The Four Rules of YNAB and How They Changed How I Budget

Vic wasn’t always the Budget Jedi that he currently is. (Nor did he always talk in the third person). For years my wife and I tried to budget. We tried Mint and Excel spreadsheets. Yet no matter what we tried and how motivated we were, nothing ever stuck.


It wasn’t until YNAB (You Need a Budget) when everything clicked. YNAB is not just a software for budgeting, it’s a philosophy on how to spend your money. While other budgeting programs simply give you a tool to budget, YNAB is based on a methodology that shows you how to actually stick to a budget. The Four Rules of YNAB have completely changed how I think about budgeting.

YNAB’s Four Rules
1. Give Every Dollar a Job
When creating your budget for the month, you allocate every single dollar. This includes EVERYTHING, from necessities such as rent and groceries to more “fun” spending like video games and going out. When you know where every single dollar is going you can save more, invest more, and better plan for your future. Doing this allows us to prioritize our spending on what we value most such as vacations, eating at nice restaurants, and buying the occasional WWE T-Shirt.

Ultimate Warrior shirts - in the budget
Matching Ultimate Warrior shirts – in the budget

2. Save for a Rainy Day
How many times have you been “surprised” with big expenses that happen once or twice a year like taxes or car insurance? How about Christmas shopping? What about things like car repairs that you know you’re going to pay for eventually?

YNAB helps you prepare for these irregular payments by treating them as monthly expenses. In October we have a $2400 tax payment due and I’ve been saving $200 each month for it since last year. Other expenses that I’ve been saving for are Christmas ($600 already saved), home repair ($750 saved), and car insurance ($582 saved).

3. Roll with the Punches
One of the reasons why budgets didn’t work for us before is because they felt restrictive. When we spent more than we budgeted or something unexpected came up, we would feel like failures and quit. With Rule 3, you simply roll with it. When things change in your budget you adjust by pulling money from another category to cover or adjusting next month’s budget to compensate for the overspend.

4. Live on Last Month’s Income
If I could get nerdy for a second, Rule 4 is Budget Nirvana. Everything you make in the current month gets put towards next months spending. While we weren’t living paycheck to paycheck before, my wife and I were always timing bills according to when we would get paid next. We would have to double check our bank balances before we could make any payment. By living on last month’s income, we don’t do this anymore. We only budget with money that we already have. Now, any bill that comes up gets paid immediately. This method is far less stressful 🙂

The magic happens here.

YNAB vs. Mint
When it comes to budgeting tools, Mint is probably the most popular. With Mint, you connect all your accounts and it automatically tracks your spending. I tried using Mint several times to budget but it never worked for me. I got frustrated because categories were often wrong, and it didn’t really handle cash transactions very well. In my opinion, Mint was more reactive than proactive. Mint showed me what I spent on, but it didn’t really change my spending habits.

YNAB worked for me because it forced me to be active with my budget by manually entering in each transaction. This creates hyper awareness as I’m always mindful of how much is in our accounts at all times.

While some might think it can become cumbersome entering every single transaction, it really isn’t. It takes SECONDS to input info in the mobile app. YNAB encourages you to enter transactions as they happen as the app remembers your location. So when I’m at the grocery store, I quickly open YNAB as I’m leaving and all I have to enter is the amount. Everything else (account, store, memo) is already populated. Pretty damn neat YNAB. If you’ve ever spent time with me you probably haven’t even noticed me updating my YNAB in public since it’s so quick.

pretty easy to access on the go
pretty easy to access on the go

Yes, YNAB Costs Money
At $60, YNAB does costs a pretty penny ($54 if you use my referral link). So why would a self-professed cheapskate even consider spending that much on a budget program when he can probably replicate it in an Excel spreadsheet? Easy. Because YNAB has more than paid for itself many times over. I have never felt more in control of our finances until we started using YNAB. In a previous post I talked about all our budgeting successes since our daughter was born, and YNAB was what we used to achieve that. The fine folks at YNAB also do a fantastic job training users on their program and methodology with online classes, video tutorials, forums, and customer support. If that $60 was an annual fee, I would gladly pay it (note to YNAB staff, please don’t do that 😉 )

If you download the program and follow the Four Rules, you’ll easily “find” that $60 in your budget. Even if you don’t use YNAB, these four rules can still help you budget. I downloaded the free trial and bought within a week. I can’t imagine using any other budgeting software, ever.

Future Budget Nerd.
Future Budget Nerd.

21 thoughts on “The Four Rules of YNAB and How They Changed How I Budget

    1. Thanks for the comment Kristin!

      The great thing about YNAB is that it trains you to not worry so much about your account balances because you’ll focus much more on your category balances. So you and your fiance wouldn’t necessarily have to combine all checking/savings/credit accounts as long as you guys stick to the budget.

      I currently have 17 different on budget accounts between cash, checking, credit, and gift cards. This isn’t cumbersome at all with YNAB they all total up to one “On Budget Number” anyways. This lets me optimize my credit card rewards depending on the purchase. I also got into the habit of treating gift cards as part of the budget so I don’t end up spending a Target giftcard on something dumb just because I got it as a gift.

      Hope you like YNAB! There’s a pretty generous 34-day free trial for you to experiment with it! I expect to see a full on review on Brokepedia! 🙂


  1. YNAB ended up being more than I needed, but it definitely packs a big punch for anyone just starting out on this journey. I do love how the basics of this post that apply to any financial tracking method you use, though, even if YNAB isn’t for me. Great blog!

    Liked by 1 person

    1. Thanks for the compliment!

      That’s understandable that YNAB might not be for you. It’s called personal finance so if there’s something else that you use that works, keep using it! I know people that swear by Mint or Quicken and that’s great! I’m just sharing that YNAB was the program that worked for me.

      What do you use to budget?


      1. I use mint for my own spending tracking and Personal Capital with my husband to keep track of our net worth. Most of my spending is automated, so Mint is just about all I need if I want to take a look at the ways I’m spending the “fun money” I allot myself most months, but I’m more interested in the overall wealth building that Personal Capital offers.

        Liked by 1 person

      2. I love Personal Capital! I use YNAB strictly for my on budget stuff and use Personal Capital for everything else. I love how I can track my net worth and how PC can analyze if I’m in the right investments.


  2. As a non-YNAB user, I enjoyed the review. Avid budgeters ourselves, but never used budgeting software. However, we do use very similar philosophies as YNAB and others. What I like about YNAB is that it is principle-based; it can be adapted to anyone’s situtation. Personal finance is personal, but the principles are not 🙂

    Liked by 1 person

    1. Thanks for reading Luke!

      That’s the same reason why I love YNAB – because of its principles. The software is simply designed around their four rules.

      If you can budget without software, that’s great too! Personal finance is all about each individual’s choice. This is just my suggestion and recommendation for those who aren’t on a budget.


  3. YNAB has revolutionized the way I budget and the way I think about money. I’m with you, I love their principles. The idea of spending “old money” has made the biggest impact on me. Just found your blog a few weeks ago. Looking forward to future posts.

    Liked by 1 person

    1. Thanks for reading Ernie! The four rules definitely changed my mindset when it came to budgeting. Rule 4 – spending last month’s income was a revelation. We’re no longer timing paychecks to bills! It’s awesome.


    1. Hi David!

      Thanks for reading such an old post 🙂

      Yes, this is based on the old version, but I felt that since the post was almost two years old I didn’t think anyone would read it anymore. Your comment might have changed my mind!

      I actually did an updated review of the new version of YNAB earlier this year. You can read it here:

      BTW – I prefer the old Rule 4. Aging your money is kind of a silly concept IMO.


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