Review of YNAB 5 from You Need a Budget

We’ve done extensive reviews of You Need a Budget (YNAB) before, but just had to jump on the chance to review the recently-revealed YNAB 5. The new software includes some important updates that bring YNAB up-to-date with other competitive budgeting software tools. These updates, in fact, shoot this helpful budgeting tool well ahead of the crowd.

Review of YNAB5

YNAB’s Budgeting Style

If YNAB 5 will be your first introduction to this budgeting software, you’ll need to know that their budgeting style is different. The goal is, essentially, to work your budget so that you live off of last month’s money.

The point of living off of last month’s money is that you smooth out financial kinks, especially if your income is at all variable. Living on last month’s money takes some time. It’s like having a built-in emergency fund that you just keep in your checking account.

YNAB has changed their style a bit with this update, which we’ll talk about in a moment. But, generally, the software encourages you to think ahead for your expenses, break them down month-by-month, and live off of money you earned at least 30 days ago. These steps, combined, can lead to much more financial control that will help you obtain your financial goals.

How it Works

On the surface, YNAB looks like a very traditional budgeting software. You enter your categories, track your spending, and adjust if you go over or under on certain categories.

The interface for a brand-new budget looks like this:

YNAB 1

You can remove or add categories into each section, as needed. Once you create your first budget, it’ll look a little something like this.

(Note: This is a completely fictional budget!)

YNAB 2

At the top of the screen, you’ll see your total cashflow for the month. To the right, you’ll see the total you’ve budgeted for the month, your total monthly activity, and the total available amount of your budget. Plus, you’ll see your total monthly inflows.

Let’s add some fictional transactions to this non-existent bank account, and see how that changes things.

YNAB 3

When you add a bank account, you can choose to enter your transactions manually, as I’ve done in this example. You can also choose to link your account to your bank account, which we’ll discuss momentarily.

Toggle back to your budget, and you’ll see what happens to individual budget items as you allocate your spending for the month. As you spend, YNAB will let you know what’s left in those spending categories. If you go over on a category, you can shift money around to cover your additional spending.

YNAB 5

Once you get enough income that you have more money to budget for the month than you’ve yet budgeted, you’ll see the top bubble turn green. This is a good thing! If you save that money over to the next month, you’ll start to live off of the last month’s income.

With this version of YNAB, you can budget a month ahead of time, so you can see how this month’s deficit or additional income will impact next month’s potential spending.

As you can see, setting up and maintaining a budget with YNAB is pretty simple and straightforward. But YNAB 5 does have some additional new features that make it even easier.

New Features of YNAB 5

The three main new features of YNAB 5 are Age of Money, direct transaction import, goals, and a web app. Here’s how these features work:

Age of Money

Review of YNAB5 pinAs we discussed above, YNAB used to have a rule that you should live off of last month’s money. Now, they’ve tweaked that goal a bit. Now, it’s called “Age Your Money.” In other words, the longer your money stays in your checking account before you spend it, the better off you are.

The goal here is still similar. You want to shoot to spend money that’s at least 30 days old. But if it’s older than that, you’re doing even better.

The Age of Money shows up in the top right corner of your budget. There’s no age in our sample budget because we’re making up numbers as we go along, and all the transactions have today’s date. Here’s the Age of Money from my personal YNAB account.

Age of Money

If you use YNAB 5, make it a goal to increase the age of your money as you use the software. The higher your money’s age, the better off your overall spending and savings routine!

Direct Transaction Import

I’ll be honest: the old YNAB was harder for me to use because I hate hand-reconciling transactions. It just takes so long. (I know, I’m being a little whiney. But, still, time-savers are the best.)

With the new YNAB, you can automatically import transactions straight from your bank account. This is, of course, as secure as YNAB can make it.

To import, you’ll just access your budget, and click the Import button. This will import your bank account’s most recent transactions. Usually this will only work for transactions that are at least 24 hours old, though this will depend on your bank. The transactions that import are those that are already cleared by your bank, not pending transactions.

Once transactions are imported, you’ll have to assign them categories. As with the old YNAB, you can split transactions between multiple categories if you need to. This is helpful if you’re working with a very detailed budget.

Split Transactions

Directly importing your transactions is still optional. If you prefer to enter your transactions by hand, you can. Just don’t link your bank account to your YNAB account.

Note that you can import transactions from multiple bank accounts and credit card accounts. I did have trouble syncing multiple accounts that are under the same bank account login, though. We have two savings and two checking accounts with Huntington Bank, all accessed with the same login information. I had to choose to only link our main joint checking account, rather than linking all the accounts under this login. Hopefully this is something YNAB will fix in the near future.

If you link credit card accounts, YNAB can track your credit spending separately from your bank account transactions. This is helpful if your goal is to balance credit and cash spending in a certain way from month to month.

Goals

You can use the goals option for certain types of goals. Personally, I found it a little more limited than I’d like. But it’s still a helpful way to keep track of certain financial goals that you’ve got in mind.

To create a goal, select the category you have in mind. Then, add a goal. You can add a goal to fund the category item for a certain amount each month, or to have a balance on the account of a certain amount by a certain date. Then, it’ll show you where you stand in relation to your goal each month. As below:

Goals 1

Goals 2

Goals 3

 

If you connect your credit card account or other debt accounts to YNAB, you can also set goals for paying down the debt by a certain date. This can help you stay on top of your debt relief goals. It doesn’t work for all debt accounts, since they can’t all be linked to YNAB. But, this is useful if you’re carrying credit card debt you’d like to pay off.

Web App

Perhaps the most exciting development with the new YNAB, for me at least, is that it’s now available as a web app. Rather than paying a flat fee to download the software, you can access YNAB directly from your web browser.

The first 34 days is free, even if you’re a current YNAB 4 user. After that, it costs $5 a month to use the YNAB web and mobile app.

This is great news for me. The reason I stopped using YNAB, in spite of generally loving the software, is that I switched from a Windows-based laptop to a Chromebook. This meant I could no longer use downloaded software, including YNAB. Now, I can get back to my favorite budgeting software, which is well worth the $5 per month.

The Bottom Line

Bottom line here is that YNAB 5 offers some great upgrades to the previous versions. It’s not earth-shattering, and it still looks a lot like the old YNAB. But, it’s definitely worth upgrading if you’re interested in any of the new features. If you’re looking for a new budgeting software option, you should certainly try it out.

Keep in mind, too, that this wasn’t a complete tutorial on how to use the new YNAB. For that, check out their introductory blog posts, which get into the nitty-gritty of using all the software’s features. It’s worth a few minutes of your time to understand how to use all the features of this great new(ish) software.

Topics: Reviews

2 Responses to “Review of YNAB 5 from You Need a Budget”

  1. ikomrad

    You forgot to mention that they removed the search function from YNAB. I just made major changes to budget categories in YNAB and need to re-categorize previous transactions so that everything lines up. How can I do this without search?

    Answer, spend a ridiculous amount of time finding transactions and changing categories.

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