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The New You Need a Budget (YNAB) vs YNAB 4

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Official support for YNAB 4 will end October 31, 2019. This primarily impacts Mac users upgrading to Mac OS (Catalina), however, there appears to be a workaround.

It’s been almost two years since You Need a Budget switched to a web based, subscription model for their software. When I first tried the new version in January 2016, there were significant gaps in features that prevented me from switching.

Now that YNAB’s had a couple years to evolve, it’s time to take a second look.

So here’s a review comparing YNAB to the old YNAB. For this review, YNAB means the web based, subscription version and YNAB 4 refers to the old, downloadable version.

I used YNAB and YNAB 4 side-by-side for about a month and a half in order to answer these questions:

  1. Is YNAB worth using for new users?
  2. Should YNAB 4 users upgrade to YNAB?
  3. Would I recommend YNAB over Mint or Dave Ramsey’s EveryDollar?
  4. Is it time to look for YNAB alternatives?

Well, here we go. Let’s jump in and see what I like about YNAB compared to YNAB 4.

Test drive YNAB free for 34 days. And #protip, you can email support requesting extra time if that’s not long enough. They’re typically very generous honoring those requests!

Note: If you sign up for a free trial using links in this post, I’ll get a small commission. And please know I wrote this review before I knew I could earn a commission. It’s genuinely my honest, unbiased experience using both apps.

The YNAB Good

Direct Import

This was probably one of the more common knocks against YNAB 4–it didn’t automatically import transactions from your financial accounts. Mint has this feature. So does EveryDollar. And now YNAB does too!

YNAB - Direct Import Feature

Goals

YNAB makes it a lot easier to save towards specific category goals. There are three ways to use them.

YNAB - Goals Feature

  1. Target Category Balance. This is useful when you have a larger expense or savings goal you’re working towards (e.g., down payment on a house or an emergency fund).
  2. Target Category Balance by Date. Similar to the above but with a due date. I buy a new iPhone every two years. This type of goal is handy for that. I say I want to save X dollars by Y date and YNAB tells me how much to save each month.
  3. Monthly Funding Goal (e.g., $50/month for car maintenance)

I found this to be a helpful feature. It removed a lot of manual calculations I used to do in order to figure out how much to save each month.

Quicker Reconciliation

YNAB - Reconcile FeatureIn YNAB 4 you used to have to reconcile each transaction individually. The direct import feature now makes reconciling accounts much quicker (assuming you’ve kept on top of adding transactions as they happen).

It’s as easy as clicking Reconcile Account and then Yes if the account balance lines up with what your financial institution says. If it’s off, the reconciliation process is similar to YNAB 4 and requires some manual work. But more often than not, I had the same balances so reconciliation was a breeze.

Moving Money is Easier

YNAB - Move Money FeatureMoving money from one category to another is a pretty common task. It wasn’t a terrible process in YNAB 4, however, YNAB makes it even easier. You just click on a category balance and tell it how much money to move where.

They’ve also added this ability to the mobile apps. Something that was missing from YNAB 4.

The YNAB Bad

Missing Features

  • No ability to search transactions (added October 2016)
  • No reporting capabilities (added October 2016)
  • No manual import of  bank statements (added June/July 2016)

The good news is all those features have been added. Just a bummer it took longer than expected for search and reports.

Can’t Rollover a Negative Category Balance

YNAB removed the ability to rollover a negative category balance to the next month. I know that’s (typically) not good budgeting practice but you’d be surprised how many valid uses there are for it! For example, expenses you plan on being reimbursed for.

YNAB - Overspending SettingsIn YNAB 4 you had a couple options. I could carry it over to the next month as a negative balance (my preferred method) or let YNAB automatically bring the category balance to zero (by taking money from what I have available to budget for the next month).

YNAB won’t let you move to the next month with a negative balance. This was the deal-breaking feature for me because it makes it difficult to track reimbursable expenses.

