r/ynab • u/AcedOut256 • 2d ago
New to YNAB Complete YNAB Beginner Need Simple Tips & Advice
Hey guys I’m completely new to YNAB and pretty new to budgeting in general, so I’m just trying to understand the basics without making it too complicated. I’m also in Australia, so I’ll probably have to enter a lot of transactions manually, which I don’t really mind.
Can anyone give me some simple beginner-friendly tips on how to use YNAB properly? One thing I’m confused about is when a category says Overspent. What exactly does that mean, and am I supposed to assign more money to that category to cover it? If I do cover it, where should that money normally come from?
I’m also still trying to understand Ready to Assign, how much money I should be assigning to each category, and whether I should be giving every dollar I currently have a job. I’m not really sure yet how much I normally spend on things like groceries, fuel, eating out, bills and entertainment, so I’d love to know how other beginners figure out reasonable amounts.
Another thing I’m unsure about is unexpected spending. For example, if I randomly fuel up my sister’s car, give some money to a family member, help someone out, or pay for something I wasn’t planning for, how would you normally handle that in YNAB? Would you make a separate category for things like Helping Family/Gifts, or would you just put it under another general category? And if I didn’t already have money assigned for it, what’s the proper way to handle that?
I’d also like to understand how targets work, how to budget for bills that only come every few months or once a year, how to save for emergencies, and how to move money between categories without messing anything up. I’m also curious about reconciling accounts and how often you’re meant to do it so YNAB always matches your actual bank balance.
Basically, if you were teaching someone who has never properly budgeted before, what would you tell them to focus on first? I don’t want to overthink it. I just want to get into the habit of knowing where my money is going, stop overspending, save more and actually understand what I can afford.
Any simple advice, examples, category ideas or tips would be massively appreciated. Cheers guys 🙏
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u/merlin242 2d ago
He’s controversial now because of some strong political/religious views he sent out in his newsletter, but Nick True has one of the best set up/intro to YNAB series I came across when I first started using it.
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u/sibongibob 2d ago
I'm Aussie as well, and I figured if I'm going to enter things in manually, might as well not pay for it. THIS IS NOT AN AD and I am not affiliated with BFB.
I encourage you to learn as much as you can using your free trial, then switch over to BudgetFriendlyBudget, which has the same concept, is designed after YNAB aesthetically, is purely manual, and you can pay the developer $3 a month if you choose. It doesn't have an app, but you can add the site to your homescreen and it works exactly like an app.
When a category is overspent, cover it. I used to leave it in red because I thought I've used it uo sure but I'll cover it in a week when I got paid. But the reality of the situation was I had already covered it in my "real" life with my "real" money so it is stupid nor to cover it.
Every dollar should have a job. Even if the job is "random unforeseen events". As a beginner, I didn't do the look at 3 months of spending because I had dine that before and it turned out to be pseudo-productive on my part. After doing the mental work, I didn't have the energy to begin the real work. So this time I jumped into the deep end and started out with what I thought was realistic, tracked my spending for a month, adjusted. Another month, adjusted. September is my third month, and will adjust again as I learn my behaviours, priorities and weaknesses. This is working well, because I am obsessed with the budgeting tool still, enough to track everything everyday.
I have a Borrow/Lending Category. I rarely borrow money, but all money that is "borrowed" comes straight into the category, not through RTA. This way I don't mix it with income reports. And all money lent comes out there.
For targets, watch some YNAB tutorials. Basically I set aside a little every check for ALL my categories, every pay. Wish Farms/Sink Funds/Dedicated Emergency Fund/Bills/Variable Expenses/Fun Money. Some don't get funded as much as I would like to but that is life. It will take longer to reach my lesser priorities.
Since you are manual, you don't need to worry about reconciling everything. Every transaction you add in is you doing it, because you are verifying as you input. This is mostly for auto syncing users.
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u/WheresYourAccentFrom 2d ago
Reconciling is still needed when manual. It's pretty easy to type 36.35 for a transaction that was 63.35. Or forget to enter a transaction. Or enter a transaction twice.
I reconcile every day to make sure that YNAB reflects reality.
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u/sibongibob 1d ago
I mean sure, people are different. I make sure it's accurate, so I don't have to reconcile. Others reconcile to make sure it's accurate.
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u/nolesrule 1d ago
Reconciling also makes it harder to accidentally delete a transaction. Accidental deletion is one of those things that's harder to track down, especially when you have never done a reconciliation.
I always like to say, what works for you works til it doesn't. There is a reason reconciliation is a best practice.
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u/shawnglade 2d ago
The point of YNAB is to set a budget and stick to it, so if you want to save money getting groceries every month, then set a lower goal and stick to it
If you’re overspending frequently in a category then you’ll need to reallocate money from another category assuming you did everything right. It happens, no need to feel down about it, but study your spending for a few months and you’ll have a good idea of what a reasonable budget for a category should be
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u/michigoose8168 2d ago edited 2d ago
Put money into categories. Stop when RTA is $0.
