You Need A Budget https://www.youneedabudget.com Personal Budgeting Software for Windows, Mac, iOS and Android Tue, 19 Jul 2022 18:15:48 +0000 en-US hourly 1 401k vs Roth IRA: Retirement Plan Rumble https://www.youneedabudget.com/401k-vs-roth-ira/ Wed, 20 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=107340 If you’re trying to decide which side to take in the 401k vs Roth IRA investment vehicle battle, we’ve got some advice. Take your ringside seats and LET’S GET READY TO RUMBLE with retirement savings.  401k vs Roth IRA  As in any fair fight, our opponents have some similarities: they’re two of the most popular …

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If you’re trying to decide which side to take in the 401k vs Roth IRA investment vehicle battle, we’ve got some advice. Take your ringside seats and LET’S GET READY TO RUMBLE with retirement savings. 

401k vs Roth IRA 

As in any fair fight, our opponents have some similarities: they’re two of the most popular options when it comes to saving for retirement and they both come with tax advantages. 

But which one is worth putting your money on? 

What is a 401k? 

In this corner, we have the powerful 401k. A 401k is an employer-sponsored retirement plan where a predetermined (by you) amount of your paycheck is automatically deducted from your paycheck to be contributed into your 401k account. 

Not only is the “automatically deducted” part awesome since it takes most of the effort out of the investing equation, but those contributions are pre-tax dollars, so they also reduce your taxable income and grow tax-deferred. 

You’ll pay income taxes on your withdrawals during retirement, and those distributions will be taxed at the tax rate of your income at that time. So, with a 401k, you’re not taxed during your high-earning years and may be at a lower tax rate when it’s time to pay taxes on the withdrawals. 

The strengths of a 401k

The 401k’s greatest strength lies in the employer contribution (but that depends on your benefit package.) Some employers offer to match employee contributions up to a percentage of the contribution and your salary—in that case, failing to contribute to a 401k (at least up to the employer match) is like throwing free money away. Don’t do that. 

Your contributions, plus the amount your employer matches, goes into your 401k account to be invested in long-term investment funds, like mutual funds, index funds, or target-date funds. You have some control over how your money is allocated and will be able to choose from several investment options, which makes diversification easier. 

401k contribution limits and withdrawal penalties

As of 2022, the annual contribution limit for a 401k was capped by the IRS at $20,500, or about $1,708 per month if you’re maxing it out, but if you’re 50 years old or over, you can make catch-up contributions to a total limit of $27,000.

Since a 401k is intended for retirement, there’s a 10% early withdrawal penalty for anyone younger than 59 and a half. So, not only would you pay the penalty, you’d also be paying the taxes on your earnings—that could have you down for the count pretty quickly. 

With a 401k, you have to start taking your required minimum distributions (RMDs) by April 1st on the year that you retire or the year following the year you turn 72, depending on which is later. If you leave all of your money in your 401k, you’ll pay a 50% tax penalty on the RMD amounts that weren’t withdrawn. 

What is a Roth IRA

And in this corner, we have the mighty Roth IRA. A Roth IRA is an individual retirement account that’s not dependent on an employer—almost anyone with earned income can open one, unless you make too much ($129,000 as an individual or $204,000 as a married couple who file together, as of 2022)  to qualify. If you earn too much, a backdoor IRA may be worth considering. 

If you’re a stay-at-home spouse without taxable income, you may still be able to contribute to a Roth IRA. Each spouse can contribute to their Roth IRA up to the current limit, but the total of the combined contributions can’t exceed the taxable compensation reported on your joint tax return. 

You can set up a Roth IRA fairly easily (online, even!) with most financial institutions or popular brokerage accounts. Once you’ve set up a Roth account, you can arrange for automatic deposits from your bank account. Much like a 401k, you can choose what types of funds to invest in, which helps with diversification and allows you to tailor your investment options to align with your personal tolerance for risk. 

The strengths of a Roth IRA

The true strength of Roth IRA accounts lies in the tax benefits. Your Roth IRA contributions are based on after-tax income so they won’t reduce your taxable income for the current year, but you won’t pay taxes on the profit from that investment and can withdraw your money tax-free at retirement—which means more retirement money to spend. 

The Roth IRA is particularly advantageous if you’re at a lower tax bracket now that you may be in the future (especially applicable to newer earners just starting out on their career path)—and if your investments do as well as you hope, you’ll be glad that you knocked out those taxes way-back-when instead of paying on all of that profit at retirement time! 

Another big benefit that makes the Roth IRA such a contender is that you can make penalty-free withdrawals of your contributions (what you invested, not what you earned) at any time. 

You can also make tax-free withdrawals on your earnings under certain conditions once you’ve had the Roth IRA for at least five years. Those conditions include being permanently disabled, using the funds as first-time homebuyers, if withdrawals are made by your estate or beneficiary after your death, or once you’ve reached 59 and a half years old. 

That flexibility makes it easier to bob and weave through life’s blows, but the best personal finance advice is to let your money continue to grow!

Roth IRA contribution limits and withdrawal penalties

The maximum Roth IRA contribution weighs in at $6,000 in 2022 (or your taxable compensation for the year if you made less than that.)  If you’re 50 or older, you can contribute $7,000 annually. 

Although you can withdraw your contributions at any age or time tax-free and without penalty, and can make qualified withdrawals on your earnings under certain conditions, non-qualified withdrawals could result in income taxes and a 10% penalty. 

Unlike 401ks, there are no RMDs with a Roth IRA, so if you don’t need the money (wouldn’t that be nice?), it can continue to grow in the account to be used by your beneficiaries. 

The 401k vs Roth IRA battle breakdown

So here’s the blow-by-blow of the strengths we’ve covered so far: 

The 401k:

Possibility of an employer match

Higher contribution limits

No income limits

Managed by your employer

Contributions reduce your taxable income for the year

The Roth IRA:

Allows penalty-free withdrawals of your contributions

Withdrawals are tax-free in retirement 

Allows qualified withdrawals of your earnings prior to retirement

No RMDs

Not tied to an employer

Easy and affordable to set up independently 

Ding, ding, ding 

And the winner is…well, that’s up to you, your financial advisor, and your personal circumstances. Both types of accounts are strong investment choices for retirement and if you can manage it, having both a 401k and a Roth IRA is a sound strategy. Invest in your 401k up to the employer matching limit, max out your Roth IRA, and put additional funds towards your 401k’s contribution limit to maximize the advantages of each. 

No matter which side of the 401k vs Roth IRA battle you choose, you’ll be using the magic of compound interest to pave the way for a more secure future—and that’s a win all around. 

Ready to get serious about saving? Try YNAB for free for 34 days to create a budget and change your money mindset. 

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Emergency Fund 101: How To Save For a Rainy Day https://www.youneedabudget.com/emergency-fund-101/ Mon, 18 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=83752 Ahhh, the emergency fund. It’s something you’ve probably heard about whether you’re just starting out on your personal finance journey, or are a budgeting pro. But how much should you be saving? What is considered a true “emergency”? Do you even need an emergency fund? Let’s find out. What is an emergency fund?  An emergency …

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Ahhh, the emergency fund.

It’s something you’ve probably heard about whether you’re just starting out on your personal finance journey, or are a budgeting pro. But how much should you be saving? What is considered a true “emergency”? Do you even need an emergency fund? Let’s find out.

What is an emergency fund? 

An emergency fund is a financial safety net that can offset or cover the expense of unexpected events. 

Let’s start by defining what a financial emergency is:

A financial emergency is something unexpected that happens that has not been planned for elsewhere in the budget and needs to be dealt with immediately.

Job loss, home repairs, car repairs, medical bills, pet health emergencies, and more—these are all unplanned expenses that can pop up at any time to put a serious damper on your sense of well-being.  

(Things like Amazon Prime Day sales don’t officially qualify as a financial emergency, sorry.) 

When urgent unexpected expenses pop up, it’s a huge relief to have emergency savings in the bank so that you can avoid going into credit card debt, or even worse, find yourself unable to solve whatever issue has thrown a monkey wrench into your life. The sense of financial security an emergency fund offers can lead to a more pleasant and peaceful life all around. 

