Voyeurs or …
I love seeing how other people budget, getting down to the nitty-gritty of their categories and numbers, however as previously stated, I am by nature a suspicious person and try to hide as much of myself online as possible. I don’t feel it is fair, however, to gain value out of what others are contributing, without contributing something ourselves. On the positive side, sharing details can spark conversation, instigate self-reflection, and provide encouragement. The opposite is that it can invite comparison, which if not taken in context could be harmful as everyone’s experiences are different. Although we’ve decided that we will share our budget, we will start slowly (much like we plan to start investing).
At the end of 2015, I had begun budgeting in Excel. While I love Excel, it had its downsides for us, so I looked for an alternative. I ended up choosing YNAB, which has been a transformative decision. In the beginning (for months!) I was in there every day, playing, tweaking, looking, budgeting, planning, dematerialising, dreaming, thinking, procrastinating, denying, wishing …. Now we’ve settled into a fairly stable pattern, I will probably only jump in to the web application every 2 or 3 days or so. This doesn’t include the convenience of the mobile app, which is available at our fingertips whenever we spend money, so we can keep on top of tracking cash as we go.
YNAB runs on a budgeting to zero model, also known as a zero based budget. This means that you give every dollar/pound/gold pressed latinum a job. You say “hey, little Aussie dollar that I’ve worked to earn, you sit there until it is time for you to exchange yourself for some hydrofuel to keep the “Enough Time” Machine running.” That little Aussie dollar then sits there, biding its time, possibly running errands on the side (depending on where you’ve stashed it), until the hydrofuel expense arrives, when it skips merrily away.
YNAB keeps track of each dollar/pound/gold pressed latinum, and calculates how long it sat there before going off to do its job. In our case, now we are spending money we earned 176 days ago. In one sense, that’s great – money is hanging around for nearly 6 months before we spend it. In another sense, not so much, because it isn’t out there working for us. I think YNAB recommends about 90 days as the ideal – any more than that, and you should be investing. But, like all personal finance, it comes down to personal preferences, and this is what suits us at the moment. Maybe when we get around to investing, we will begin to see the age of our money reduce.
When you first start YNAB, you will find a pre-fabricated budget template populated with categories and sub-categories. These are only a suggestion, a way to help you get started, so use your photon blasters to delete any that don’t apply, and take your laser sculptors to others to remodel them in the shape you wish.
On the right you can see the top-level categories that best suit how we spend, and the level of analysis I wanted to perform on our spending. This is not what our budget looked like back in January when we started – it was roughly similar, however as expenses arrived, I modified it to accommodate. Within each of these categories are sub-categories which we will explore further in subsequent posts. Currently I am running with 63 sub-categories (my goodness, I had no idea!), which is WAY above what Jesse Mecham from YNAB would recommend. As I said, it is for analysing our spending, so we are no longer unconsciously letting those dollars go. I can already see that there will be some consolidation next year.
You’ll notice that there aren’t any $ values attached to this post – we’ll get into those as we break things down a little further over the coming trips. It appears that Satellite Money will become one of our favourite destinations!
There are lots of mentions of YNAB here. If you click on a link and decide to sign up after your free trial, both of us will get a free month.
If you use a program to budget, what do you use? Why do you like it?