However, I did some research and found a solution I liked. Read about it here. It involves creating an off-budget tracking account and transferring any reimbursable expenses to it.

It was initially a little confusing to understand, but as one commenter said, it made a lot more sense when I went through the steps in my YNAB account.

Here’s a short video of what it looks like.

I like it because it creates an easily accessible place for tracking reimbursements (it’s in the sidebar). With a quick glance, I can tell how much is outstanding and who owes what.

One caveat. This works great if your reimbursements are on a credit card account.

It gets a bit trickier when the reimbursement is from a checking/savings account. In this situation, YNAB will take money out of the next month’s budget to compensate for the overspending. In order to avoid that, I cover the overspending with a different budget category in order to not impact the amount available for budget next month. I then mark where that money came from in the memo field so that when the reimbursement comes in, I can put the money back.

Not ideal, but I rarely have reimbursements on my checking/savings account, so not a big deal.

Conclusion

Let me go back and answer the three questions I posed above in reverse order.

Is it time to look for YNAB alternatives?

Definitely not. All the missing features from the initial launch have been added. So in it’s current form, YNAB covers all the main bases. It does everything most users will need from a budgeting app. I still haven’t found a budgeting app that’s as polished and tailor made for budgeting as YNAB.

Once you understand it’s methodology and how to use the app, you come to appreciate how well built the app is. Everything fits like a glove (with the exception of carrying over negative balances). ;) Where other budgeting apps feel like Honda Accords (they get the job done), YNAB feels like a Ferrari (it’s pretty and high-performing).

While I was initially hesitant to move full-time to YNAB when it was first released, I’ve done so now and have been using the web-based version for a year.

With a year’s worth of usage, I can say YNAB adds enough value to justify the recurring expense. The key features for me are:

  • Goals make it easier to remember and know how much to budget to hit my savings goals.
  • Quicker reconciling because of auto-importing of transactions. Seriously, a big time saver.
  • Quick budget options like budgeting the average amount spent over the last year in a category.
  • A better iPhone app with budgeting capabilities.

While YNAB 4’s iPhone app was great, it only let you add transactions. The current YNAB app has 90% feature parity with the web version. Meaning you can do all your budgeting from your phone if you want. I still prefer using a computer for most of my budgeting, but the new app is nice for some things (namely, approving imported transactions and covering overspending quickly after adding a transaction).

Would I recommend YNAB over Mint or Dave Ramsey’s EveryDollar?

Absolutely. Even though YNAB is a relatively young product, it’s already a much better budgeting tool than Mint or EveryDollar.

You can read my review of YNAB4 and EveryDollar to get a better idea of where I feel EveryDollar falls short. And don’t get me started on Mint. I wouldn’t touch Mint (for budgeting) with a ten foot pole. It’s so commercialized (designed to sell you stuff) and was definitely not built for budgeting.

Not to mention, no other company has more comprehensive budgeting classes, guides, and resources. This is one thing I love about the company. They are passionate about helping people gain control of their money.

Should YNAB 4 users upgrade to YNAB?

Tough call. I’d say yes for most users. In my opinion, it’s better to upgrade sooner rather than later.

While it does stink YNAB is now a recurring subscription, I’m fine paying for it. The value YNAB adds to my life is worth the price. Some of the new features like automatic import, faster reconciliation, ease of moving money, and quick budget options are noticeable improvements from YNAB 4.

If you upgrade, there is a way to import your YNAB 4 data into YNAB. When I tested the import feature back in early 2016, it worked without a hitch. But this time around, some of my numbers didn’t match up. Rather than take the time to troubleshoot, I just started a new budget from scratch. I did save my YNAB 4 data in a separate budget though so I could reference later if needed. Hopefully you have better luck importing than I did.

The Toolkit for YNAB browser extension is also worth checking out.

However, I know there’s still a vocal contingent that will ride out YNAB 4 until it dies. The good news is YNAB Classic was updated to support Dropbox’s new API. I was initially worried that wasn’t going to happen which would’ve rendered the app useless after June 2016. So for the diehard YNAB 4 users, the app will continue working for the foreseeable future.