How do I start an emergency fund

When I first started budgeting, I made a goal of saving a $1000 emergency fund. It was advice I’d heard often and it seemed sound. It took about a year, but eventually I got there.

It can be difficult to come up with a savings plan when it seems like you don’t have enough money in your bank account to handle daily life. Small windfalls like tax refunds, work bonuses, three paycheck months (if paid bi-weekly), or money from side hustles, garage sales, or things sold on Facebook Marketplace are all great opportunities to funnel a little money into your rainy day fund. 

The amount of money you set for your savings goal depends on your personal circumstances and budgeting style. Maybe you start with a $1000 emergency fund and work your way up to 3 months’ worth of living expenses. However, if you include variable expenses (aka True Expenses in YNAB lingo), you might magically find yourself having less “emergencies” to fund. 

As I began building my emergency fund, I also started saving for my True Expenses. I set aside manageable amounts of money each month for car repairs, the holidays, annual bills, and all of the other non-monthly expenses that everyone deals with but still feel unexpected when they pop up sporadically.

Learn more about how to budget variable expenses in YNAB.

Time marched on. My dedicated emergency fund dollars sat there. And sat there. And sat there.

  • They sat there and watched my car suffer a $750 repair. They did nothing.
  • They sat there when my dog Charlie got into something he shouldn’t have and needed a quick (and expensive) trip to the vet.
  • They sat there when I registered my car at the town hall, a once a year expense.

All these things would have been emergencies before I started budgeting. They were unexpected and not planned for and needed to be dealt with immediately.

But they weren’t emergencies now, because I had specifically budgeted for them gradually throughout the year. The longer I budgeted, the fewer emergencies I had. Huh. How about that?

Do I really need an emergency fund?

So does budgeting for True Expenses mean you shouldn’t have an emergency fund? Not at all. Things will happen that you cannot anticipate. Having money around for those moments is just good sense.

So what would I define as an emergency now?  

Well, there was that time the sewer line to the septic tank was blocked and water was no longer leaving the house.

It certainly was unexpected, but I have a category for house maintenance. Things break on houses. Did it belong there? You could definitely make an argument for that. I could have categorized it that way. So why did I categorize it as an emergency?

Because it felt like one. Seriously, I couldn’t get a plumber to the house fast enough.

Then there was a time I wanted to help fly a family member home quickly. It was unexpected and not planned anywhere in the budget. And adding a category for “Helping a family member fly home quickly” felt unnecessary.

There was also the time we had a very severe fall storm that knocked out the power for four days. I couldn’t cook and it was the end of the month so my dining out category was drained. I could have shuffled some money around between budget categories, but it was nice to not have to.

So go ahead and start saving for that emergency fund. But as you save for True Expenses, I’m betting you won’t need that emergency fund as much as you thought…and that’s a significant step towards living a life with less financial stress. 

Ready to meet your financial goals? The first step is to start a budget. Try YNAB for free for 34 days!

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What Should I Do With My Investments Now? https://www.youneedabudget.com/investments-losing-money/ Thu, 14 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=107234 Let’s be honest, we save money in order to spend it. Whether we plan to spend it on our wants or our needs, the goal of saving—even for retirement—is to eventually spend. With investing, you’re saving with the hope that your money will multiply and work for you. Its job is to make more money …

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Let’s be honest, we save money in order to spend it. Whether we plan to spend it on our wants or our needs, the goal of saving—even for retirement—is to eventually spend. With investing, you’re saving with the hope that your money will multiply and work for you. Its job is to make more money until you’re ready to spend it, and that growth is what makes investing so satisfying. However, investing with rumors of a recession looming changes some things. There’s nothing that puts a damper on the excitement of investing quite like investments losing money.

Abigail wrote into the You Need a Budget podcast with the following question about what to do with her investments right now:  

Dear Jesse, 

I’m watching my retirement account decline each week. It is painful contributing almost the same amount that I seem to be losing each month. Ouch! What can I do during this time of inflation? Should I shift from contributing to my 403b to something else? 

After the routine disclaimer that he’s not a financial advisor, and that you should do your own research before making any investment decisions, Jesse Mecham (founder of YNAB and host of the You Need a Budget podcast) had some advice about what to do (or not to do) with  investments right now. Here’s what he had to say:

Would you rather listen than read? Click here for Ask Jesse: What Should I Do with My Investments Now?

Should I invest in something other than my 403b or 401k? 

Whether you’re investing in a 403b or a 401k, you’re actually investing in stocks or bonds or something like that and the 403b or 401k is simply the investment vehicle—the investments just sit inside that vehicle and you enjoy the tax advantages. So, should you invest in something else? If you mean outside of the 403b/401k, I’d say no, unless you’ve already maxed it out or you’re already getting the match or whatever the benefit associated with that is. In that case, you would invest in addition to it, but not in lieu of it. But the bigger question is this: 

What should you do when investments are losing money? 

That’s a tougher question to answer, and a harder reality to face. In times like this, I will tell you what I’ve done. 

First, we haven’t seen a lot of times like this. If you’re 40, you probably haven’t experienced a big dip where you were really in it for a lot of money. People remember ‘08. At that time, I was in my late 20s and I remember it being referred to as the Great Recession. I remember a big dip in the stock market, but I was building my business and wasn’t heavily invested because I didn’t have a lot of money; it was all going to the business. So, I didn’t have a big portfolio that was dropping—there was a little bit, but it wasn’t concerning. 

Fast forward to now and we’ve had this massive run-up in stocks. I think the average has been like 17% over the last decade or something—that is huge. That’s way above the norm, which was more like 10 or 11 or 12%. Anyway, we’ve enjoyed that and if you got your investing experience when the market basically just went up a lot, then this could be a little scary. Here are two things you can do that may help: 

Write an investment plan (and review it as needed)

First, you should have a written investment plan so that you’re very clear on why and how you’re investing. Then when things like this happen where the market is dipping consistently, you can go back and review that investment plan. Ask yourself, has my plan really changed? Most of the time it hasn’t, based on some dips. 

So, write down your investment plan in a moment of emotional stability so that you can check it during those moments of emotional instability. Mine is in the form of a spreadsheet that has the percentage of allocations in different investments that I would like to be in. I follow that spreadsheet and I only change those allocations very, very rarely—I’ve done it twice in eight years, and only by small amounts. So, that’s step one: get an investment plan in place. 

Change the way you look at your investments

The second thing I’ve done that’s helped in times like this is that instead of looking at the value of my holdings in some broad index fund, I look at the amount of shares I own instead. This way it becomes more like a game for me. I pick a number in the future and think, “I’m going to own this many shares by then.” So when there’s a market downturn, I get to buy more shares for that same amount of money—which is really what’s happening with your 403b or 401k right now. You’re contributing the same amount each month; the value may be going down but the number of shares you’re purchasing is increasing. 

Remember that you’re buying shares in future earnings; sometimes those shares are valued a little less by the market, sometimes a little more. So, it’s like you’re purchasing at a little bit of a deal—you’re getting a discount, which is always a good thing. The bottom line is this: don’t look at the value, look at the number of shares. 

Remember this about investment advice

While it’s possible to be “right” about guessing which direction the market is going to go, no one can really predict the timing of an economic cycle. All you can really do is ask yourself how long you’re going to be invested, how long until you need that money, and which direction do you think the economy will have gone over that period of time, on the whole. 

Since I can’t time the market, I don’t know where else I would put money right now so I’m not doing anything different. I have heavily invested in my business, and by heavy, I mean not a lot of diversification. What I do have separate from the business is in pretty conservative investments like bonds and real estate and a little bit of stock. I guess the bonds went down like crazy the other day, so, hey, the safe haven wasn’t so safe. I’m no stranger to the experience of investments losing money. But what can you do? They’re still more conservative than equities and it’s a long-term investment for me, so I’ll stick with it. 

If I had to guess, I’d say this decline in the market shouldn’t change your plan. But that’s just a guess! If you’re two years from retirement and invested in 90% equities, I would have you revisit your allocation to become more conservative. If you need some resources to figure out what mix of assets you should invest in, I recommend The Bogleheads’ Guide to Investing, The Little Book of Common Sense Investing, The Four Pillars of Investing, and The Intelligent Asset Allocator. 

