When I first discovered YNAB, it wasn’t love at first sight.

I had just returned from four years of living abroad with my family and was looking for the perfect budgeting software to help me along my financial journey.

I tried them all: YNAB, Mint, Quicken, EveryDollar, and Mvelopes. As an accountant, I was looking for something similar to accounting software: income in, expenses out, and net cash flow for the month to see if I needed to cut back on expenses. After trying out YNAB, I immediately decided it didn’t fit what I was looking for.

I initially didn’t understand the philosophy behind YNAB. I didn’t realize at first that my view of budgeting fostered a scarcity mindset and kept me stuck in old patterns.

Fortunately, after testing several other budgeting apps, I realized they were missing many of the features I had seen (and liked) in YNAB. I decided to give it another try with a more open mind.

That’s when I started to fall in love with YNAB.

My Must-Have Features in A Budgeting App

If I were to eliminate all of my expectations from a budgeting app and start with a fresh slate, here are the things that would be important to me:

• Security
• Proactive approach
• Efficiency
• Ability to customize

All of the most popular budgeting apps have bank-level security, so that’s not necessarily something that really differentiates one from another. But let’s look at some of the other essential features.

Proactive Approach (versus Reactive)

Throughout the past decade, I’ve realized that your money mindset is the most important influence in sticking with a budget.

YNAB has helped me see that learning how to spend is just as important as learning how to save money.

Zero-based Budgeting

A zero-based budget involves allocating your income to various expenses and saving categories until every dollar is accounted for.

YNAB refers to this as “giving every dollar a job.” It even takes zero-based budgeting a step further by requiring you to allocate not only incoming money but all of your available funds.

For example, if you have $5,000 in checking and $25,000 in savings, you’ll assign all of this money to specific purposes. Most likely, you’ll allocate the money in your checking account to regular monthly expenses such as your mortgage, utilities, transportation, food, and personal expenses. You might allocate your savings as follows: $15,000 as an emergency fund, $5,000 to a future car purchase, and $5,000 for an upcoming trip.

Seeing a clear plan for my money provides confidence and peace of mind.

“Moving” Money

Overspending with a zero-based budget has a tangible and visual impact rather than simply a different net inflow/outflow, as is common with most budgeting methods.

When using YNAB, overspending forces you to reallocate money out of one of your goal categories, such as a fun future trip, to frivolous expenses that you may not have even really enjoyed.

I’ve found that YNAB helps me to keep my goals in mind every time I move money and encourages me to be much more intentional with my resources.

Sometimes, I realize I need to increase spending on certain things and readjust my budget accordingly. Other times, I find that I need to reevaluate my priorities because I’m taking money out of more important things.

Automation & Efficiency

Even I, a self-acclaimed budgeting aficionado, don’t want to spend more time than necessary on my budget. YNAB allows me to spend minimal time on my budget while still getting the information needed to make important money decisions.

Automatic Bank Imports

Automatic bank importing is essential for me to save time and reduce errors, but it can sometimes reduce spending awareness. YNAB’s method requires approval of new transactions (which can be done individually or in bulk). This allows me to acknowledge cash inflows and outflows quickly and efficiently.

I can also enter transactions manually in the app and YNAB will “link” them when those transactions are imported from the bank. This helps me to keep my budget categories up to date at all times, but I’ve noticed that I’ve needed this less as pending transactions have been quicker to import.

Expense Categorization

Along the lines of efficiency, autocategorization of expenses is another essential for me.

I would say that at least 95% of transactions that come through are already categorized accurately based on how I’ve categorized previous transactions. The remaining 5% are either transactions from stores that I occasionally spend on different categories or new payees I’ve not used in my budget before.

Scheduled Transactions

One of YNAB’s most underrated tools is scheduled transactions. I set up every single recurring expense as a scheduled transaction in YNAB.

Scheduled transactions help me to see all of my monthly subscriptions, as well as upcoming due dates for less frequent bills such as auto and life insurance.

YNAB uses scheduled transactions in the calculations to “alert” you when you need to assign more money in a category to cover the upcoming expense. This has helped me to avoid “surprise” expenses that could derail my budget.

Another way I use scheduled transactions is to ensure that I have sufficient funds in my checking account to cover upcoming expenses. Before using YNAB, I kept a running total in a spreadsheet to make sure

Auto-Assign

One of the largest feature improvements since I’ve started using YNAB is the automation of the budget process through the auto-assign function.

With the click of a button, YNAB can suggest an order to assign all of your money available based on upcoming scheduled transactions, budget category totals, and targets (discussed later). It also allows you to budget quickly.

Ability to Customize

I love spreadsheets because you can customize everything. It’s no surprise that I ended up loving YNAB, as it started out as a spreadsheet and still has a similar format.

Categories

The first thing I customize in YNAB (and do every time I create a new budget) is the budget categories.

This might be the accountant in me, but I like to group my expenses together by main spending purpose (i.e., housing, transportation, food, etc.). This way, I can identify whether my spending aligns with my values in each individual area.

Fortunately, YNAB allows you to adjust the main categories and subcategories, making your budget your own. I love seeing how creative people are in their category names, even though my own are pretty boring.

Note: you can download my tax-optimized budget category master list (for free) here. There are a LOT of categories, but you can cut out any that don’t provide value in your financial decision-making!

Accounts

Not only can you add manual accounts in YNAB (in addition to linked accounts), but you can also adjust the order in which the accounts are shown.

This seems simple, but as someone who loves organizing, having my accounts in a specific order makes me happy.

YNAB also offers the ability to have “tracking” accounts (which don’t affect the zero-based budgeting system) in addition to the “budget” accounts (where all money is required to be assigned). However, I don’t currently utilize tracking accounts in my personal budget, as I prefer to track my investment accounts in my own spreadsheet.

Focused Views

Budgeting can be overwhelming, and sometimes, there are just a few things I really want to see and monitor in my budget.

YNAB has preset “focused views” in your budget that allow you to see a specific subset of categories. You can also create your own custom focused views. I currently use the following focused views:

• Underfunded
• Money Available
• Income (my custom one)
• Annual Sinking Funds (my custom one)

Targets

And my absolute favorite customization feature (and the one I use the most) is targets. These are like mini-goals that can be set at various intervals. Just this week, YNAB rolled out an update to targets, and they’re better than ever.

I personally prefer to set targets for each and every category in my budget to increase my efficiency in setting my monthly budget:

1. Set aside each month (refill each month up to $x): groceries, eating out, gas, clothing, etc.
2. Set aside each year (next year set aside $x): non-monthly bills such as annual insurance premiums
3. Have a balance of $x: sinking funds such as auto repairs and vet expenses

I “snooze” these targets (yes, that’s a thing) more often than I want to admit, but it still helps keep me accountable to my goals.

Final Notes

If you’ve ever given up on budgeting, it may be because you haven’t found the right system for you.

Getting a handle on your cash flow is foundational to help you reach your financial goals and use your financial resources wisely. Even if YNAB isn’t the thing for you (and it’s not for everyone!), be sure to make your own list of essential features you’re looking for and try, try again.

Have you ever tried YNAB for budgeting? What other tools do you love to manage your money?