I was pretty pumped when I saw Dave Ramsey launch his new budgeting tool called EveryDollar. Especially since there was a free option.
Being a long-time You Need a Budget (YNAB) user, I was curious to see how EveryDollar stacked up.
Would EveryDollar be good enough to switch away from YNAB? Or at least worth recommending to friends who don’t want to pay for YNAB?I used YNAB and EveryDollar side-by-side for an entire month. Here's what I learned.Click To Tweet
I focused on three areas I believe are important for any app wanting to help people get their money under control.
How easy is it to:
- Create your first month’s budget?
- Add transactions from your smartphone?
- Balance your budget at the end of the month?
This post shares what I learned and crowns a winner!
Note: This review is for the web-based version of YNAB and not YNAB 4 (the previous, desktop-only version).
Creating Your First Budget
Creating a budget is a simple process in EveryDollar. Once you create an account and log in, you’ll immediately be able to get started. While I believe it is fairly intuitive how to create your first budget, I do wish there was a little more hand-holding here.
The first thing you do is enter your monthly income and spread that amount across the different budget categories.
You Need a Budget
Before you create your first budget, you’ll add your different bank accounts (checking/savings, credit card, etc.). The first time you add a credit card account, you’re given a brief walkthrough of how YNAB handles credit card accounts/payments. Pay attention to this part since YNAB has a unique way of handling credit cards.
Once you’ve added a checking or savings account, that money will be available for budgeting. The process is then similar to EveryDollar. You take what’s available to budget and distribute it into the different budget categories until the “to be budgeted” amount reaches zero.
There’s no question here. EveryDollar is definitely a lot easier and quicker to get started with.
While YNAB’s accounts, goals, and handling of credit cards are helpful, they can be intimidating for new users.
The best way to keep track of your budget is to add each transaction as they happen. That means the mobile apps for EveryDollar and YNAB are critical pieces to budgeting success.
The focus of this section will be on adding transactions on the iPhone.
Just like creating your first budget, EveryDollar’s iPhone app makes it straightforward to add a new transaction.
Nothing fancy here.
Type in an amount, choose a budget category, and type in the merchant name.
You Need a Budget (2.0.4)
Let me just go on the record here and say YNAB’s iPhone app is gorgeous. It’s obvious from the start a lot of care went into designing YNAB (and how you use it).
You’ll type in the same things as you would in EveryDollar.
However, the strength of YNAB becomes more apparent when you re-visit a place you’ve already shopped.
More details later when I declare a winner for this section.
Winner: YNABThere's two noteworthy features YNAB has that EveryDollar does not have.Click To Tweet
- YNAB uses GPS to remember all the places you shop at.
- YNAB uses default values whenever it can.
Both those things drastically speed up how quickly you can add a transaction.
The easier it is to use an app, the more likely you will be to use it. When it comes to staying on budget every month, this becomes an important point.
The second time you visit a store, this is how quickly you’ll be able to add a transaction. Notice all I did was type in an amount and the store/category were automatically filled in for me.
On the flip side, EveryDollar requires you manually type out the store name and choose a budget category every time you make a purchase. #inefficient
Balancing Your Budget
I won’t get into a rant here, but if you don’t do this step regularly (at least once a month) then you’re not really budgeting. You’re just tracking your spending.
What does balancing your budget mean?
It means every budget category is at $0 or has a positive dollar amount before moving on to the next month’s budget.
If you overspend by $50 in groceries this month, you take $50 from a different budget category (one that has an extra $50 to spare) and move it into the groceries category to compensate for the overspending.
It could also mean “sweeping” all your surplus (money you budgeted but didn’t spend) into a specific saving goal.
Balancing your budget requires two things:
- An easy way to move money from one category to another.
- Confidence you’ve recorded every transaction for the month.
Now let’s take a look at how EveryDollar and YNAB stack up.
Turns out getting this:
To balance out to this:
is way harder than it should be.
There’s no easy way to move money around.
I had to bust out a calculator and re-calculate the new amounts for Groceries and Restaurants so that the Groceries budget would be $0.
How about ensuring all my transactions have been added properly?
This was a nightmare.
I have a bunch of recurring transactions (rent, HOA dues, subscription services, cell phone bill, etc.). All of those have to be manually added. EveryDollar doesn’t support recurring transactions.
And I don’t always remember to add transactions on my phone whenever they happen. So how do I know which transactions I forgot?
Lots of manual labor.
I had to look at statements from each banking account and check line-for-line if I entered the transaction into EveryDollar.
I wanted to gouge out my eyes. There’s no easy way to do this.
You Need a Budget
All things bad in this department for EveryDollar turned out to be all things good in YNAB.
You can have scheduled (recurring) transactions.
And it’s really simple to move money around.
YNAB also provides a handy feature for reconciling. If you’ve stayed on top of adding transactions when they happen, it’s a two-click process.
If your balances don’t match (maybe you forgot a transaction or two), YNAB gives you a simple way to add missing transactions until your balances match. To do this, you will need to cross-reference your bank’s statement with what’s in YNAB (similar to EveryDollar).
However, with YNAB this is a much easier process.What took 20 minutes of frustration in EveryDollar took 2 minutes in YNAB.Click To Tweet
By a huge margin.
I didn’t realize this was a deal breaking feature for me until the end of the month when I started balancing my budget.
For a budget to work, you have to be confident the numbers are right. Otherwise you may be spending money you don’t actually have.
Without a way to reconcile balances in EveryDollar, the process of checking for accuracy becomes a painstakingly slow and error-prone process.
Budgeting already requires a good amount of discipline. Make that process harder and you drastically reduce a person’s desire to keep up with it.
This is where YNAB clearly shines. It’s extremely easy to balance your budget each month.YNAB makes budgeting a fun and *gasp* enjoyable process.Click To Tweet
What about EveryDollar Plus?
EveryDollar Plus (the paid version of EveryDollar) does support importing transactions automatically. That solves the forgetting a transaction and recurring transactions issue (assuming your bank account is supported). However, I do not recommend EveryDollar Plus.
It encourages bad habits by how it handles transactions after importing.
A good habit is entering a transaction immediately after it happens. Doing this keeps budget balances accurate and let’s you adjust accordingly. Maybe you’re eating out too much this week. By adding every transaction when it happens, you’re able to adjust your spending because you’re seeing your “eating out” balance regularly.
The challenge with using EveryDollar Plus is that it makes manually added transactions useless. It doesn’t provide a way to “match” an existing transaction with an auto-imported one. In order for your budget to be accurate, you have to delete the manual transaction after the auto-imported version gets added. Your budget will double-spend every category if you don’t.
Since this causes more work, most users will stop manually adding transactions and rely on the auto-import.
Because transactions don’t get usually get imported until 2-3 days after they happen, the budget amounts in the app are inaccurate. The app could show $50 available for eating out, but instead of $50, you really have $30. $20 was spent the other day that hasn’t been auto-imported.
So you could be making spending decisions on inaccurate budget amounts.
YNAB is the clear winner here.
I would wholeheartedly recommend YNAB to anyone serious about getting their money under control.
Unfortunately, I would not recommend EveryDollar to anyone. While it excels at simplifying the initial creation of a budget, it does not provide useful features/tools to keep the budget going strong over time. EveryDollar is great for your first month’s budget, but terrible from month-to-month. And that’s where you absolutely need a budgeting app to excel in.
Plus, $14.99/month (or $99 paid annually) for EveryDollar is a terrible deal compared to $50 (paid annually) for YNAB.
YNAB gives you so much more for cheaper.
What budgeting tool do you use? What do you like about it?