Markets are cyclical; they go down, then they correct, and then they’ll just go back up but it can take a long time and no one can really guess when that will happen. Let’s face it, if we could guess, I wouldn’t be doing this podcast and I wouldn’t be selling software—I’d be playing golf, building things out of wood, and jumping in and out of the market with perfect timing. 

In the meantime, build some emotional footing on the number of shares that you’re purchasing, and feel good about that. And don’t forget to budget! 

Have your own question for Jesse? Send it to askjesse@ynab.com for a chance to be featured on the podcast. Also, if you haven’t started a budget yet, enjoy less financial stress by signing up for a free trial of YNAB.

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7 Tips for Road Tripping on a Budget https://www.youneedabudget.com/7-tips-for-road-tripping-on-a-budget/ Tue, 12 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=107122 Summer spells freedom! Drop tops. Flip flops. Board shorts. Most importantly, road trips!  International travel restrictions and flight mishaps have brought one reality to the surface: there is so much to see domestically…in every country! National Park enthusiasts, campers, road trippers, and Van Life people hit the road like never before to discover the beauty …

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Summer spells freedom! Drop tops. Flip flops. Board shorts. Most importantly, road trips! 

International travel restrictions and flight mishaps have brought one reality to the surface: there is so much to see domestically…in every country! National Park enthusiasts, campers, road trippers, and Van Life people hit the road like never before to discover the beauty and get away from it all. 

Yes, costs are a-risin’, but you still have travel goals and vacation time. Maybe you’ve even budgeted your days off! Fear not—you can still plan the road trip of your dreams without extra financial stress. 

Here are a few tips to help you save money while you’re on the road…or the road less traveled.

Theme your road trip around a free activity. 

I recently met a gentleman who plans every road trip around labyrinth hunting. I repeat: labyrinth hunting! Who knew that was a thing? The more I looked into it, I realized a) how many labyrinths exist and b) labyrinths are typically located in beautiful, untouched places, historic churches, or wooded areas. Plus, they’re free to enjoy and located all over the world! 

His love for labyrinths got me thinking: If you theme a road trip around free entertainment that interests you, you’ll wind up satisfied at every destination. 

Budget travel doesn’t have to be boring! Imagine making it your cross-country mission to discover:

  • The Nation’s best craft market or farmers market. The one in my hometown of Moscow, Idaho is hard to beat, but there are amazing food and artisan vendors far and wide!
  • The most picturesque spot for your favorite pastime, like wildlife or landscape photography, kayaking, or hiking. I’ll casually recommend Grand Teton National Park in Wyoming for all of the above.
  • The world’s coolest sports arena, like the MetLife Stadium in New Jersey.
  • The most random museum of random things, like the National Mustard Museum or the Museum of Bad Art. Hey, you might just find one of my childhood drawings in there! 
  • Free community food competitions that allow you to eat your heart out, like the Texas Food Fest. Hello barbeque, it’s me…again.
  • Epic community festivals, like the Doheny Surf & Art Festival in California or the Testicle Festival in Montana. (Is it appropriate to say that here? It’s a real event, after all.)

Camp on BLM land to save on campground fees.

In planning our latest road trip, I was shocked by the rise in Airbnb, hotel room, and campsite prices. Did you know you can camp for free or cheap on BLM land? You might think you have to go way off-grid to make it happen, but you’ll be pleasantly surprised by how many free camping areas there are if you’re willing to take a more rustic trip. We’re talking 245 million acres of possibilities. Yep, there’s even an app to help you find free campsites when you’re on the road.

Save for your road trip before it happens. 

Budget confession: I used to take road trips all the time without knowing whether I could actually afford them or not. I had the proverbial convertible top up on my bank account until I found the YNAB app and method. Now that I’m riding in style with the top down (aka, I have a budget!), I know exactly where my money’s going…because I tell it where to go. I fund my road trips before they happen! Then, I simply enjoy the ride. No vacation stress. No financial strain.

A budget screenshot that shows how road tripping on a budget might work.
An example of a road trip budget. YMMV!

While I’m planning my road trips these days, I add a buffer of funds in my fuel category to account for rising gas prices and allocate some extra dollars to auto maintenance just in case. Yes, it’s possible to take a road trip or vacation without money stress along the way. You’re simply prioritizing your income and giving your dollars the job of making lifetime memories.

Consider purchasing a AAA membership. 

As much as I love road trips, auto maintenance is not my first language! Still, I wasn’t sold on the value of a AAA membership until my car broke down in the Arizona desert. Their roadside service was fast, friendly, and safe in a moment when I felt scared, sweltering hot, and helpless. The mechanic was able to change my tire on the spot and saved me time and money compared to getting my car towed to an urban area and serviced at a dealership.

Yes, there is an upfront cost, but if you use AAA travel planning, roadside assistance, restaurant discounts, and hotel deals for your road trip, you’ll likely make up for the membership fee in savings.

Stock up on snacks and beverages before your trip. 

Remember going to the Dollar Store for less expensive movie candy and sneaking it into the theater? The same trick works for road tripping on a budget. Instead of paying for overpriced food and beverages at gas stations or restaurants along the way, stock up on your own meals and snacks at a discount store or bulk retailer. While fancy foods on the road are a nice treat, you don’t have to splurge on dining out for every meal for an enjoyable vacation. Sure, those Mickey Dee’s french fries taste great on the open road, but fast food discomfort and long road trips don’t mix well.

Instead, buy your “hangry” essentials at a grocery store ahead of time and keep them in a cooler. Think: salami, cheese, bread, crackers, apples, granola, bananas, peanut butter, protein bars, chocolate, coffee, and gallon jugs of water. You’d be surprised how many more miles you can make it past the only restaurant option with healthy snacks and proper hydration!

Save on National Park fees.

If you’re planning a Tour de National Parks, fees add up. Yes, the fees contribute to an incredible network of parks and protected areas, and that’s important. However, if your budget is stretched already and you still have National Parks on your bucket list, Fee-Free Park Days may become your best friend.

Planning to visit more than one National Park this year? Take advantage of the Annual National Park Pass to save a lot of money on entrance fees. It’s like getting a bulk deal on beautiful views.

Set cruise control, baby.

One way to achieve better gas mileage, battle inflation, and enjoy a more budget-friendly trip is simply setting cruise control. It sounds obvious, but it pays back in spades. As I mentioned, auto maintenance isn’t my first language, but for some reason cars are more fuel efficient when you don’t drive the way I do (speeding up and slowing down constantly, never really finding a happy medium). Set cruise control and watch those MPGs rise, then use the GasBuddy app to find the cheapest gas for your next pit stop!

Speaking of cruise control, that free and easy feeling is exactly what you can expect when you gain total control of your finances. Try YNAB for free for 34 days and you’ll be road tripping on a budget in no time! Ready to feel the wind in your hair? Let’s hit the road!

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What is a Good Credit Score? https://www.youneedabudget.com/what-is-a-good-credit-score/ Mon, 11 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=57366 There are three basic questions when it comes to credit: What is a good credit score? Why do I need one? And how do I get one? It’s no secret that we don’t love debt here at YNAB, however, we recognize that credit can be a useful tool when used carefully.  But instead of just …

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There are three basic questions when it comes to credit: What is a good credit score? Why do I need one? And how do I get one? It’s no secret that we don’t love debt here at YNAB, however, we recognize that credit can be a useful tool when used carefully. 

But instead of just writing “carefully” at the end of the sentence, we want to spray paint it in big red letters, we want to hire a skywriter to emblazon the sky with ‘carefully’ in a cloudy cursive font, we want to follow you around all day chanting it into a bullhorn while beating on a drum.

This will have to do, though. 

The reality is that debt can be necessary to achieve dreams like buying a house or going to college. The flip side of that reality is that debt can be insidious; it can pose as an invitation to live a life you can’t afford and it can rob you of future opportunity. It seems manageable at first—and therein lies the danger!

Use it Carefully, with a capital C. 

Now that we’ve covered all of that, let’s learn what’s a good credit score and how you can get one. 

What is a Good Credit Score?

A credit score is a three digit number calculated by credit bureaus using information like your payment history, the amount of debt you carry, and your length of credit history.

