This is How We Budget

Mr. G and I made our first budget together before we were even married.

We were househunting for our new home. So we used a simple Google Docs spreadsheet to map out our projected expenses and figure out what we could afford.

We were smart and considered our plan for me to stay at home with our children in the future.
The income I was making at the time was excluded from our budget and set aside in savings. We always planned on being a single income family, from the very beginning.

We tried several different budgeting systems before settling on the best one for us.

The Cash Envelope System

The most basic system there is. Heavily endorsed by money gurus like Dave Ramsey. We set our budget for the month, withdrew cash from the bank, and kept the requisite amount for each category in an envelope on our kitchen counter.
After working with this for a few months, we scrapped it. It just wasn’t convenient for us and the way we live, or comprehensive enough to accommodate the larger picture.

We wanted to try a web-based system. Mint is a modern way of tracking personal finance. It gave us a slightly better idea of where all of our income went. The charts and graphs are super fun to look at and tweak. Being a very visual learner, I loved this aspect.
Mint automatically imports your bank transactions for you. But doesn’t do so well at categorizing those transactions. We were spending hours each month maintaining it, and it didn’t enable us to organize things the way we wanted them. After about a year we gave up on it, totally frustrated. It just wasn’t what it hoped it could be.

This is How We Do It Now: YNAB (You Need a Budget)

In 2014, this is where we landed. And this is the program that has made a big difference for us.

YNAB, in some ways, is similar to the cash envelope system. But digitized. It uses scarcity principles which force you to think,

“What do I need this money to do, before I get more money?”

Every single dollar gets a job until you are budgeted to zero. The program is endlessly customizable and flexible.
I’d never felt confident handling our finances, and therefore always delegated these types of tasks to Mr. G. But using YNAB for the past 4 years has (almost inadvertently) given me a crash course in personal finance.

I finally feel like I have a grasp on our budget, and am no longer making decisions out of fear.

Some things we like about YNAB

The program makes it possible for us to view all of our accounts simultaneously, in one place. We have our checking account, savings account, credit card account, money market account, and even the cash we have in our wallets, all listed together. When we budget out the month, we are drawing from these accounts. It doesn’t matter where the money itself lives. What matters is what it’s earmarked for.

The Age of Money concept. The program allows us to automate the process of buffering our income. So this month, we are spending LAST month’s income. A safety catch for your money! But without the fees! You can track the “age” of your money.

Also, It’s simple to move money around wherever you need it to be. You budget what you HAVE right now. Not what you think you might have next month. So if you over-spend on groceries this month, you can move the excess money in your clothing budget to cover that. Bam.

If you’re interested in learning about YNAB, start here:

They also offer a free, 34-day trial. The website contains loads of free educational information, workshops, and classes. So if you want to poke around before taking the plunge, I guarantee you’ll learn something.

Full disclosure: I am NOT being paid to endorse this product. I just really like it.

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