The only thing that would break the app is an incompatible macOS or iOS update which I don’t think will happen with either of the next updates. So that gives YNAB 4 a good shot at working through 2018.

Ready to give YNAB a try? YNAB’s offering a free 34-day trial. If you have any questions, let me know in the comments!

Is YNAB worth using for new users?

If you’re brand new to YNAB and it’s methodology, I would still recommend YNAB. As a new YNAB user, you have the luxury of learning how to use YNAB and it’s updated methodology from scratch without any “baggage” from the YNAB 4 days.

Final Thoughts

Through all of this, I’ve learned a valuable life lesson.

People are naturally resistant to change. I’m no exception. In all honesty, the initial release of YNAB would’ve been fine for me. I was just too stubborn to adapt my existing budgeting process. I could’ve easily found my “red arrow” workaround back then but I didn’t want to.

Ironically enough, I’ve been pondering what it’s like to get older. I’ve seen several people at later stages in their life struggle. Partly because I believe they’re holding onto the past and not embracing the future. They believe the best days are behind them.

Honestly, I don’t want to live like that. I want to believe the future will always be better than the past. But in order to do that, I have to embrace change and be willing to adapt.

So that’s one reason why I’ve decided to upgrade. YNAB 4 is the past. YNAB is the future. I believe YNAB will continue to evolve and add new features YNAB 4 could only dream of.

#endrandomness

Where have you landed? Are you going to upgrade or look for YNAB alternatives? What are your reasons?

194 replies on “The New You Need a Budget (YNAB) vs YNAB 4”

If I may share my humble approach to reimbursements, please read on.

I incur these expenses monthly and it can amount to significant inflows and outflows over time (obviously balanced). If I’m not careful, I could sometimes run into trouble with balances not lining up with other bills.

Therefore, I simply created a reimbursements category and ACTUALLY PUT MONEY IN IT. It goes down when I incur and back up when I get reimbursed. I’m not always timely with expense reports so the lag is important.

For those who are loathe to set aside idle money still, perhaps using the emergency fund to handle this will work the same way. The point is that you are indeed incurring liabilities, however temporarily, so depending on your situation you may actually want to make sure you have funds available to cover the activity.

thanks for sharing! i’m currently using the method you describe. i decided a couple months ago that the method i shared in this post was a little more hassle than i wanted to deal with. too many nuances with that approach.

so like you suggested, i took some money from my emergency fund and funded my “to be reimbursed category.” anytime the category is less than that amount, i know i have money waiting to be reimbursed.

if people have the surplus cash to do something like that, i think it’s my new recommended approach.

Hi Alex,

Great review.

One thing no one seems to be afraid of regarding the online budgeting (any systems) is that these companies use your data, analyze them, profile your spending and saving habits and most probably sell them to interested (ad) companies… This is my main reason I prefer offline budgeting..

The other reason is the aforementioned online security. Unfortunately, none of the banks (that I know of) is open to the idea to create a read-only account. I do not like the idea to provide any 3rd party with my actual bank account logins…

thanks for reading! i get the privacy concerns. i’m okay sharing my log in details for the added convenience it provides. so far i haven’t been bit by any inappropriate use of that data. let’s hope that trend continues. ;)

Thank you for your review: it was very helpful. I’m here because I want an OFFLINE budgeting software. I agree with all the commenters below who say it’s “very insecure/ bad enough that the banks are online.” Do you not read the news? Millions and MILLIONS of people’s information exposed by hacks. And you want to give some app access to all your finances?? I am going to go check out YNAB4 though. Thanks again!

glad you found the review helpful. hope YNAB4 works out for you!

and in terms of an online solution, the perks of connecting YNAB to my bank accounts outweigh the very low probability that any of my accounts will be hacked.

i’ve been online since the late 90s and i’ve _never_ had a hacked account cause me any issues. that track record makes me comfortable with YNAB having access to my bank accounts.