What’s considered “good” may depending on the credit scoring model (the two most commonly used are FICO and VantageScore), but here’s a general idea of where different credit score ranges fall on a scale of poor to excellent: 

300-579Poor
580-669Fair
670-739Good
740-799 Very Good 
800 and upExcellent 

Why Does Good Credit Matter?

Your credit score is an indicator of your creditworthiness, and is used by creditors and lenders to make lending decisions about your application for a credit card or loan. It also helps determine what terms, credit limit, and interest rates you qualify for—a better score means that you’re a lower risk, so you’ll pay less as a borrower.

Good credit health can also be the deciding factor when it comes to:

  • Getting approved to lease an apartment
  • How much your landlord requires for your security deposit
  • If you’ll need to provide a security deposit to your utility company (and how much)
  • If you’re eligible for car insurance and what your rate will be
  • If you can get approved for a mortgage, and if so, for how much and at what rate

Adult life is a lot easier (and less expensive) when you have good credit.

How is Your Credit Score Calculated?

FICO and VantageScore both generate your score based on information from Equifax, TransUnion and Experian credit reports or, in other words, your credit activity. Don’t be surprised if your scores from these credit reporting agencies don’t match. Rob Kaufman, at FICO, explains, “Due to the fact that the agencies may receive different creditor information at different times (or not at all), you might not have the same FICO Scores at each agency.”

Your credit score is generally calculated based on the following factors: 

1. Payment History 

Your payment history—including on-time payments, late payments, bankruptcies and related items—is the biggest factor in calculating your credit score. 

2. Amount Owed

Credit utilization is the amount of debt you have and how it’s distributed. For a better score, keep your revolving balances low, and pay down any installment debt. 

3. Age of Credit History 

Next up is the age of your credit. The longer your credit history is, the more it helps your score so avoid closing out older accounts in good standing, if you can help it. 

4. Credit Behavior

Applying for or opening new lines of credit can have a negative impact on your credit score, so avoid behavior that may result in a hard inquiry on your credit report if you’ll be applying for an auto loan or mortgage in the near future. 

5. Mix of Account Types 

What kind—and how many types—of credit you have also impacts your credit score. Types of credit include mortgages, installment loans, retail accounts, credit cards and finance company accounts. Keep in mind that if you don’t have a lot of credit activity or history, your mix of accounts will more heavily affect your score.

How to Get Good Credit

The best way to get good credit is to be careful, strategic, and thoughtful as you begin to build your credit history, but if you got off to a rocky start, it’s never too late to clean things up and improve your score. Here are our top tips for increasing your credit score: 

Stick to a Budget

The safest way to use credit is to treat it like a payment source vs. a borrowing tool—meaning don’t spend what you don’t have. Creating (and following) a budget helps make sure your spending aligns with your priorities because you make intentional decisions about where you want your money to go. 

YNAB’s budgeting app makes it easy not to slip into debt accidentally. You assign the money that you already have into different budgeting categories. When you spend money, you enter a transaction, identify which budget category the spending comes from, and select how you paid—if you paid with a credit card, the software automatically moves the amount from your budget category to the category for your credit card payment. 

When it’s time to make your credit card payment, all of the money you need to cover your purchases has already been set aside in that category. Voila! No debt or interest! 

YNAB’s credit card functionality makes it easy to avoid getting in debt.

In the image above, someone bought gum with a credit card at the grocery store. The $.35 cost was deducted from the Groceries category and added to the Credit Card payment category to cover the cost. Learn more about how credit cards work in YNAB

Pay Your Bills on Time 

Payment history is the most significant factor in credit score calculations, so it’s critical to pay your bills on time, every time. This is true for more than just credit cards and loans—any debt that goes into collections will negatively impact your credit score. If you’re having difficulty making a payment, call the creditor and ask for guidance on what to do. 

Keep Balances Low 

Here at YNAB, we’d love to see your balances paid in full each month because it would mean you’re avoiding debt and not wasting money on interest payments. If that’s not possible, a good rule of thumb is to keep your balances below 30% of your total available credit. If you’re already in debt, YNAB’s Loan Planner can help you come up with a plan to pay it off

Avoid Applying for New Credit 

Before you apply for any type of loan or credit, ask yourself if you really need this. And then ask yourself again. Is there any way you could save up the cash instead? Find a cheaper alternative? Live without it for a while? Applying for loans or credit will show up on your credit report as a hard inquiry, which will have a negative impact on your score. 

Monitor Your Credit Report

Check your credit report on a regular basis so that you’ll have a full awareness of your credit situation and so that you can dispute any inaccuracies. You can request a free copy of your credit report from all three credit bureaus every 12 months at www.annualcreditreport.com. Requesting one from each bureau every four months allows you to keep an eye on your credit all year round. 

What is a Good Credit Score and How Do I Get One?

So, to summarize, the answer to “What is a good credit score, why do I need one, and how do I get one?” is CAREFULLY. 

And yes, I know that answer doesn’t make sense for two of the three questions listed but since I cannot tattoo it on your skin, write it in fire, or hire a murder of crows to fly around singing it at you, I’m doing the best I can here. 

Don’t buy what you can’t afford, make your payments on time, keep an eye on your credit report, and enjoy a life with lower interest rates and more opportunity to build the future you want with an excellent credit score that you worked hard to get.

Need some more motivation to clean up your credit? Read how one family went from living paycheck to paycheck to an 800+ credit score and then try YNAB for free for 34 days to enjoy less money stress.

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Cut Food Costs with Our Grocery Planner Templates https://www.youneedabudget.com/cut-food-costs-with-grocery-planner-templates/ Fri, 08 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=107073 Grocery shopping on a budget is one of budgeting’s greatest challenges—especially as prices continue to rise. Get organized and cut costs with our free price tracker and grocery planner templates. Groceries have been a sore spot in my budget for years, and as the deadline approaches for meeting one of my personal financial goals, I decided …

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Grocery shopping on a budget is one of budgeting’s greatest challenges—especially as prices continue to rise. Get organized and cut costs with our free price tracker and grocery planner templates.

Groceries have been a sore spot in my budget for years, and as the deadline approaches for meeting one of my personal financial goals, I decided to really focus on this frequently fluctuating expense so that I could funnel my savings towards something that matters more to me right now. 

It’s taken a lot of trial and error, but over the last year and a half, I feel like I have finally dialed it in. I’m going to share some numbers and strategies, but please keep in mind: Grocery prices vary wildly across the United States and beyond. What I share here is what works for me in Maine. If I lived in NYC or Seattle or basically anywhere else, prices would most definitely be different. My grocery bill would be higher in some places and lower in others.

That’s why I don’t spend a lot of time comparing my grocery budget to others. I focus on my average since that’s a real number that I can control. But with that being said, implementing a few of these strategies and putting our free price tracker, kitchen inventory, and meal planning printables (see below!) to use can help reduce your food budget, too. 

Also, for clarity’s sake, grocery spending for me includes everything I buy at the grocery store with the exception of pet food, which I track separately. (I have three cats and a dog, so I really need to know what they cost me so I can prepare appropriately.) Some people choose to list their household goods like cleaning supplies or paper towels into a separate budget category. Do whatever works for you! 

Grocery Spending History (it’s a lot of money)

Alrighty then, with that out of the way, let’s look at some of my grocery spending history. Being the budget nerd that I am, I have data going back to December of 2016. (To be fair, YNAB, my budgeting app, tracks this for me—managing this information on my own for this long would put me in a whole different category of budgeting glory.) 

A graph of spending data which shows that groceries averaged $261.38 per month in Erin's budget.
YNAB’s Spending Trends report reveals how much groceries have cost through the years.

Can we just stop for a second and look at that total? I mean—wow. Over the past 6+ years I’ve spent over $17,000 on groceries. As one person. That just blows my mind. Oh, and that big spike in the middle? That was my “Oh my gosh there’s a pandemic I need to go buy all the things!!!” shopping month. The spike a few months later? I was sick that month and really needed a good popsicle supply. Just sayin’. Our budget tells the story of our lives. 

My monthly average over that time was $261.38. I am shopping just for me, and like I said it includes non-food items like shampoo, paper towels, cleaning supplies—you get the idea. So really, that’s not too bad. 

