative, cornmeal is your man. This healthy recipe will satisfy all your fried desires without making you pop open your pant’s button.

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                                        19. Chicken, Tomato & Cucumber Dinner Salad ($2.57 per serving)

                                        Easy to do, extremely healthy, and super delicious. A must-try!

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                                          20. Lentil Soup with Beef and Red Pepper ($1.90 per serving)

                                          I can’t believe how cheap this meal is, especially for all the nutrients it contains. You can make a big pot on Sunday night and divide it into small portions to last you a whole week.

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                                            21. Smoky Mushroom Stroganoff ($1.90 per serving)

                                            Craving pasta but not sure what to top it off with? How about smoky mushrooms with a twist?

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                                              22. White Bean Tuna Salad ($1.36 per serving)

                                              You can add this White Bean Tuna Salad in your sandwich or just eat it as-is for a quick lunch on a busy day.

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                                                23. Sausage Eggwiches ($0.80 per serving)

                                                Who says you have to eat fast food to get an eggwich? This delicious recipe will give you an amazingly healthy eggwich for less than a dollar per portion. Can you say Breakfast?

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                                                Sausage-Eggwiches

                                                  24. Baja-Cali Black Bean Salad ($1.17 per serving)

                                                  Great snack to add to a movie-night with friends. You don’t have to use chemically-processed salsas anymore, you can now use this homemade salad for your chip dips.

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                                                    25. Gnocchi, Sweet Corn & Arugula in Cream Sauce ($2.24 per serving)

                                                    Italians always knew how to make carbs look good! This delicious Gnocchi recipe will give your lunch a whole new meaning. Easy to make and only $2.24 per serving.

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                                                      26. Vegetable Lasagna ($1.73 per serving)

                                                      If you were looking for a healthy lasagna, you’ve just found it. At under $5 per serving, you can fill yourself up right away without putting on the extra calories.

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                                                        27. Fajita-Ranch Chicken Wraps ($2.05 per serving)

                                                        Don’t know what to make for lunch this week? How about delicious chicken wraps with a healthy ranch? This recipe will make all your lunches, even the quick ones, healthy and colorful.

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                                                          28. Quinoa with Pan Roasted Brussels Sprouts ($1.24 per serving)

                                                          A dish that has quinoa and brussel sprouts can’t be unhealthy, it just can’t, which is why this dish is one to keep in the books. Easy to make, healthy, and will keep you full for a long period of time.

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                                                            29. Butternut Squash Chili ($1.04 per serving)

                                                            You don’t need meat to make chili now that you have this recipe! It’s 100% healthy, filling, and smells absolutely delicious.

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                                                              30. Fast Shrimp Bisque ($2.03 per serving)

                                                              Seafood doesn’t have to be expensive if you know how to do it right, and this fast shrimp bisque is a great recipe to try if you’re in the mood for some seafood!

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                                                                31. Chicken-Noodle Casserole ($0.98 per serving)

                                                                Looks divine doesn’t it? This super easy to make dish will satisfy all your taste buds without burning a hole in your wallet or adding a few extra numbers on the scale.

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                                                                  32. Burrito Cups ($1.18 per serving)

                                                                  Entertaining someone tonight and don’t know what to make as appetizers? These burrito cups are a great alternative to chips or other greasy finger foods. All you need to enjoy it is a spoon and a cup.

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                                                                    33. Lemon-Dill Shrimp & Pasta ($2.45 per serving)

                                                                    Another impressive shrimp recipe under $5 per serving. The lemon-dill twist adds a great taste to the dish.

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                                                                      34. Potato Frittata ($0.87 per serving)

                                                                      If you want to eat potatoes for breakfast but still want it to be healthy, this is the recipe for you. At under a dollar per serving, this potato frittata will make you see potatoes in a whole new light.

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                                                                        35. Grilled Pork and Pineapple ($2.67 per serving)

                                                                        Meat and fruits? Oh, yes. The juiciness of the pork mixed with the liquid sugar in the pineapple will make you wish you knew about it sooner.

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                                                                          36. Greek Honey-Lemon Pork Chops ($2.15 per serving)

                                                                          Another splendid recipe mixing sweet and salty for a healthy meal. Easy to make and absolutely mouthwatering.

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                                                                            37. Jamaican Pork Stir-Fry ($2 per serving)

                                                                            You can add this healthy stir-fry to any dish as a side or amply enjoy it as-is for lunch or dinner. You can even make a wrap sandwich out of it if you’re in a rush to eat.

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                                                                              38. Herbed Salmon ($2.49 per serving)

                                                                              Salmon contains a healthy dose of fats that will boost your metabolism, lower inflammation, and make you happier. At under $5 per serving, need I say more?

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                                                                                39. Five-Spice Pork Kabobs ($1.96 per serving)

                                                                                Exquisite recipe under $5 per serving that will most definitely awe everyone at your dinner party.

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                                                                                  40. Stuffed Sweet Potatoes with Mango-Black Bean Salsa ($1.24 per serving)

                                                                                  You don’t have to eat sweet potatoes alone anymore with this flavorful recipe.

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                                                                                    Featured photo credit: Featured Photo Credit: 5 Dollar Dinners via 5dollardinners.com

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