YNAB Budgeting Software - Update & Categories

Posted on | October 19, 2007 |

Update on my YNAB Purchase

A week ago last Thursday (Day 40) I purchased and downloaded the You Need a Budget* budgeting software. I will admit that despite my initial excitement about the program and determination to get the most out of it, the process has not been without hitches. I’d call myself fairly technically inclined and I’m used to being able to jump into a new program and, with a little trial and error, figure out what’s going on pretty quickly. I had no trouble understanding and getting on board with the programs 4 rules.

1. Stop Living Paycheck to Paycheck
2. Give Every Dollar a Job
3. Prepare for Rain
4. Roll with the Punches

And I had no trouble understanding the general layout and design of the program — the what-it-does part. What I had trouble with were the nuts and bolts mechanics of the program — the how-to-do-it part.

I don’t know if it was the threat to my self-image as a technically “with it” middle-aged mom or my determination to get full use out of a program that showed so much promise, but I stuck to the task and worked through my initial confusions. Of course, the really friendly and knowledgeable forum users who answered all of my questions didn’t hurt in helping me over the hurdles. I’m pleased to announce that I think I’m well on my way to mastering the program and putting it to full use. Also, at this point in the process it appears that my initial expectations of what this program had to offer were, if anything, too low.

Building My Categories

I know from past Quicken experience that it helps to put the extra effort into fine-tuning your categories before you put a ton of effort into entering transactions. The YNAB program* comes pre-loaded with some basic categories but new users are sure to want to make changes and additions to fit their individual needs.

Over the past few days I’ve played around a bit with categories and will share my category list below. First, though, I’ll share some of the questions I asked myself in figuring out how detailed I wanted to be in tracking my spending. Past experience has taught me that being too detailed leads to unnecessary time requirements and the longer it takes to enter my transactions, the less likely I am to continue using the program over the long term.

So I asked myself:

Q. What are my goals in keeping a budget?

A. I have two. First, I want to see where our money is going and then, second, I want to see where we can cut back. As I posted yesterday in Our Debt Load, debt reduction isn’t necessary but even we could benefit from spending a little less and saving a little more. I suspect we could reduce our monthly expenses a satisfying amount without feeling any real pinch.

Q. Specifically, what information do I want to break out? And what information can be lumped?

A. For example, which categories do I want to know how much we spend down to the person (clothing). Which categories do I want to know how much I spend on each individual child (cosmetics, allowance) and which items do I just want a combined children total (activities fees, books & materials). Which items am I happy having lumped into one big catchall category (charity). Which items should logically be lumped together because they’re billed together (Gas & Electricity, Cable & Internet).

For each person/couple/family, the answers to these questions are going to be different. Obviously, if you don’t have children you don’t need to know how much you spend on their clothes, toys, or activities fees. If you’re living on a really tight budget, breaking your grocery purchases into smaller categories like staples, treats, beverages might help keep splurge spending in check.

So, as promised, here is a breakdown of what my budget categories look like right now:

• AUTO
  • Car Insurance
  • Gas
  • Loan Payment
  • Maintenance, Repairs, Tires
  • Registration
• CHARITY
• FOOD
  • Groceries
  • Restaurant
• GIFTS (*)
  • Immediate Family
  • J’s Family (The Husband)
  • L’s Family (Me)
  • Other
• HOUSEHOLD
  • Computer Hardware
  • Computer Software
  • Consumables
  • Durables
  • Postage, Shipping, Supplies
• HOUSING
  • Improvements
  • Mortgage
  • Other
• I…. (The Son)
  • Allowance
  • Clothing
• KIDS
  • Books & Materials
  • Equipment & Rentals
  • Lessons & Activity Fees
  • Other
• L…. (The Daughter) **
  • Allowance
  • Clothing
  • Cosmetics
  • School Lunches
  • School Tuition
• MEDICAL/HEALTH
  • Alternative Care
  • Co-Pays
  • Prescriptions
  • Vitamins/Supplements
• PERSONAL
  • Books & Music
  • Cleaning & Laundry
  • J’s Clothing (The Husband)
  • L’s Clothing (Me)
  • Haircuts
  • Memberships & Subscriptions
  • Other
• RECREATION
  • Entertainment
  • Vacation
• SAVINGS
  • Buffer
  • Emergency Fund
  • IRA (Me)
  • Joint Savings
  • Personal Savings
• TAXES
  • Property
• UTILITIES
  • Cable & Internet
  • Garbage
  • Gas & Electricity
  • Phone
  • Water

* With The Husband’s five grandchildren and my six nieces and nephews, two siblings, and parents to shop for in addition to our own children, I like keeping our gift budgets separated out like this. It helps at Christmas time when we seem to hemorrhage money. Also, a few years back I became aware that it was important to The Husband that I spend more money on his grandchildren than my siblings’ children (hey, we all have to have a few little issues, right?) so separate budgeting is helpful for that as well.

** One of my main goals with budgeting is to calculate how much it costs to clothe and accessorize The Daughter. I don’t want to guilt her or give The Son ammo to use against her but I do want her to have a sense of how these expenses add up. Thus the separate categories under each child and the combined categories in the general Kids category. Also, this is laying the groundwork for a clothing budget project I have in mind (more on that soon).

So there you have our budget categories. How do they differ from yours? Did I miss something important? Do you think I’ve over-categorized?

Related Posts for Further Reading

• No Related Posts

Comments