But over the past few years, I started to really feel that I could do better and free up more money. So I decided to aim for spending $200 a month on grocery items. To be perfectly honest, I wasn’t sure I could do it. But setting my goal uncomfortably low forced me to pay attention to my grocery spending in a way I hadn’t for a while. 

Turns out I geek out on this stuff, so I made significant progress. 

Here’s my grocery spending for 2021:

A graph showing that grocery shopping on a budget is paying off, with an average cost of $211.39 per month.

I was pretty dang close to $200! I was really pleased with this. 

Then 2022 hit and food prices have been on the rise. Honestly, it didn’t affect me at first (more on that in a bit), but I’m feeling it now. But it’s making me shake my fist at the sky and say, “I will not be deterred! I will stay at $200 a month for 2022! I can do this!” 

(Sometimes having a stubborn competitive streak is an asset!)

How to Reduce Your Grocery Budget 

When it comes to grocery shopping on a budget, you have to decide which lever is more important to you: time or money.

Here’s what I mean by that: Right now, I am willing to spend more time (price shopping, cooking, etc) in order to lower my costs. Time is something I have and I enjoy working on this. However, my friend and colleague Ernie has three teenage boys. Time is precious to him. So he is willing to spend more money on groceries if it frees up time in his life. 

Where I’m willing to drive to a few different stores to get the best prices, Ernie’s philosophy is “I’m going to place the order online and just do curbside pick up and boom—I’ve got my Saturday back.” (Sidenote: Online ordering is also a great way to curb impulse buying.) 

I respect that. I’d probably feel the same way if I had three teenagers. 

So I fully expect some people reading this will be in Ernie’s camp and that is A-OK. But if you’re willing to put some time in, I’m your girl—and there’s a lot you can do to lower your grocery spending.

Strategies to Save Money

If you’re willing to spend a little time to save money, try incorporating the following tips, tricks, and suggestions into your shopping, planning, and dining routines:

Download Our Grocery Planner Templates

There are so many tools available to help organize shopping and meal times that it’s almost overwhelming, which is why we tried to consolidate everything you need into one handy PDF resource that is both editable and printable.

A pantry inventory page from our grocery planner templates workbook.
Here’s a sneak peek at the first page of the Pantry Inventory in our Grocery Planner templates workbook.

Our free Grocery Planner templates include a pantry inventory with spaces for a restocking list, meal ideas, and an avocado ripeness tracker (because not ripe, not ripe, not ripe, rotten seem to be the stages of avocado existence), a fridge and freezer inventory, and a weekly meal planning template. Hit the button below and download it to get started.

Free Grocery Planner Templates

Know Your Prices

I have three grocery stores I go to regularly that are close to me. I thought I knew the prices, but I wanted to be sure. I’ve longed for an app that would track prices across the stores the way I want it to, but I haven’t had much luck finding one. So I built a price tracker in Google Sheets. It was eye opening to say the least!

Grab yourself a copy of my price tracker here if you’re interested. (Best used by spreadsheet nerds). 

To make a copy, go to “File” and “Make a copy.” Basically, each row is an item, and when you enter the prices for that row/item, the cell with the lowest price turns green. 

The price differences between my stores were shocking to me—I can’t stress that enough. Yes, it was work to build it out, but now keeping it updated takes a few minutes here and there when I sit down to build a shopping list. Prices for most stores are available online, which makes it a bit easier, so compare between Walmart, Aldi, Amazon, and your local grocery stores. And you don’t have to do it all in one sitting. First, build your grocery list of items you regularly buy. Then grab the prices for one store, then the next store another time.

The other thing about paying attention to prices in this way is I know a good deal when I see one.

Keep a Well-Stocked Pantry

I got better at this during the pandemic and now I am a pro. I could easily go two weeks without shopping without blinking an eye. Aside from that advantage, I can also whip up any number of meals that I know I’ll enjoy very quickly.

Our Grocery Planner templates include an inventory list for your pantry, fridge, and freezer, and a meal planning template, so be sure to download that and you’ll always know what to stock up on. 

This also helps limit trips to the grocery store—the more trips I make, the more I tend to spend. Check out this blog post about how to go grocery shopping once a month

Focus on Your Average

As I mentioned above, I keep an eye on my average. I’m not worried about spending the exact same amount every month. Some months I run above $200 if I come across some great deals and want to stock up. When that happens a few months in a row, I know there’s food available, so I cook from the pantry and freezer to bring down the average.

Fresh produce is important to me, so in months where I’m trying to spend less, that’s where I continue to splurge. Having fresh fruits and vegetables on hand makes it easier for me to make healthy meals. 

Buy Generics (Store Brands)

Mindy over at See Mindy Mom did a fascinating analysis of brands versus generics. I mostly buy store brands, with a few exceptions, so I was already doing this, but I had no idea how much money it saved. If you aren’t doing this, it’s worth trying. And if you find a store brand of something you hate, well at least now you know and you can go back to the name-brand stuff guilt-free.

(Mindy is a great resource for budget family meals. 10 out of 10 would recommend her channel.)

Meal Plan 

This is worth your time and it doesn’t need to be super fancy. You don’t need to figure out every snack for every day. You just need a framework. 

I do this on the weekend and cook a few bigger things that I can reheat over the course of the week. Here’s a typical weekly menu for me.

Breakfasts

  • Overnight Oats with Strawberries and Blueberries
  • Scrambled Eggs with Oven Baked Home Fries

Lunches

  • Egg Salad Sandwiches (sometimes with homemade bread)
  • Tossed Salads. I make up about a half dozen of these and store them in individual glass containers. I just pull one out each day—boom—done.

Dinners

  • Taco Soup
  • Green Chili Chicken Enchiladas

Snacks

  • Fruit
  • Popcorn
  • Tortilla Chips with homemade salsa

That’s just one week, but it’s enough to keep me happy and help me avoid take out. Use the meal planning template in our free printable to come up with an easy meal plan of your own. And check out this blog post on meal planning myths—it doesn’t have to be difficult or time consuming! 

Ten Go-Tos

One way to keep meal planning manageable is to figure out what your top ten meals are; choose things that are easy to make and budget-friendly. Here’s my list:

  1. Homemade Pizza. I make this in a cast iron skillet. I make excellent homemade pizza. It is my superpower.
  2. Taco Soup (as mentioned above)
  3. Burrito Bowls
  4. Homemade Chicken/Turkey Pot Pie
  5. Roasted Veggies with Grilled Chicken Breasts
  6. English Muffin Pizzas—a bit of an emergency meal for me. (Thanks Dad!)
  7. Baked Beans and Potato Salad
  8. Corn Chowder
  9. Homemade Focaccia with Roasted Veggies
  10. Sweet Chili Chicken Bowls

Need some cheap and easy meal ideas? We’ve got you covered.  

Eat What You Buy

I’m convinced we all throw away too much food, myself included. (How many times have those fresh vegetables turned into a mushy mess?) So my latest goal has been to finish what’s in the fridge before making something else. Sometimes that means getting a little creative, like turning that formerly fresh produce into a smoothie. 

I also make an effort not to make too much of any one meal, and if I do make a big batch of something, I’ll throw half in the freezer right away. 

Buy Ingredients, Not Processed Food

You won’t see a lot of processed stuff in my cupboards. For the most part, I buy ingredients and use what I buy across multiple recipes. There’s often a mindset that if you’re spending too little on food, you can’t be eating healthy foods. I have not found that to be true. If I bought all organic from the local farmer’s market, yeah that would cost more. (And if that’s important to you—go for it!) 

But there’s just no question that cooking from scratch saves money. And the mental overhead of preparing a meal lessens as your skills and habits get better.

If you want help learning to cook there are lots of channels on YouTube that can help you. Just search around. I mentioned See Mindy Mom; I also like Meals with Maria and Frugal Fit Mom. All three are great if you just want to binge watch to get ideas.

How I Fight Leftover Fatigue

When it comes to leftovers, the struggle is real. I mean I loooove taco soup, but I don’t want to eat it every day for a week. That just doesn’t work for me. The long standing suggestion is to freeze half for later, and that works for some things, but not so much for others. 

I also like to cook more often, so lately I’ve also been doing the opposite: I cook a half batch instead of a full batch. This gives me less to eat through, saves freezer space, and I get to try more things. 

If you have a big family, this may not work as well for you so get in the habit of dividing big batches into smaller portions and perfecting your freezing routine. 

