My 5 YNAB Beginner Mistakes

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(chalk scratches) – Howdy. (upbeat music) My name’s Hannah with You Need a Budget, and today I’m here to talk
about my own budgeting journey. To give you some history on myself, before I worked here at YNAB, I never worked a traditional job. Right out of high school I started doing odd jobs for people. I painted rental homes, I farm sat, worked for a display case
company on their website design. Once I graduated college, I ended up going into freelance videography and running a sole proprietorship for the first time I thought to myself, hmm, money is kind of hard. So, I was hanging out with my mom and she said why don’t you try what I try. So, my sweet, sweet mother sat me down, and ran me through a crash course of how to use You Need a Budget, and I would love to sit here and tell you that I walked away that day
with a whole new outlook on money, that I knew how to budget, that I had a successful budget. But unfortunately, not the case. Now that was back in 2016. It’s 2020 now and I’m better at budgeting. Yeah, I budget, I budget! So, today I’m gonna tell you all the ways I thought I was budgeting, but wasn’t. Let’s dive right in. (Hannah hums) (upbeat music) Now, some of you are
thinking, Hannah, stop, this is a joke. No, no it’s not. I know there are a handful
of you who saw the sign and you went oh, phew,
I’m not the only one, because I truly thought I
have signed up for a budget, therefore I am probably more
responsible than my peers, and that was enough for me. Now, the problem was it looked
like I was being productive, and I was, getting a
budget starting with YNAB is one of the best things
you could do for yourself. But I definitely found that
I was using my YNAB account as an excuse to tell people
that I was being responsible with my money while still
not dealing with the core. I could say, mom, yeah, I’m budgeting, I have a budget online somewhere. It’s kind of like when you wanna exercise, so you buy a treadmill,
but then it just sits in your basement. It felt really good and
it did nothing, yet. Now, my solution, if you’re
someone who has signed up and you’re having a hard
time getting past that hump, start with a buddy. Find someone else who will
embark on this journey with you. It could be your spouse or your partner. Ask one of your neighbors. See if there’s anyone else around you who doesn’t have a budget
yet that would like to start this journey with you, because what you’re doing
when you’re budgeting is learning a brand new life skill. Accountability is gonna
be so helpful to you in getting your budget up and running and becoming a budget-er. (chalk scratches) I dove right into the app. Most people are thinking
isn’t that a good thing? Isn’t that what you want as a company? Kind of. Would you put a teenager in a two ton car without any driving lessons? Personally, no, and I’m from Kansas. We actually kind of do that here, and yet that’s what I was doing
hopping right into the app. The problem here is that
I was totally uneducated on YNAB’s method and was
haphazardly using this app that I had no knowledge how to use. I had been using YNAB for almost two years before I learned some of
its most crucial concepts. (upbeat music) Four Rules, like I before E? I had no clue how helpful
setting goals were when using the quick budgeting tools, or how to move money with one click, or even just the best
structure for my budget. I didn’t even know you could
use the plus and minus signs in the budgeted column. Has changed my world entirely. If you’re in a similar
boat the solution is seek out some education. We at YNAB have tons of
resources and materials to help all kinds of learners
figure out budgeting and YNAB. If you’re a visual learner go ahead and work through some
of our video courses. If you’re someone who likes to read, or needs instructions
written down check out our Ultimate Getting Started Guide. It’ll take you through the entire process of starting your budget word by word, and if you’re the more interactive type who likes to ask a lot of questions go ahead and take one
of our free workshops. You get to utilize live teachers, live demonstrations, live Q&A. It’s all live. Woo, this is a long one. And next, I set my ideal budget, but I didn’t change my lifestyle. The problem here is that
my budget wasn’t realistic, so, I didn’t execute it. It was almost as if the
word budget was a noun and not a verb. It was a thing I had, and not something I realized I had to do. Before I made a purchase I
never looked at my budget. I didn’t make any
adjustments to my lifestyle. I was simply tracking my spending. But I wasn’t letting my results affect the way I saw my money. The solution here is to start your budget with realistic numbers and
check your budget daily. I know daily is a big word. Just two minutes a day, promise. Trust me, you will never
get the hang of budgeting if your budget is impossible. For instance, if you’re someone
that’s been spending $200 a month on dining out and you
slash your dining out budget to $50 a month overnight, you are not setting
yourself up for success. Cold turkey changes are
very hard to sustain, and there’s a reason why
we have the habits we do. We’ve built them up over a long time. So, changing those habits is
not gonna happen overnight. So, start by lowering
your dining out category from 200 to 175, maybe 150, if you’re looking for a challenge. Once you succeed in that month then you can lower it even more. Similarly, if you’ve built 37
specific savings categories into your budget you’re not gonna be able to fund them all in the first month. Start with budgeting for
just your basic needs, all the necessary expenses,
then as budgeting becomes more fluid for you, start adding in those less necessary categories. I wish I had better chalk handwriting, but that’s a gift. Actually, that looks pretty good. What, Hannah? That’s not, I thought you were supposed to use direct import. Yes, yes you are. Oh, but we have a way of twisting things. Now, the problem here
is not direct import. That’s an amazing tool,
but I was remaining completely detached from the process. I was super hoping YNAB
would do all the work for me. Did you know that you
can use direct import and manual transactions
and they will match up, because I did not for a
