YNAB budgeting app review

YNAB (You Need A Budget) claims its budgeting app can change your relationship with money, though you’ll need to buy into its system for such a transformation to occur. Its effective features — including ways to set financial goals, wipe out debt, organize bills and monitor expenses — come with a price tag and learning curve that might send you on a search for another budgeting app.

All terms and prices are current as of February 6, 2024.

About YNAB

YNAB takes the popular envelope method of budgeting and adapts it to a digital platform. Users have a four-point system for money management:

1. Give every dollar a job. YNAB adheres to the principle of “zero-based budgeting,” which allocates every penny of your income according to a budget that typically resets each month.
2. Embrace your true expenses. YNAB makes liberal use of “sinking funds” so you can plan ahead for larger, non-monthly expenses such as holidays or car registrations.
3. Roll with the punches. You can easily move money from one category to another if you’re about to go over budget.
4. Age your money. A major tenant of YNAB is to “live on last month’s income”. This stops the paycheck-to-paycheck cycle and having to time bills with your paychecks.

The app, available through the App Store and Google Play, doesn’t have advertisements for credit cards or bank accounts. Instead it charges a fee ($99 per year or $14.99 a month).

You can access YNAB on your computer, smartphone or tablet; and you can communicate with the app through an Amazon Echo device.

Aside from offering the app, YNAB runs a program for certifying financial coaches.

How YNAB works

You start by creating spending categories with goals and assign the money you actually have in your checking account right now. This is different from other budgeting apps where you plan for future income. With YNAB, you only budget the money you can actually get your hands on now.

For example, let’s say you have $1,000 in your checking account on the 10th of the month, and your rent is $1,500. Your plan (in your head) is to earmark $500 of your current cash for next month’s rent, and then make up the difference from your next paycheck.

YNAB, though, makes you put everything down on (digital) paper.

When setting up your “rent” category, you’ll set a goal of $1,500 (how much you owe your landlord). Then you’ll tab $500 to rent when assigning the funds in your checking account.

When you receive your next paycheck, you’d assign the additional $1,000 to the rent category, thereby fully funding the $1,500 goal.

You record the transaction when the rent is paid on the first of the month, which would bring your “rent” category back to $0. The process starts anew when you receive your next paycheck.

Any money left over in a category will roll over to the next month. For example, if you budget $300 for gas, but only spend $275 then $25 will roll over and be available for gas the following month.

The idea is to get one month ahead on all expenses so that when income is received, you are using it to fund the following month, not the current one.

This can help you build up an emergency fund, preferably in a high-yield savings account.

Sinking funds

A unique YNAB feature is the use of sinking funds.

A sinking fund is a stash of money that you add to on a regular basis for a specific purpose but then spend from as needed.

Let’s say you typically spend $1,200 per year on gifts. This works out to $100 per month, though of course you don’t always spend your monthly allotment. The lion’s share, for instance, comes around December and close to the birthdays of your loved ones.

To account for this, YNAB you would be encouraged to set up a gifts category with a monthly goal of $100. As you fund this each month, the amount available will grow giving you the freedom to buy gifts whenever the need arises.

The goal is to always have the money on hand to buy gifts because you habitually set aside the monthly amount you need for this expense.

YNAB features

YNAB boasts a variety of money management features. These features let you:

• Set and track spending and saving goals.
• Generate spending reports.
• Link your bank accounts to the app.
• Monitor credit card spending.
• Create a detailed plan for loan payoffs.
• Calculate and track your net worth.
• Categorize transactions.
• Customize views of budget categories.
• Reconcile the balance in your linked bank account with the balance reflected in the app.
• “Snooze” any financial target for the remainder of the month. The target automatically reawakens at the start of the following month.
• Keep up to date on pending transactions.
• Share your YNAB subscription with up to six people for the price of one subscription.
• Attend no-cost online budgeting workshops.

There is also a dedicated fan base where other users generously share tips, answer questions and support one another on their financial journeys.

YNAB: Pricing

YNAB’s annual plan costs $99, which comes out to $8.25 a month plus taxes, and its monthly plan costs $14.99. This is more expensive than other budgeting apps, such as Quicken’s Simplifi and Goodbudget.

The app offers a free 34-day trial. College students can qualify for a free one-year subscription.

Some employers offer YNAB as a workplace benefit and some nonprofits provide donated YNAB subscriptions to their clients.

YNAB: Usability

While YNAB is easy to use once you get the hang of it, there is a steep learning curve. The issue isn’t navigating the software itself, but rather understanding YNAB’s budgeting principles.

You’ll have to think about your money differently, which is both why YNAB works, and why it can be tough to learn.

In general, YNAB earns high marks for usability.

On the App Store website, one reviewer praised YNAB for being easy to use, reliable and well-designed. Over at Google Play, a reviewer expressed appreciation for the bar charts and pie charts that help track spending.

However, not every YNAB user is an entirely happy user. One Google Play reviewer complained about the user interface for mobile devices, while another dinged YNAB over the difficulty in assigning money to credit card expenses.

YNAB: Security

Through data-sharing partners such as MX, Plaid and TrueLayer, you can connect the app to your bank accounts and automatically import transactions. You can also enter transactions manually or with downloaded banking data, meaning you don’t necessarily need to link your bank accounts to the app.

Among other security measures, YNAB:

• Uses bank-level security (or better) for all data sent between your computer and YNAB.
• Encrypts data stored on its servers.
• Does not access or interact with customer data “as part of normal operations.” If a YNAB employee violates the company’s customer data policy, YNAB promises to immediately dismiss them.
• Protects customers’ passwords. Even if someone stole YNAB’s database of passwords, the thief would need to guess every possible password to find yours, the company says. In addition, YNAB prevents attempts by hackers to guess an account password many times in a row.
• Requires passwords be at least eight characters long and blocks customers from using the 2,085 most common passwords.
• Wipes your financial data from its database when you cancel your YNAB account.
• Pays “good guy” hackers to hunt for vulnerabilities or weaknesses in its systems.

How YNAB compares

One of the big differences between YNAB and a number of other budgeting apps is cost. YNAB charges $99 a year, or $14.99 a month, for a subscription. Meanwhile, PocketGuard offers a basic no-cost budgeting app, while an annual subscription for the advanced app goes for $74.99. Whether you want to come up with $99 a year for YNAB depends on how committed you are to whipping your budget into shape.

Other drawbacks of YNAB include:

• Customer service available only by email or through an in-app widget.
• Lack of bill-paying or bill-tracking features.
• No way to track investments.
• Reliance on a budgeting principle that might be tough to grasp, at least at the outset.

While some people might be put off by YNAB’s somewhat rigid approach to budgeting or lack of certain features, others might be attracted to the app.

Perhaps more than any other budgeting tool, YNAB puts you in the driver’s seat of your financial journey. It goes well beyond simply tracking your income and expenses — helping better structure your finances and helping put you on track toward what you ideally will be a solid financial future.

YNAB does offer a free 34-day trial, enabling you to take it for a test drive without a long-term financial commitment.

Frequently asked questions (FAQs)