Get Started with Grocery Shopping on a Budget

All of this might seem like a lot of work, but you build habits as you go. Make it more manageable by choosing one area to improve on first—start comparing prices, take inventory of what you have, create a list of your 10 Go-To Meals, or work on a meal plan. 

Just like you can choose which savings lever to pull (time or money), you can also choose your own pace for revamping your grocery spending. Maybe you’re ready for a 100-yard dash to the finish line of frugality with a complete overhaul of your meal planning and shopping. Perhaps you’re a long distance marathon runner who needs to meander through Whole Foods a few more times. Any improvement is an improvement and saving on your grocery budget can help you work towards achieving financial goals that matter more to you. 

So you’ve downloaded our free Grocery Planner templates but have you started a budget? Try YNAB for free for 34 days and enjoy less money stress with a financial planning tool that puts your money to work for you. 

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Solve Money Mysteries Using YNAB Search https://www.youneedabudget.com/using-ynab-search/ Wed, 06 Jul 2022 14:38:36 +0000 https://www.youneedabudget.com/?p=107099 It happens to all of us at some point—we set our keys down or put something important somewhere “safe” because we’re so darn confident that our memory won’t fail us and then we have no idea where to find it. It’s easy to forget how easy it is to forget stuff.  The truth is that …

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It happens to all of us at some point—we set our keys down or put something important somewhere “safe” because we’re so darn confident that our memory won’t fail us and then we have no idea where to find it. It’s easy to forget how easy it is to forget stuff. 

The truth is that we all have a lot to do, to manage, to remember, and to follow up on and sometimes our brains are busy doing other things, like worrying about life or thinking about work, or choosing to play “Call Me Maybe” in an incessant loop in our heads for no apparent reason whatsoever. 

Sometimes these lapses of recollection result in a moment of confusion (Why did I come in this room?) and at other times they lead us on a wild goose chase of Scooby-Doo mystery-level proportions. 

Ah, the joys of being human. 

If you’re like me, you really believe that you’re leaving a careful trail of breadcrumbs in your budget as a favor to Future You, but sometimes Future You still has no idea what you’ve been up to. That’s where the YNAB search functionality can come in handy—it’s ready, willing, and able to solve your budget mysteries with very little brain power required, so you can get back to that one-song Carly Rae Jepsen concert going on in your head. 

You may be wondering what there could possibly be to learn about “search” since it’s a fairly basic and ubiquitous feature on just about every computer, website, and app that exists. Yes, you go to the accounts section in the sidebar, and yes, there’s a search box to the far right of the screen with a magnifying glass. Sure, you can search by the basics, like your category name, payee, date or a whole slew of other things, but as those late night infomercials would say, “But wait, there’s more!”  

Check out these three lesser-known tips for using the YNAB search in the account register to level up your budget:

Search for Flags

Did you know that you can search for Flags? They are a fun way to add some color-coded organization to your budget and they are searchable in the register.

Flags! They’re fun!

Start by typing “Flag” and then choose the color, or just start typing the color to click whatever one you’d like to search. Some budgeters use the Flag feature throughout the year to make tax prep time a little easier. 

(Bonus tip: I put a memo to remind myself what the flag color means the first time I use it. Future Me always appreciates this effort!)

Use the YNAB search functionality to sort transaction by colored flags.
Search for transactions by colored flag.

Search a Name

You can actually search for any term in any field, helping you to see all instances of it in a Memo, a Payee, Category, or anywhere in the transactions list. I use this in my own budget when I want to see which of my three cats is costing me the most at the vet. I don’t use separate CATegories for the transactions since I want to assign money for it all together, but I often note which cat it was for in the memo. 

Use YNAB search to find transactions by name.
Figure out which cat costs you the most by searching transactions by name.

(Let’s be real, with a name like Chanel it’s always her.)

It can also be helpful if I want to see if that recent transaction for a massage got categorized as “Sasha Fun Money” or “Sasha Self Care.” If I search for my name, both will come up! 

Search Uncleared

This tip isn’t quite as glamorous as the others, but it’s a workhorse! (And yes, we’re playing fast and loose with glamorous as an adjective here.) It’s a fantastic trick to have when you’re working to reconcile your accounts, and I use it every week.

Start to type in “uncleared” and then select “Is © Uncleared” and you’ll bring up any transactions that still have that status. 

This is super handy to make sure no older uncleared transactions slip through the cracks!

Use YNAB search to find uncleared transactions quickly.
Use YNAB search to find uncleared transactions quickly.

Now you can mark them as cleared if needed, and get closer to balanced budget bliss!

So, there you have it, super sleuthers! The YNAB search feature lets your brain get back to the business of doing…whatever it wants, mostly. 

Go forth and search to see what kind of mysteries your budget can reveal. Future You will be glad you learned this stuff!

Interested in more YNAB tips and tricks? Sign up for the Weekly Roundup! It’s short, sweet, and chock full of helpful information.

Join the Weekly Roundup!

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Financial Fireworks: Happy 4th of July https://www.youneedabudget.com/firework-by-katy-perry-budgeting-edition/ Mon, 04 Jul 2022 11:00:00 +0000 https://www.youneedabudget.com/?p=2132 It’s 4th of July and you know what that means! A long weekend, family barbecues, patriotic color palettes for clothing, and everyone’s (except for dogs) favorite: fireworks. Here at YNAB, we think that calls for a good old fashioned sing-a-long! To be honest, we think everything calls for a good old fashioned sing-a-long. We even …

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It’s 4th of July and you know what that means! A long weekend, family barbecues, patriotic color palettes for clothing, and everyone’s (except for dogs) favorite: fireworks.

Here at YNAB, we think that calls for a good old fashioned sing-a-long!

To be honest, we think everything calls for a good old fashioned sing-a-long. We even made our own budgeting-inspired mix tape.

(Is there a video of the marketing team singing Miley Cyrus’s Party in the USA on a bus, complete with choreography? Yes. Can you see it? Not on my watch.)

So take few minutes to listen to Katy Perry sing Firework. Warm up your vocal cords. Then get ready to sing along with our “Budgeting Edition” lyrics:

Firework: Budget Parody Edition

Do you ever feel like a budget fail?
Spending through your cash, regretting all again?

Do you ever feel, stressed & wearing thin
Like a house of cards, one buck from caving in

Do you ever feel already buried deep, thousands under
Payments, without progress, not a thing

Do you know that there’s still a chance for you
You have a budget now…

You just gotta give jobs, to dollars and let them work

Light up your debt like the 4th of July

Cause baby you prioritize
You know what every dollars worth

Save them for a true true true
Expense, as money grows grows grows

Baby you prioritize
Come on, let your dollars work

Paying off that debt, debt, debt
You’re gonna feel so less stress, stress, stress

You don’t have to feel like it’s just too late
You’re in control, that cannot be replaced

If you only knew what debt-free could be
After a hurricane comes a rainbow

Right now it feels like all the doors are closed
But your budget could lead to the perfect road

Like a lightning bolt, your account will grow
And when it’s time you’ll know

You just gotta give jobs, to dollars, and let them work

Light up your debt like the 4th of July

‘Cause, baby, you prioritize
You know what every dollars worth

Save them for a true true true
Expense, as money grows, grows, grows

Baby, you prioritize
Come on, let your punches fly

Make ’em roll, roll, roll, roll
You’re gonna save it all more, more, more

Green, Green, Green
Even richer than you dreamed, dreamed, dreamed

It’s always been inside of you, you, you
And now it’s time to let it through-ough-ough

‘Cause, baby, you prioritize
You know what every dollars worth

Save them for a true, true, true
Expense, as money grows, grows, grows

Baby, you prioritize
Come on, let your punches fly

Make ’em Roll, roll, roll, roll
You’re gonna save it all more, more, more

Green, Green, Green
Even richer than you dreamed, dreamed, dreamed

Green, Green, Green
Even richer than you dreamed, dreamed, dreamed

Keep the fun going by checking out these financial success stories! And enjoy your 4th of July.