I’m still using YNAB 4. First of all – I probably wouldn’t auto-import my transactions anyway – manually entering them has been one of the most eye-opening experiences of my financial problems. It helps me get out of bad habit spending before I get into it.

Secondly, while I don’t mind paying subscription service, $6.99 seems high to me. Yes, high. As in, I pay $8.50 a month (annual subscription) for a 5 user Office 365 subscription (that’s with 1TB of online storage for each user, email accounts, web office, and full versions of office). So paying subscription after subscription for one off applications seems absurd to me. Don’t get me wrong, YNAB is great software and I understand the support and community aspects of it, but $6.99 a month just seems way too high. Try $3.99 a month and I’d me much more willing to jump.

Finally – I still prefer the old forums (now called community) to the new one. Call me old fashioned, but if something isn’t broke – don’t fix it.

I quit YNAB when it went subscription and became web based, those were the deal breakers for me. I was a very loyal customer and told other people about the software, now I warn people against it.

Yep the same for me … Im currently sticking with ynab4 but seriously thinking about switching to Banktivity despite that it doesn’t do budgeting as well … a one off cost where I know what I am working with without the need to be on line .. and with much better reporting/drill downs etc
I also dont really want my finance details out in the web .. still feel uneasy about Ynab security.

i should also mention, if you ever have a positive amount in the “to be reimbursed” category then you need to move that money to the associated credit card payment category.

that was something i learned after i recorded that video.

Just want to add my 2 cents as well: One of their “missing” features that has not been added back yet is a desktop app. When they launched their new service they clearly stated they would put out a desktop app in the future. I don’t mind paying for the service – it’s worth it in my opinion – but I want to be able to work offline. There are times I don’t have an internet connection but still need to review my budget. I am starting to feel misled that they promised a desktop app but have not delivered. If they’re not going to do it, I wish they’d just say so.

i just put my iphone in airplane mode and was able to view my budget from the app. i was also able to add a transaction. then it later synced to my account when i turned airplane mode off.

so it appears (at least with the iphone app) that it has some offline support. possible even the desktop?

just don’t like that it is web based. Very insecure and don’t want to link my bank accounts to such a thing. Bad enough the bank accounts themselves are online…

can you recommend any budgeting apps that don’t store data in the cloud?

if you’re on a mac, i’d suggest trying banktivity. unfortunately, not too familiar with windows-based alternatives.

YNAB 4 was a finished product. Aside from adding easier goals, it’s still a very viable product. The problem is, the company needed to stay in business. Solution: SAAS (software as a service) and change your algorithm for “success” in personal finance.

nYNAB misses at least one very important pillar, for me at least. Living on last month’s paycheck. This was completely abandoned for age-of-money, a completely pointless concept. If you have enough set aside in an emergency fund and live on last month’s salary, you’re set. The rest of your dollars should be either given jobs or invested once you reach this point. There’s no point in having $100k in your checking account if all you really need in an emergency is $45k. The rest should be earning a decent return in a longer-term investment. Who cares what the age of your money is beyond what it takes for your pre-determined pad in case it all hits the fan.

nYNAB also obsesses over credit cards. It annoyingly shoves extra categories at the top in both the apps and the web interface. Spending from categories and transferring to pay is a simple enough concept. Somehow, they’ve managed to make it more important than it should and now it’s even easier to “borrow” on your credit card. BAD nYNAB, BAD!

One piece of evidence that this new SAAS, method and interface isn’t doing all that great is the yearly subscription. They traded off an additional $10 for a $50 yearly subscription because customers were bailing after 1-2 months on the horrible failure that is nYNAB. Now they lock you in for a year.

You mentioned YNAB 4 is the past. While it’s the previous version, the new version fails miserably. In this case, the future is worst than the past.

Annoyances / brokenness I didn’t mention: split transactions, recurring transactions, sorting & transaction entry in the account register, a step back in reports.