second, a long second. The solution is just manually
enter those transactions in all of your out and about categories. When you enter a transaction manually you can immediately see how that affects the rest of your budget,
then all of your decisions made from then on out
can be fully informed. Some of you are thinking,
oh no, won’t that manual transaction double up with
that direct import transaction? No, no, because YNAB is brilliant. YNAB sees the two and says, hey, guys, you’re the same,
and they link together. So, now in my categories
like clothing, dining out, fun money, miscellaneous, I always enter those transactions manually. Direct import rolls it in. The two meet, they are linked, we’re good. Now, I’m super in touch with my budget and I can make way more
informed decisions. I think that’s all I
had to say about that. Now, I am hoping I get
some homies with this one. (Hannah slurps) I just did not rule three. I just, I didn’t even. I just, I didn’t get rule three. The problem here is I just spent money that I quite literally did not have. Now, remember earlier when I said I never referred to my budget
before making a purchase? If I wanted something
and I didn’t have money in that category, slash, let’s be real, I wanted something and I
didn’t even check the budget, I just bought it, then later
when that red number shows up, I’m like, all right, where
can I cover this overspending? Where can that money come from? So, at first you can play the game, and just take from
groceries and take from gas and take from clothing,
even though clothing is the main category I overspent in, but then after a while you see those red overspending numbers and the
only categories you have left are electricity and rent and water, and you can’t take from those,
because you got to pay those. So, here’s the solution to this problem. Learn what rule three
actually is, okay, Hannah. Before willfully
overspending in a category analyze your entire
budget and decide first where you’re gonna pull that extra money from to roll with the punches before you make that purchase. At YNAB we call this
finding the money first. You can totally roll with the punches if you’re pre-evaluating your budget and deciding where you’re
gonna pull that money from. I did not. I thought roll with the punches just meant I’m gonna buy these shoes
and I’ll figure it out later. But then the only categories
that had money left were things I couldn’t pull from, utilities, rent, internet bill. When you’re finding the money first, this creates a sense of awareness
and of willful sacrifice. You are saying to yourself
I, Hannah Markley, do solemnly swear to spend 20 less dollars on clothes this month, so that I can go to that speed-dating event, or wait, whoa. (Hannah laughs)
What, what did she say? I don’t, I don’t do that. You’re saying to yourself
I can get that power tool, but I’m gonna have to stretch
the groceries we already have until the end of the month, looking at your budget and predetermining where you’re gonna pull that money from before you just willy-nilly
make a purchase, Hannah. Now, I’m gonna give you
guys a little bonus tip. Ah ha! (chalk scratches) This is the way my brilliant
co-worker taught me to structure my budget
and it has helped a lot. My budget has five category groups, Fixed, Flexi, Savings,
Wish List, and Wish Farm. We’re not gonna worry
about the last two today. First, we have our Fixed category group. Every expense you have that
is exactly the same amount every single month goes in
the Fixed category group, my phone bill, my renter’s
insurance, my tithing, my internet bill, my
student loans, and my rent. What I do is at the
start of the month I fund every single category in
the Fixed category group and then I close the category group. I, what’s this called, I collapse it, because if those categories
are the exact same amount every month and I’ve funded them, then I should never be taking
out of those Fixed categories. So, I collapse the whole category group, so that I’m never tempted to
take away from those things. Your second category group is Flexi. This is where I put all my categories where the amount might
change from month to month. I actually keep my utilities
in the Flexi category because I live in Kansas and my utilities vary greatly for month to month. Yesterday was 64 degrees and
the Chiefs won the Super Bowl. (electronic music) And today it’s snowing, so,
this is also the category where I keep car fuel,
clothing, coffee, dining out, fun money, gifts, groceries,
home improvement, my dog, miscellaneous, personal
training, sundries, and makeup, because technically any
of these categories, I could take from them and
if I couldn’t fund them that month it’d be fine. Well, not utilities, but I
keep those under control. for instance, I do not need
to spend this full total on my dog every month, but I do. Dining out I can always stop doing. I can always stop buying coffee. As you can see, these
are all the categories where I don’t actually need money in them to make it through the month. Therefore, they’re Flexi. The third category group is Savings. This is where I keep auto repairs, Christmas, travel, a wedding fund. I try to keep this category closed because I want these
categories to build and build. I don’t wanna be tempted
to take money from them. So, by keeping on my flexible
categories in one place I always know which categories
I can look at if I do need to roll with the punches. For instance, my dog just
developed some kind of bacteria and I needed to buy her antibiotics. So, I just canceled one of my
personal training sessions, got $25 back, and put that
toward her medication. This method makes rolling with
the punches so much easier and I’m so grateful to my
friend who taught it to me. Well, folks, I truly hope my rough and very transparent budgeting
history is able to, one, encourage you and remind
you that you are not alone, two, help you put a
name to your struggles, and three, hopefully provide
some practical insight and ways to combat your own struggles. Budgeting is a skill to develop, and developing any new
skill is challenging. But like the old saying
goes, give a man a fish, and he can eat for a day. Teach a man to budget, and
he’ll have a very specific allotted amount each month
for how many fish he can buy. And if he buys too many fish,
well, he’ll figure it out. (upbeat music)

