You Need a Budget

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You Need a Budget (YNAB) is a Windows only personal budgeting program available via digital download or traditional CD-ROM. YNAB Pro is compatible with all computers running Windows 98 or later as long as the .NET framework is present.

It was designed to work closely with the YNAB budgeting methodology.

Unlike other software budgeting tools that give you a snapshot view of how your budget did over the last month, YNAB is instead a forward looking proactive plan for money before it is spent. It does so using what is called a "Buffer" which equals one full months worth of expenses. The Buffer therefore is a specific known amount of money already in hand having been saved for that purpose. In doing so it provides a system for planning and executing short term and long term budgeting goals much more effectively than the standard crystal ball approach where you have to estimate what you are going to have for income before you get it.

As the month progresses income is tagged as "Primary" in the software which virtually sets it aside until next month where it becomes the full Buffer on the first day of the next month thus repeating the cycle.

The YNAB Methodology uses four rules of cash flow management:

• Rule # 1: Stop Living Paycheck to Paycheck (This refers to having and using the Buffer, budgeting out the month using a known cash reserve which is the sum of the previous month's unspent income.)

• Rule # 2: Give Every Dollar a Job ( Standard zero-based budgeting. Basically deciding where each and every dollar available needs to be saved or spent.)

• Rule # 3: Prepare for Rain (This rule forces a person to accept the realities of life in the sense that there will always be "Rainy Days" when ample amounts of cash are needed in a hurry for repairs or other emergencies. By allocating money to these types of budget Categories you can stave off panic over what to do when those events occur.)

• Rule # 4: Roll with the Punches (Since even with a forward looking and planning system you can sometimes overspend in a Budget Category, YNAB has a method that spreads that overage across the next month's budget where it can be absorbed more readily. Since (by design) a person has money reserves at hand (The Buffer) the overage can be covered easily.

History

YNAB was created by Brigham Young University graduate Jesse Mecham in 2003 as a personal budgeting system for him and his wife as they finished college. With only part-time jobs to support them, money was tight, and strict budgeting was the answer. After their own success and sharing the program with many friends, it seemed that there might be a market for YNAB. In the summer of 2004, YNAB was first offered online. Originally created as an Excel spreadsheet, YNAB took on new life in the form of YNAB Pro, with the collaboration of programmer Taylor Brown. First released in November 2006, YNAB Pro has continued to expand its capabilities.

• Only YNAB Pro remains available as the spreadsheet version YNAB Basic was discontinued in July 2009.

Future

An entirely new version of YNAB, called YNAB 3 is currently under development. Unlike the current version, YNAB 3 will be cross-platform, being written using the Adobe AIR platform. YNAB 3 will introduce many new features, including comprehensive reporting functionality.

See also

Comparison of applications and websites for Personal budget
Comparison of accounting software

External links

• YNAB product website

References

• CNN radio interview with YNAB creator Jesse Mecham
• Kiplinger's Personal Finance magazine, June 2009 article
• Product review by About.com
• Product review by My Money Blog
• Product review by Frugal for Life
• Product review FreeMoneyFinance- Compares YNAB to commonly known financial software such as Quicken and Microsoft Money.
• Customer product reviews at Amazon.com
• Product review by LifeIsNotHard.com
• YNAB 3 Information
• YNAB review, info and tutorials