 

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How Many YNAB Categories Should I Have? https://www.youneedabudget.com/how-many-ynab-categories/ Mon, 27 Jun 2022 07:00:00 +0000 https://www.youneedabudget.com/?p=87031 How many YNAB categories should I have? 12, 24, 158? This is a question we’ve been getting since the dawn of time—err, well, since the dawn of You Need a Budget in 2004.  It’s not just new budgeters that get bogged down with this question, either. As you move farther along the learning curve and …

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How many YNAB categories should I have? 12, 24, 158?

This is a question we’ve been getting since the dawn of time—err, well, since the dawn of You Need a Budget in 2004. 

It’s not just new budgeters that get bogged down with this question, either. As you move farther along the learning curve and develop a better understanding of your financial goals, you may realize that your initial YNAB budget category set-up might not serve you as well as it once did—and that’s a good thing! Your budget should evolve as your financial situation (and life!) does. 

There’s No Wrong Way to Categorize

Just like there’s no wrong way to eat a Reese’s, there’s no wrong way to categorize your budget. Sure, there are impassioned hordes on the internet that might have a definitive (and contradictory) stance on this question, but when it comes to your YNAB categories, you do you.

How Many YNAB Categories is Too Many?

You probably want me to say the answer is something definitive (like, 29) but it would make for a really short blog post. To be honest, the answer is different for everyone. Some people have 45, some people have 145. One woman (who met her now boyfriend through YNAB) had just eight categories when she was focused on paying down her debt. 

So why isn’t there a correct number of categories? Well, a monthly budget isn’t just a record of your spending. It’s a personal finance tool designed to make your life better all around. Your categories are part of that process. When you have just the right amount, they’ll most effectively point you in the right direction—whether that’s eliminating overspending, paying down credit card debt, building up an emergency fund, or meeting your savings goals. 

When in Doubt, Simple is Better

We suggest that budgeting beginners start with fewer categories and then let any new ones earn their way into your budget. You can always add or change them at any time, just remember: simple is better.

When you started using YNAB, whether it was today, last week, or last year, we gave you some categories and groups that we thought may be useful to get you started. The default category groups included: 

  • Bills – Create categories for your monthly expenses. 
  • Frequent – Includes expenses like groceries, transportation, and eating out. 
  • Non-Monthly – Categories to break True Expenses (like holiday gifts, annual subscription costs, or car insurance premiums) into manageable monthly chunks. 
  • Goals – Categories of expenses you’re saving up for, like travel, education, or home improvements. 
  • Quality of Life Goals – Categories for hobbies, health and wellness, and entertainment. 

Here’s what that starter budget might’ve looked like:

Default categories in YNAB

And while this set of default categories and groups work great for some of us, we want you to know that they’re not your only option. You might have variable income, you might be aggressively breaking the paycheck to paycheck cycle, or maybe you want to save up for a specific fun thing like a vacation or even a blanket ladder.

Changing your categories isn’t wrong. In fact, there’s no wrong way to organize your budget. We can organize our budgets based on the category structure that best fits our lives right now. If we change our minds later, that’s ok and we can restructure again then too. 

Here’s an example of categories set up around when you get paid:

An example list of YNAB categories grouped by paycheck
Categories organized by paycheck

And here’s one broken out by theme:

An example list of YNAB categories grouped by theme
Categories organized by theme

Use any of those as a template to set up your own YNAB categories or customize your own!

Save in Specific Categories,
Spend in General Ones.

Saving money is exciting. There, I said it. As one YNABer, Carsen, put it, “Giving dollars jobs is like getting to spend the money before you spend the money (and who doesn’t enjoy spending money?).”

And the jobs that you give your dollars could be paying for your next new cell phone, a house project, a new refrigerator or a vacation. Whatever you’re saving for, it’s motivating to know that you’re chipping in for a future purchase that will make your life better—and the specificity is what’s so motivating!

But what happens after we pay for the new fridge or go on that vacation? Do you really need a category called ‘Whirlpool WRB322DMBB’ or ‘Woohoo! Costa Rica, 2017, Baby!’ floating around in your budget? It’s a personal choice, but my guess is “No.”

Even if you hide those old categories when you’re done with them, it’s just extra clutter. So how can you save for specifics (that vacay category name is pretty motivating!), without the category remnant muddling your spending reports? Easy! You need a Wish Farm.

With a Wish Farm, you can plant specific seeds in new categories (Costa Rica, 2017!) but, when you harvest your crop (Costa Rica, 2017!), you record the expense under a more general category (Travel). Then you delete your old Costa Rica category and your reports remain clutter-free. Be sure to read that blog post to become a Grade-A Wish Farmer.

Revisit and Revise.

Last, but not least, remember that your budget is a living, breathing thing. Life changes, and budgets should, too. Don’t feel like you have to get it perfect right now—these aren’t permanent decisions. Play with it!

Try a separate category for your coffee purchases for a while—maybe you need a little more focus there. But, when you’re in control, maybe you wrap that back into your ‘Eating Out’ or ‘Fun Money’ category. Your call.

Maybe you simply outgrow a category. Did you just make your last month worth of car payments? Congrats! Go ahead and hit “delete” on that car payment category and start next month with a clean(er) slate.  You’ll be prompted to reassign the past activity to a different category so that your spending reports remain accurate—something more general like “Transportation” covers a lot of possibilities. 

The point is, keep it simple (where you can!), and always go back to our original question: “Will adding this category actually change my behavior?” (Looking at you, middle-of-the-night Amazon purchases.) 

Feeling inspired about changing up your YNAB categories? Check out these five budget categories that you need right now!

Interested in learning more budgeting tips, tricks, and tutorials? Sign up to have them delivered straight to your inbox! 

The post How Many YNAB Categories Should I Have? appeared first on You Need A Budget.

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We’re Hiring a Humbly Confident Senior IT Systems Administrator https://www.youneedabudget.com/were-hiring-a-humbly-confident-senior-it-systems-administrator/ Thu, 23 Jun 2022 18:26:25 +0000 https://www.youneedabudget.com/?p=106942 About Us and Why We’re Hiring We build “You Need a Budget,” the best budgeting software and educational resources around. (Those in the know call us YNAB, which is pronounced “why-nab.”) For more than a decade, people have been buying YNAB and then telling their friends what a difference it has made in their lives. …

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About Us and Why We’re Hiring

We build “You Need a Budget,” the best budgeting software and educational resources around. (Those in the know call us YNAB, which is pronounced “why-nab.”) For more than a decade, people have been buying YNAB and then telling their friends what a difference it has made in their lives. Google us, or read some of our reviews on the app store, and you’ll see what we mean. We love building something that has a huge positive impact on people’s lives.

For this position, YNAB is looking for an experienced IT professional with a broad technical background to help us with the administration, management, and support of a wide range of internal systems and applications. We want someone who is earnest about tech and finds joy in helping their teammates. 

The person in this role will be appreciated from day one, as you’ll be YNAB’s first IT hire! YNAB has been growing steadily, and frankly, we’ve exceeded the point where we need an experienced and skilled tech generalist to help us get the maximum benefit from our internal systems. That’s where you come in!

We have one overarching requirement when it comes to joining our team: our Core Value Manifesto has to really click with you. If you’re nodding emphatically while reading this, you’ll probably like it here, and we can’t wait to connect with you!

Of course, we have some firm* requirements too, like five years of professional experience in some IT capacity. 

*Well, firm-ish. If you know you’re a great fit for this role but fall a little short of the five-year requirement, we encourage you to go ahead and apply. We don’t need you to be the perfect candidate on paper. 

On a similar note, we know impostor syndrome can be a powerful force, and may discourage fantastic people from applying. Please apply anyway. Many of us here have it too, so you’re in good company.

Okay, let’s talk about life at YNAB, and then we’ll go into detail about what we’re looking for. 

Who You’d Be Working With

Although you’ll be YNAB’s first IT hire, you won’t be alone. You will join our near 50-person engineering group and work closely with our operations team and alongside our senior security engineer. You will also support awesome people from all parts of the organization who all have one thing in common: They are a joy to work with. 

You won’t find heated arguments and raised voices here. We all love to solve problems in creative ways, and we regularly take time to geek out and show each other something cool we built or found to make our lives easier. We save our competitive spirit for YNAB’s external competitors (or the occasional lively board game session), but internally we build up our teammates and celebrate their successes.