You’d think after 2 years they’d have a polished product.

All that YNAB 4 could use is a mobile app facelift and the automated goals.

i do agree with you that age of money is a worthless (and confusing metric), imho. i wish they would’ve kept the “live off last month’s paycheck” as an official rule. YNAB was the first place i heard that and was what motivated me to work towards it.

thankfully, i have and it’s an amazing feeling knowing you’re no longer living paycheck to paycheck.

in YNAB, i handle it by creating a category called “budget next month.” all my current month’s income goes into that category. it’s really similar to how YNAB 4 had a “budget [next month]” category. then when the new month rolls around, i move the money from that category to TBB. while not as native as YNAB 4, it’s the same concept.

I too miss the “live off last month’s income” concept and the ability to put income into the “next month” category. Your “budget next month” category idea is clever, and I’d love to adopt it, but won’t that break the “Income v Expense” report? All your income transactions will not be against the special built-in “To Be Budgeted” category but rather your non-special “budget next month” category. The “Income v Expense” report will show no income for those transactions. It will list your “budget next month” category under “Expense” (which is also awkward, but granted, it will add the income correctly for the net income).

I’ve been using the “Income v Expense” report to easily see my income for a given month. Since the report doesn’t work with your “budget next month” approach, how do you easily find all your income (i.e., individual transactions and total) for a given month? I like to do this because all my income comes in as “To Be Budgeted”, but some of it needs to get allocated to different categories (e.g., “birthday gift” to a “Gifts Received” category). Or maybe you don’t work this way instead perhaps making the category allocation at the time of entry?

you’re right that putting the income in “budget next month” doesn’t include it in the income reports. since i never look at those reports i’ve been okay with that.

however, in your case, would inflowing the income to TBB first and then immediately moving it to the “budget next month” category solve that issue?

Thanks, that’s also an interesting idea. Yes, that would make it show up correctly in the report. The downside, though, is the extra step for each income transaction (i.e., first enter the transaction against the “To Be Budgeted” category, and then move the funds to the “budget next month” category).

It’s also a pain for recurring scheduled transactions (e.g., salary) since the moving of the funds from “To Be Budgeted” to “budget next month” can’t be done automatically. However, since I have to approve the scheduled transactions, maybe I could just do the move whenever I approve them.

I’m still on the fence with this. If I did enter transactions against the “To Be Budgeted” category first, then immediately move the funds to the “budget next month” category, then when the next month rolls around, I move all the funds from “budget next month” back to “To Be Budgeted”. Those are the funds to budget in that month. After that, “budget next month” becomes the holding category for the next month’s income again. It feels like a lot of effort to keep this going, though.

Alex, I’m a bit late to the discussion. Thanks for the article. I read it recently because I thought it worth checking if after nearly 2 years someone actually thought the new YNAB was any good. My initial view when it was introduced was that it was done simply to generate more money for the YNAB company. To quote their own words: “the subscription model was a better model for us” – No doubt. $50 per annum per user is a NPV cost paid by a lifetime user of over $1000.

Fast forward 2 years and I maintain my view that the new YNAB:
– imposes an onerous cost on users
– focuses so much on the cloud that it reduced basic functionality to get there
– is a functionally inferior design for users compare to YNAB 4.
– no forward planning beyond one month?
– no ability to see what my multiple bank balances might look like in a few weeks time based on forecast expenses?
– no carry over expenses?
– I don’t want “workarounds”. A workaround means the software design is fundamentally flawed. If I have to use a workaround I will end up not using the software and not budgeting, and therefore losing money. This is human behaviour 101 when it comes to system design of any kind.

A note on the cloud:
– IMO web based software is STOOOPID. It’s clumsy and requires a connection, and BTW what is this “we’ll only look at your data sometimes” crap? By comparison, desktop app and mobile apps that sync mean I’m in control of my data and I don’t need to be online all the time to do my budgeting.