41 COMMENTS

  1. You and the other YNAB Video teachers are really rockin' it lately. Love all of you: your styles and deliveries are very different, but you are all polished, real, and hugely helpful.

  2. In my first month: basically trying to track, I.d. My expenses. But I’m also loving all the you-tube YNAB vids….so, I discovered early on that I couldn’t budget the month traditionally….I.e. corrected many errors already.

  3. This was SO HELPFUL! Thank you for your honesty, and for keeping it super simple. I am brand new to YNAB and the timing is great for this video.

  4. This was great – I'm a big YNAB fan and I learned a few things. I'm also realizing that I've ignored some of the newer features – I should probably sign up for a web class.

  5. You absolutely make me laugh out loud! I can't tell you how refreshing that is to hear when dealing with $$ :/ Thank you for your insight!

  6. This video was so helpful!!! I definitely abused rule three. But I like the breakdown in the bonus you gave. I’ll have to use that. ❤️

  7. I really like Hannah's style, she makes it funny and uses just the right pinch of self-deprecation to make it relatable! We've all been there! lol These points are all very very good, and, sorry to admit, I found myself nodding along with more than one of them. Doh!!!

    What's super confidence-inspiring is that YNAB's educators use the product themselves, and talk about learning the product and learning how to budget. In the software world, using your own product is called "eating your own dogfood". It's a terrible phrase, but the idea is powerful, because if your product is good enough to improve your own lives, that shows consumers that it can work for them too! <3

  8. This is a really a light, fun and informative video Hannah. Mistakes one thru three were, sooo me. Hope to develop better practices with all of these tools offered by YNAB.
    Thank you, much.

  9. Hannah, you have such great videos. Your facial expressions, body language, and pausing in your speech at just the right time to bring all three together make all your videos a joy to watch.

    Not to mention that this is my new favorite quote, "But like the old saying goes, Give a man a fish and he can eat for a day. Teach a man to budget and he'll have a very specific allotted amount each month for how many fish he can buy. And if he buys too many fish, well, he'll figure it out… with YNAB!"

  10. Hannah is awesome because she explains in such a great way and makes you laugh that I can totally relate to what she is saying. This video is so me in the stuff I've been doing with YNAB, thanks for the clarity!!!

  11. I’ve been using YNAB for 5 months and my direct import and manually entered transactions seldom link. That frustrates me, because it’s supposed to do that.

  12. OMG!! Hannah is the bomb and I was exactly like her….getting ready to rewrite the categories because the Flexi vs Fixed is a game changer

  13. I’ve been using YNAB for 8 months now and I am slightly fanatical.. getting my friends and family about it.. I truly believe there is a need for this fabulous tool in everyone’s life.. I’m for promoting it as part of basic education/life skills for high school students as well as a resource and offering as a part of company benefit packages.. don’t employers want employees who are productive and engaged and not worried about there financial woes. How do I sign up to work for YNAB?

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