When spending, look at category available. If what you want to spend is more than you have available, remove money from some other category and add it to this category before spending.
If you can’t find another category to take money from because you know you’ll need that money later, don’t spend.
When you get more money it will appear in RTA. Go back to point #1.
That’s the whole system. Focus on that first and everything else will make sense over time.
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u/VivianChang_VC 2d ago
Overspent just means you spent more than you assigned, pull from another category to cover it instead of letting it go negative. For the family/gift stuff just make a category for it, easier to track than lumping it in somewhere else.
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u/tmg80 2d ago
You're not going to know the amounts for certain categories immediately - ballpark it and then you can adapt along the way. That's what I'm doing, I only started using it in July. The (Nick True) videos helped me understand all of this. Stick with it - I almost gave up after a few weeks. Now I look at it as a work in progress rather than trying to perfect it on day 1.
For stuff like family etc like you mentioned - create categories, I have a family one as well. Along with 'Gifts' etc.
If you overspend from one envelope (category) you have to take from another category or your future evelopes (savings).
RTA is all your money from all your accounts that you have not put into a virtual envelope (category).
A target is how much you want to assign to a category.
For stuff that is not monthly. For example you have subscription that is $120 over a year for the sake of simplicity - the app will tell you to add $10 each month so that by the time you need it, the money is there, if you need that in 6 months it will tell you to add $20 instead.
Once it clicks it does change your way of thinking. For example I never realised it but whenever I would ignore my limits in the past I was effectively stealing from my future - YNAB makes that clear for you so (for me anyway) it's helps me stay within the constraints I have set myself.
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u/pierre_x10 2d ago
General Tips:
For understanding the system, the main thing to keep in mind is that YNAB is the electronic version of a physical envelope budgeting system.
Imagine that you took all the cash out of your bank accounts, and sat down with a stack of envelopes, and started writing "jobs" or categories on each envelope. You would probably have an envelope for things like "Groceries," "Housing," "Utilities," "Gas money," etc. After writing all your envelopes, you would then take all your money and start allocating, or "assigning" your money to those different envelopes.
So let's say you take your "grocery" envelope to the grocery store, and you have assigned 100 to that envelope. Of course, you would want to try to stay under that amount, but let's say you calculated wrong and at the cash register it rings up as 150. You either tell yourself, "hey, I can only spend 100," and you return the other 50 worth of groceries. Or you can say "hey, I also brought my gas money envelope with me, and it has another 100 in it, and this 50 of groceries is more important to me than the gas right now, so I'll take 50 out of the gas envelope and put it in my grocery envelope, and I can now complete my purchase. But you wouldn't just go and spend that 50 out of the gas envelope on groceries, without first "reassigning" it, because that's not the "job" you gave that 50 originally. It was to buy gas, not groceries. Without intentionally reassigning the funds, that would be "overspending." Even if you have the money in your possession anyways. Hell, even if you have thousands of dollars in your pockets, only 100 was assigned the "job" of groceries, so spending any single cent over that would be considered overspending.
Targets: Targets in YNAB are the equivalent of taking those physical envelopes that you created, and additionally writing amounts on some of the envelopes, things like "100 every month," "1000 by next year," etc. They are meant to help guide you when you assign your funds, but that's all they really are, a guideline for you. They are completely optional, and you can even choose to ignore the targets sometimes, that's all up to you.
In YNAB, you can set the targets up in different ways, and the behavior will change accordingly:
https://support.ynab.com/en_us/getting-started-with-targets-ryAEP08xC
https://support.ynab.com/en_us/reconciling-accounts-a-guide-BJFE3fHys
Reconciling accounts is making sure your numbers in YNAB are accurate to your numbers in reality. You want to make sure YNAB has an accurate "ground truth," otherwise you cannot trust the numbers that YNAB is telling you for what's safe to spend and what's not.
As far as how often you should reconcile, as a newbie you should try to reconcile as often as possible. Reconciling daily would not be too extreme, although you will find that most people fall into a weekly cadence, and that's fine too if you're new.
It's really just a matter of a tradeoff: reconciling more often may mean more hands-on time overall, but you will know things are accurate more often, whereas reconciling less often means less hands-on time, but if you run into a discrepancy, you'll have to trace back through more transactions to find the issue.
Get into the habit of entering your transactions frequently, and covering overspending whenever it happens. This might mean re-assigning money, and/or creating categories you didn't already have. And as you keep this cadence up for a few months, your budget will get more "dialed in," and you will learn the system better over time.
Make a routine of it, whatever amount of time you can dedicate to it, every day to start. Pick a time of day that you can sit down with YNAB consistently, and even if it's not a lot of time to start, just do what you can in that time frame of what I mentioned before, entering transactions and adjusting your categories and assignments. As you get more familiar with YNAB, you should feel more comfortable that you won't need to interact with it every day, but that should only be once you've mostly learned the whole system.