A note on getting transaction info direct from my bank,:
– Many people think downloading transactions from your bank is a good thing for budgeting. NO NO NO NO NO NO. When you enter all transactions yourself it reinforces you taking personal responsibility for your spending actions and reminds you on every occasion where you are at with your budget. Reliance on bank downloads is LAZY and makes you lose money. It is not just HIGHLY overrated, it WORKS AGAINST spending discipline..

My conclusion 2 years on: YNAB 5 is a massively overpriced, fundamentally flawed system which is missing a number of the main requirements for successful budgeting, whereas YNAB 4 is almost perfect in form and function. I will stick with YNAB 4 for as long as it works and then I’ll move to something else or write my own software and sell that because there will be a gaping hole in the market for the functionality of YNAB 4. I would not move to YNAB 5 even if YNAB was PAYING ME the annual fee.

I’m with you Andrew. While nYNAB is newer, it’s in no way better.

Initially, the fee was $5 monthly or $60 / yr. So many people were bailing after 1-2 months they decided to lock people in at a yearly rate.

Just tried switching, after 2 years, still feels like a beta product, like you said, designed to fit the web instead of the other way around.

it does seem with your workflow, YNAB may not fit your needs compared to YNAB 4. i do hope YNAB 4 continues working for a long time for those that don’t feel YNAB is worth the recurring expense.

at least for me, i think $45/year (the lifetime discount for YNAB 4 users) is absolutely worth the cost. the confidence i have in where my finances are and where they’re going is easily worth $45/year to me.

Andrew, I could not have put it better.

I agree with just about everything you say here. The one thing I do like about YNAB is the simplicity of the user interface, the hints provided and the ability to quickly and easily transfer amounts between categories, but this is cancelled out many time over by the negatives.

Personally my biggest beef is ‘cloud based app’ and all you say above followed by the cost! (Compare this with a microsoft office licence… it just doesn’t add up!!).
I am also not convinced by security provisions and lack of certification from someone like Norton. I would NEVER connect directly to my bank, but still am not happy with my transactions details (downloaded from banks separately) being uploaded to the cloud just so I can process my own data. All the clauses about YNAB working with third parties just doesn’t convince me at this point in time.

Like you I await another player to put an offline app into play once YNAB4 falls off a cliff. Thankfully there is at least one out there that is looking promising but not yet quite there!

Andrew, please inform me, when you will write your own software. Because YNAB has digged a hudge hole and is going to fall into it. I won’t follow.

I am exactly in the same boat as you were a year ago. I am using YNAB 4 since 2011. I tried YNAB last year and gave up as certain features were missing or the way they work had changed.

A mail from YNAB team to retry with another trial period got me going from July.

I resonate with most of your points. One more thing I noticed:
YNAB doesn’t let you budget beyond the next month, while YNAB 4 allows it. I use it for some anticipated future expenses and also to see how much money ends up in a category over a period of time.

I am sure there will be a way to do it in YNAB, but it strikes an old time user like me.

Any thoughts?

unfortunately, i don’t know of a way since YNAB only lets you see one month ahead. so there’s no real way to forecast further then that.

it seems a big part of YNAB’s methodology is focusing on the here and now. so i bet that’s why they don’t let you budget too far in advance.

They’ve replaced the concept of “fully buffered” or living on last month’s paycheck with a pointless concept of age-of-money.

My advice: Get fully buffered, work on your emergency fund. Once the emergency fund is full, then invest more or take nicer vacations (or whatever you want jobs for your dollars).

Brandon hits the nail on the head. In pursuit of profit, they’ve quite literally detrimentally changed the rules that made YNAB budgeting so successful. Walling off current income to next month was the most crucial of the rules, and they simply erased it from existence. It’s really quite astonishing how profoundly they hobbled their own philosophy and product with this shift, and I’m not sure why. Was it because they simply weren’t competent enough to hire programmers to replicate YNAB4 as a SaaS product, or did they feel the need to make up “improvements” to justify the upsell?

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