Recently, I decided to try something new: budgeting. My friend Andrew told me about the system he’s using, YNAB. They make the principles of budgeting simple. Namely, they are:
1. Give every dollar a job.
2. Save for a rainy day.
3. Roll with the punches.
4. Live on last month’s income.
However, I wasn’t keen on paying $60 for their software. Meanwhile, Simple says that their Goals feature is great for budgeting (and free). So I decided to combine YNAB’s method with Simple’s features. It basically works like this:
1. Create Goals for scheduled expenses. I mix this with scheduling checks for payments (since this causes the money to disappear from your Safe-to-Spend balance, same as putting it in a goal). Don’t forget annual or semi-annual expenses such as car registration.
2. When paycheck is deposited, move every penny into Goals as necessary. This includes using Goals as digital envelopes for food and entertainment. (#1: Give every dollar a job.)
3. As transactions post to your account, promptly use Spend from a goal to deduct the purchase from the appropriate goal.
4. Have an Emergency goal; put money in from each paycheck. (#2: Save for a rainy day).
5. Realize that you will move money between Goals on occasion. Things happen. (#3: Roll with the punches.)
6. If money is left over in a goal, strive to leave it there for the next month. But still put your normal amount into the Goal each paycheck (e.g. I put $60 toward fuel each pay period, even if I have $10 left over from the previous one). This works toward YNAB’s point #4: Live on last month’s income.
Yes, using Goals this way means that Safe-to-Spend always shows as being empty, but I can easily check all my Goals from the app and see what I have available before making a purchase.
This particular combination of YNAB and Simple works fairly well. I have a gut feeling that it could use some improvement, but I’m not exactly sure how at the moment.