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Personal Finance

How Does You Need a Budget (YNAB) Software Work? Review of Pros vs. Cons

Updated Mar 01, 2022   |   4 mins read

You Need a Budget (YNAB) started in 2003 when a couple of young, married, college students needed to find a way to manage the small amount of money they had. They developed four basic guidelines for how they wanted to approach budgeting in a new way.

First, they decided what they wanted their money to do for them before they spent it. Second, they saved for bigger, less frequent bills by breaking them down into a monthly expense. Third, they changed the budget accordingly as needed. Fourth, they only spent money that was thirty days old.

This helped them stop living paycheck to paycheck. They made sure that their money was working for them rather than simply working for their money. Inspired by the change the budget had on their lives, the couple officially opened YNAB for business in 2004.

Getting Started Budgeting

The idea developed into a software budgeting system that everyone can use to help make their spending stay in line with their budget priorities. When you first create an account, you set goals for your money. These can be both short-term goals, such as having money available to pay the monthly mortgage bill, or long-term goals, such as a trip to Japan or college tuition.

Then, you separate your monthly income into monthly budget categories based on bills that need to get paid and miscellaneous spending categories like dining out with friends. After you figure out where you want every dollar to go, you can schedule future transactions you need to make. Then it is simply a matter of staying in that budget each day and working towards your goals.


One of the biggest benefits of the YNAB budgeting software is how it helps consumers get into a habit of thinking about their money as a tool to achieving their goals. That simple twist in mindset changes budgeting from a restrictive and laborious task into a motivating challenge. Every dollar has a job to do for you, and YNAB lets that dollar do its job. The goal-oriented aspect of the software is what sets YNAB apart from other budgeting programs.

One of the biggest financial failures facing adults today is the failure to plan. YNAB allows users to plan for their bills along with their life goals and sets up a budget to reach those goals. Planning ahead reduces the user’s reliance on credit, so it helps to pay down debt as well.

YNAB also has support and suggestions for users whose goals include paying down their debt. It’s easy to monitor your budget status each day, and change your budget to meet your changing financial needs.

It’s also easy to add new budget items, change goals, and increase or decrease specific budget categories. You can sync your bank or other financial institution accounts to your YNAB and install the YNAB software on as many computers or mobile devices as you need. Your budget is available anywhere at any time.

Another unique benefit of YNAB is the education that the company provides. The company has a blog with lots of tips for managing your budget and planning for your financial future. Plus they offer classes on a wide variety of topics like managing a variable budget, making a food budget, and strategies for paying down debt.


YNAB is free for the first month and then costs $50 a year to keep the service. Settling that bill could be the first savings goal. The only other cost is the time and effort it takes to get your budget set up in the software.

Before getting started with YNAB, you’ll need to take the time to gather up all of your monthly bills and track your receipts for a few weeks. In other words, you should already have an idea about what your typical expenses are each month, when they occur, and how much you will need to budget for different categories. So there is already some work to do before logging in to YNAB for the first time.

After gathering some information about your spending habits, you’ll need to set aside a couple of hours entering all of your goals and accounts into the YNAB software. In addition, you will want to sync your bank, or other financial institution, accounts with YNAB so the software can automatically update your budget every day.

It definitely takes a while to set your budget up correctly and to learn how to make the budget process work best for you. But once you get used to it, you might find that you enjoy the freedom of knowing every dollar is in its place to help you find financial stability and help you reach your goals.