How You’ll Work at YNAB

We also work really hard, together, to make working at YNAB an amazing experience, and we were (humbly) proud to be named Fortune’s #1 Best Small Company to Work For the last two years. We have a team of truly exceptional people—the kind you’ll be excited to work with. Here’s how we operate:

Responsibility and Empowerment

YNAB appreciates, respects, and trusts the expertise and judgment of everyone in our engineering team, and this role is no different. Everyone is empowered to do what they think is right. 

We also work collaboratively. We continuously seek a pragmatic balance between nimble flexibility and unity, structure, and security. 

Even though our people are right a lot, it’s okay to make mistakes here. We freely admit when we’re wrong. If something doesn’t go as expected, we learn, bounce back, and make corrections. 

You won’t be alone—others will be there to help, review, reassure, and back you up. We own our systems, applications, processes, and collective outcomes as a team.

Live (Almost) Anywhere You Want in the U.S. 

We’ve always been a fully remote team, and have people all over the world. For this particular position, however, we’re only considering candidates located in the 48 contiguous United States. Wherever you are in that region, just make sure you have a reliable internet connection.

No Outrageous Hours

We want everyone to have a full life outside of YNAB, and we seldom work more than a standard work day. There have been a few occasions where things got busy and people had to put some extra time in. But then they took some extra time off, so it all balances out. We work hard and smart, but we’re in this for the long haul.

In this role, you’ll be collaborating with people across many time zones, so depending on where you live, some flexibility in working hours may be necessary to provide overlap for synchronous work. For example, if you’re on Pacific Time, you may need to work some early mornings to help YNAB team members in central Europe. 

Take Vacation (Seriously)

We want you to take vacation. In fact, we have a minimum vacation policy of three weeks per year. Five weeks feels about right (plus two extra weeks for our company-wide December break). It’s important to get plenty of downtime and get out and do something. We’ll look forward to seeing pictures of your adventures in our #office_wall Slack channel.

The YNAB Retreat

When the pandemic isn’t keeping us from traveling, we get the whole team together once a year to catch up on spreadsheets and powerpoints in a Best Western conference room. Just kidding. So far, we’ve done Costa Rica, a gigantic cabin in the mountains, a beach house in the Outer Banks, a ranch in Montana, and most recently, Laguna Beach. We do really fun things at these retreats, but the highlight is inevitably just being together and having a blast.

Up Your Game

We’re serious about helping you improve your craft. We budget for it (hey-o!). Think conferences, Lynda/Skillshare subscriptions, books, and dedicated time away from work to learn something new. We love to see our people grow.

Benefits

We offer excellent health, dental, and vision insurance for our US employees, where we cover 100% of the premium for you and your family. No need to check your vision, you read that right—100%. Although if you did need to check your vision, we’ve got you covered!

We also have a Traditional and Roth 401k option. YNAB matches your contributions, up to six percent of your paycheck. Matches vest immediately. (Are you a personal finance junkie like our founder Jesse? He set up YNAB’s 401k to have the lowest fee structure possible, where all plan costs are paid by YNAB, not your retirement nest egg. The investment funds available are fantastic, passively-managed, ultra low-cost index funds. Not a PF junkie? Trust us, it’s awesome.) 

We also offer generous paid parental leave for all full-time team members. Here’s to increasing the world’s budgeters, one child at a time!

Competitive Compensation

The starting salary range for this position is $60,000-$75,000 USD annually, depending on experience. We consider raises every year, and have a bi-annual profit-share bonus. YNAB wins, you win—that kind of thing.

Other Tidbits

  • Once you start, we DEMAND (in a friendly, ALL CAPS IS YELLING way) that you fill out your “Bucket List” spreadsheet with 50 items. (That’s harder than it sounds!) 
  • The bucket list really helps in deciding what we should give you for your birthday and the holidays. 
  • We’re all adults. There’s no need to punch a clock or ask for permission to take off early one afternoon to go see the doctor. We look at what you accomplish, not how long you’re in front of a computer.
  • We’re currently trialing a four-day work week! For us, this means four regular days of work followed by a three-day weekend…every week. This is new to us, and we’re learning a lot, but we’re excited about what it could mean both for the company and our team members. 
  • We want you firing on all cylinders so we’ll set you up with a shiny new computer and will replace it regularly.
  • Did we mention we make a huge, positive difference in people’s lives? You may not think that matters much, but then a few months down the road you’ll realize it’s made your job really, really enjoyable. Don’t underestimate this one!

If this sounds like your ideal environment, read on because now we want to talk about you. You will play a part in building something that helps millions of people discover budgeting as an essential financial and life-planning tool.

Apply Now

You, Our New IT Systems Administrator

In this position, you’ll do things like: 

  • User administration for onboarding, offboarding, and role changes—and devise methods to make this easier. 
  • Set up and manage automatic provisioning and sign-on tools based on group membership (e.g., Okta Identity Cloud)
  • Management of the 3rd party tools and software used by all YNAB teammates, such as email, Slack, video conferencing, 1Password, Notion, and Google Workspace. 
  • Administration for specific applications and services used by YNAB product development, such as Github, Heroku, Figma, Amplitude, SumoLogic, and Bugsnag, as well as those used by YNAB marketing, such as Facebook and Braze, and those used by YNAB support, like HelpScout, and Kustomer. 
  • Troubleshoot any access or performance issues with these systems. 
  • Assist teammates in setting up their computers, accessing systems, and configuring particular environments (e.g., a development environment). Serve as the first point of contact to aid with any tech-related issues. Our team is fairly tech-savvy, but there are still plenty of opportunities to help. 
  • Participate in equipment purchasing, provisioning, and configuration processes for laptops, peripherals, and one-off software. 
  • Maintain an inventory of all the software used by the company, by whom, and for what purposes. 
  • Work closely with YNAB’s security lead to ensure security protocols and best practices are implemented and followed.  
  • Work closely with the Operations (HR) team to advise on and plan for all employee-related technical needs and systems. You’ll take a lot of the manual processes we have now, and find ways to streamline or even automate them. 
  • Provision and manage security-related systems such as VPNs, Kolide, Cloudflare for Teams, or AWS Identity Management. 
  • Edit configuration files and occasionally write a script to help make administrative tasks more manageable. 
  • Proactively identify, suggest, and implement new systems and tools that benefit the team. 

You’re our person if:

  • You’re an IT professional with at least five years of experience and know your way around managing and configuring modern systems, applications, and tools. 
  • You have excellent verbal and written communication skills and enjoy using your knowledge to help others when they require support. 
  • You’re process-minded and can make order of chaotic details. You can follow a process like clockwork, innovate when something could be done better, or create a new process from scratch.
  • While process-oriented, you also enjoy facilitation and collaboration, like to find ways to say “yes,” and value pragmatic solutions based on sound judgment more than simple policy enforcement. 
  • You know a lot about navigating modern operating systems, have experience with Mac OS, Linux, and Windows, and are acquainted with iOS and Android. 
  • While maybe not a developer, you are comfortable with a Unix command line and can write simple scripts and edit configuration files. 
  • You may not be a security specialist, but you are aware of how applications, accounts, websites, and services can be exploited. You are security conscious while you work and are protective of company and customer data and privacy.  
  • You have excellent troubleshooting skills and can find problems and devise solutions.
  • You can’t help but notice that things could be done better/faster using this or that method/tool. And then you take the initiative to actually make it better.

Diversity

YNAB is an equal opportunity employer. We believe a diversity of backgrounds, beliefs, abilities, and experiences is critical to our success. We are passionate about creating a welcoming, supportive, and collaborative environment for all employees. All are encouraged to apply as we continue to grow a smart, experienced, and diverse team that loves working together to build something that matters.

How to Apply

  • Apply by filling out this form. You’ll need to log in to your Google account to access it.
  • The deadline is 11:59 pm PT on Sunday, July 10, 2022. 
  • Our goal is to make the hiring process as accessible as possible. If we can help you with an accessibility need, email us at accommodations@youneedabudget.com and indicate in the subject line that you’re applying for the IT Systems Administrator position. (Please note that this inbox is only monitored for messages related to accommodations.)

We’re excited to hear from you!

Apply Now

P.S. If you’re not interested in this position right now, but know someone who might be, we’d appreciate you passing this along!

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