WAIT! Come back! Hear me out. I found this great app that solves many of my money-managing problems like a DREAM, and I'm even finding that it's changing the way I think about how I spend my time. Check it out.
Money is hard
I'm pretty OK with money. I've read a couple books about it. I track things, I look at graphs, I spend less than I earn, I have a non-fancy apartment so that my biggest recurring cost is low. I even made a budget in a spreadsheet, and used actual average spending numbers and everything.
But I found that two things kept tripping me up. First, although I had great reports I could run at the end of the month, I never knew if I was ahead or behind at any given day.
So when I had a purchasing decision—buy that rad shirt in the window? Buy a round for my friends? Take the train late at night, including the 20-minute transfer, or spring for a cab?—I never knew which way to lean in the moment. It didn't help that my rent money sat around all month until the 25th, inflating my bank balance. It made me feel both power (look at that money) and looming dread (most of that money will go away soon).
The second problem is that my spending tends to be spiky, which I think is pretty normal. Christmas gifts. Surprising tax bills. Buying plane tickets and hotels for a vacation. So even if the graphs in a spendy month look pretty bad, did I save up enough in the boring months to cover it? Those months were confusing—I always felt like I'd probably be fine, but I could never really prove it.
One day I sat down and subtracted a year's spending from a year's earnings, and I was embarrassed to find that my savings rate1 was much lower than I'd thought—and much lower than was in my spreadsheet plan.
I was in the middle of working out an elaborate system to solve these two problems—something involving recurring transfers for the month's discretionary money onto a debit card whose remaining balance would be a really simple pacing bar—when I flipped through the XOXO Slack #money channel, and ten people in a row had strongly recommended YNAB. I Googled around a little more, and person after person said it had changed their financial life. I cracked it open.
Y U Use YNAB?
It's a little hard to tell from the judgey name and salesy website, so here's the gist: it's a system for thinking about what's most important in your life and getting really clear on your priorities.
Oh, and by the way, it's also a money app. They're very clear that they're an education company first, which is awesome, as most of money managing is emotional, not logistical. They get it.
Once you get set up with your accounts connected and whatnot, the basic workflow is this: take your previous month's earnings and decide what categories you're going to spend them on. When you spend money, it gets taken out of that category. If you overspent in that category, no problem, just reassign unused dollars from another category. There's a mobile app you can use to check on the fly how much you have left in each category for the month.
So much awesome
I know that sounds dry and utterly expected. Here is why it feels so different from every other system I've tried:
- Money is a zero-sum game. If you spend more in one area it makes you actively pick where to spend less. No more willy-nilly "I don't usually spend a lot so this will probably even out, right?" jibber jabber.
- Dollars feel more precious, because I see what else I could be doing with them.
- You have to think about what's most important. Last month I couldn't fund every category I wanted to, so I had to make some hard decisions about what was most important and what could wait.
- I know exactly where I stand at any point in the month! No more wondering. Decisions get simpler (not easier, though).
- Planned spending doesn't look like reckless spending any more. Instead of a Net Income line in the red, I see my dollars safely waiting there to do their jobs until I need them.
It's all about making the abstract squishy things about money tangible and easier to reason about.
After a few weeks of using this, I'm actually excited to try spend less so that I can roll more into savings. I've literally never felt that way before.
Hours are basically dollars
I totally wasn't expecting this to change the way I see my calendar.
But think about it: time seems infinite, but it's not. Wait But Why lays this out really clearly when he draws every single day in a 90-year-old person's entire life on a single sheet of paper. He goes on:
Not counting Wait But Why research, I read about five books a year, so even though it feels like I’ll read an endless number of books in the future, I actually have to choose only 300 of all the books out there to read and accept that I’ll sign off for eternity without knowing what goes on in all the rest.
So what about hours? After using YNAB for a bit, hours suddenly seem less squishy. We get exactly 24 of them every day. I can give them jobs, just like I give my dollars jobs, deciding to spend this one on family, that one on learning.
And if I fart around on the Internet, not only can I not spend that hour on the important things, but then it is gone forever. 2
Check out YNAB and see what you think. I strongly recommend plugging in your actual numbers and trying it for a few weeks—most of this didn't hit me right away.