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How To Create Your First Working Budget With YNAB

The tool I recommend for creating and managing a budget is using You Need A Budget (YNAB) budgeting software. You can see my YNAB review for the various reasons I recommend YNAB.

In the videos below I outline how to create your first budget with YNAB and explain the basics of how YNAB works. I’ve divided the videos into 9 parts and they are meant to be viewed sequentially. Follow along and before you know it you’ll be up and running.

If you don’t have YNAB and want to give it a try, you can download a free, fully-function trial version here.

Part 1 – Overview

To start out, here’s a quick overview of why I think YNAB is so great.

Part 2 – Setting up your accounts

The first step to getting started with YNAB is to set up your financial accounts.

Part 3 – Managing categories

The next video shows you how to manage categories in YNAB. You can add, delete, edit, and reorganize your categories for your personal needs.

Part 4 – Allocating initial balances and how the buffer works

After you first set up your accounts you’ll want to allocate the existing balances in those accounts. You may have those funds reserved for something already or you may want to use them for this month’s budget. You could also use them to start creating your buffer of one month’s worth of expenses.

Part 5 – Budgeting your income

Up to this point you’ve set up your accounts and allocated any existing balances. Now you receive your first paycheck. This video shows what to do.

Part 6 – Printing your budget for your financial binder

Every time you receive a paycheck and allocate funds, you should print out your budget, mark any notes on the printed copy, and store it in your financial binder. If you’re a month ahead and can allocate your full month all at once, you’ll only need to print one budget. However, if you’re still living paycheck to paycheck, you’ll want to print out a copy whenever you receive a paycheck.

Part 7 – Entering additional paychecks

This video explains different options for entering paychecks. The three scenarios are:

  1. You need to use the paycheck for this month’s budget
  2. This month’s budget is already funded and you want to usethe paycheck for next month
  3. You need some of the money this month and some of it next month (split transaction)

Part 8 – How YNAB handles expenses

At this point your budget should be complete (at least up to your last paycheck). In the next video I show you how YNAB handles expenses and how they’ll appear in your budget. I won’t be going through the entire process of reconciling your budget yet. We’ll cover that in a few weeks when it’s actually time to reconcile.

Part 9 – How to re-allocate funds between categories

What happens if you want to transfer funds between categories that were funded in previous months? This short video shows you how to move funds from a previously-funded category to another category.

Posted in 12 Weeks to Fiscal Fitness, Budgeting | 2 Comments »

2 Comments to “How To Create Your First Working Budget With YNAB”

  1. Jim Says:

    Great videos my problem is that I get lost try to set ynab because a contractor my income is all over the map- makes it hard to save- suggestions?

  2. Sam Says:

    YNAB actually is great if you’re a contractor. If you have inconsistent income streams, it’s particularly important to create your master budget so that you can prioritize your expenses. You HAVE to know the order in which your bills and categories need to be funded. Then, when you receive any income, enter it into YNAB as “income available this month” and allocate the income to the categories in the order you previously decided. It’s actually pretty simple using YNAB, the tricky part is making sure you have the money when you need it.

    If you can, it’s particularly useful for a contractor to have a full month of expenses saved up so that you have a buffer to prevent overdrawing your account due to a late income payment.

    Does that help? What other questions did you specifically have?

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