First off, what do I mean when I say old YNAB vs new YNAB?
I’ll explain below, but if you are looking for info on the old version check out my review of the classic version of YNAB (YouNeedABudget)
Here’s a little history:
YNAB (YouNeedABudget) start off years ago as a standalone application that you could purchase, download, and use however you wanted. It progressed from the original software to YNAB 2, 3, and finally ended with version 4. Earlier this year YNAB decided that the best move for the company, its customers, and their budgeting philosophy in general was to fundamentally change their software and business model. So, they decided to recreate YNAB from the ground up as a SaaS (software as a service). This basically means that they changed from having an application that you download to using a browser-based interface. It also meant that they changed from a one-time purchase price to a new subscription-based model. I’ll talk about that later.
Because they have so fundamentally changed their software they have decided that the new version is NOT YNAB 5, but a fresh start back at YNAB.
If you read all that, congrats!
Just to be clear, throughout the article I’ll reference the classic YNAB 4 as “old YNAB” and the newer version and model as “new YNAB” – easy.
Getting Started with the Old YNAB vs New YNAB
One thing to point out from the beginning is that the company is clearly separating the old from the new – so much so that you’ll actually need to make a whole new account in order to use the new web-based version of their software. This is a little weird because if you only really have one email address you’ll be forced to find an alternative because the email you used when you bought the old YNAB won’t work. It’s possible that they are doing this to avoid free trial abuse, but I’m not sure.
To go along with the new YNAB software they have also released new apps on the Google Play store for Android or the Apple store for iPhone.
This is probably the biggest change for those of you that have already been using the old YNAB. If you are using the old YNAB then you have already PAID FOR IT TOO! But, remember that they have recreated YNAB from the ground up and that included their business and pricing model.
Here’s the new system: $5 per month or $50 per year. If you remember from the last time you paid for the software this is basically the same price you paid for the old version, but now you’re forced to pay the same price each and every year that you plan on using the service. I was happy to see that they included a monthly option so that you won’t have to worry about being “contracted in” if you are worried about that sort of thing.
Also, if you were or are a YNAB 4 user then you’ll also get a lifetime ten percent discount off of the yearly fee which makes the final price $45/year.
There are lots of people out there that absolutely rebel against subscription services, but honestly I have to say that YNAB has easily saved me $5 per month since I’ve been using the software. Free is obviously better than not free, but I don’t totally disagree with their new pricing model.
Transitioning from old YNAB
If you are a current user of the old YNAB then don’t worry too much about the new account creation, etc. You can still bring your old budget with you to the new version and they include a pretty simple guide to migrating over. Because the new YNAB has a few differences in the way it handles your money you should expect your budget to look a little different from the way it did in the old YNAB. They also have plenty of guides covering those changes and how you can adjust the budget you’re bringing over.
They also suggest that you consider a complete fresh start with the new software. This is actually what I did because there were a few inaccuracies that I was unable weed out and I happened to start on the first day of a new month anyway – great timing!
Changes to the “Method”
In my original review I discussed YNAB’s budgeting philosophy and how it integrated with their software to help govern your decisions. In the new version they have gone back to the drawing board to determine if their rules had survived the test of time and whether or not they have learned anything over the years. In the end they decided to change the rules up a bit.
Original Rule #1: Give Every Dollar a Job -> Same
This rule has stayed basically the same as it always has been, but in the new YNAB they remind us that our goal should be to prioritize. They also suggest that you prioritize in the following sequence when making sure that every dollar has a job. Is that job:
- for Right now?
- for a True Expense?
- for Rolling with a Punch?
- or Pushing it to Next Month?
Original Rule #2: Save for a Rainy Day -> New Rule #2: Embrace your True Expenses
The biggest change here is not necessarily that you are no longer saving for a rainy day, but that you are also considering these rainy day funds as not just a “someday, maybe” type of goal, but as a true expense that you should be budgeting appropriately for depending on your timeline.
Rule #3: Roll with the Punches -> Same
The philosophy with rule number three hasn’t really changed, but what has changed is the “enforcement” of the rule. In the original software you could overspend and carry a negative balance with you for as long as you wanted (budgeting gods be damned!) and there were no repercussions. With the new YNAB they believe that overspending means you can’t trust your category balances because the dollars you spend should have left your budget entirely. What this means is that the negative balance should be there on the next month to remind you that you messed up and need to correct.
In the old YNAB you could simply override this setting and let your overspending “ride” in that one category. Basically this meant that you were budgeting dollars that you had already spent – impossible! Yes, you could handle this overspending with some discipline and the knowledge that you had to cut next month when you overspent this month, but if you were a master of budgeting you probably wouldn’t be using budgeting software now would you!
Original Rule #4: Create a Buffer -> New Rule #4: Age Your Money
The “buffer” vocabulary in the old method was useful, but it was also a little confusing when it was referred to by a bunch of different names (buffering, living on last month’s income, stop living paycheck-to-paycheck, etc). They have developed a new term, Age of Money, to let you know exactly how “buffered” you are!
The idea is similar: if you deposit a paycheck, but you have to spend it the next day then your money was only able to “age” 1 day. If you deposited the paycheck, but didn’t actually use that money until the next month then it would be “aging” a month. Get it?
They also have a cool tracker on the top-right corner to let you know exactly how old the money in your bank account is – the older the better!
Changes to the Functionality
Future Budgeting/Upcoming Transactions
The old YNAB service allowed you to set up transactions into the future, but with the new version they’ve been integrated into the register of your checking/credit card account. They have also added a feature that allows you to repeat transactions every so often (weekly, monthly, etc). I’ve found this to be an awesome time saver for things like weekly paycheck (I would get so tired of repeating the same thing each month) and static bills that repeat every month. They won’t “go live” until their scheduled date happens and you will still have to click to confirm that they have posted to your account just to make sure that they actually happened.
They have also changed the way that budgeted money comes in – now it simply goes into a “To Be Budgeted” category and you can budget it in any month that you choose. This sidesteps the “add to this month or next month’s income” option that we used in the old YNAB.
Handling credit cards always bothered the crap out of me in the old YNAB because I was constantly having to make manual changes when I used my credit card to purchase something while already carrying a balance. You would input the transaction into your credit card account and then what? Nothing. You had to make sure that you paid back that exact amount during the month on your own because the amount that you budgeted for credit card payments was simply to pay down the balance. There was no good way to keep track of what you should be paying back for your monthly spending.
They have created a category for credit card payments and if you couple it with a monthly goal you will be able to keep much better track of how you are handling your credit card debt and payments.
Overspending is handled a little bit differently in the new yNAB as well. Basically in the old YNAB you could budget $100 to a category, spend $125, and then carry the -$25 balance over to the next month. It could then theoretically just sit with a negative balance forever not forcing you to do anything about it and all the while allowing you to “budget” money that you didn’t actually have.
In the new YNAB you must cover that spending right away by moving money from another category or it will be deducted from the following month – forcing your hand.
There are a bunch of new features to be found in the new YNAB compared to the old one. Some of these are are features that we as users have been asking for and others come from the creator’s ideas in further evolving the methodology.
In the old YNAB syncing was handling via Dropbox. You simply connected your Dropbox account to the software and then it allowed you to sync with any other device that had access to Dropbox to get the budget file. This process worked flawlessly, but it was cumbersome to make sure that you had Dropbox installed everywhere and it was slow to update.
Because the new system is browser-based and part of the cloud already it’s now possible to sync into the cloud and access your budget from anywhere on any device with browser support or app availability. This is a definite win from a convenience standpoint, but some people may have an issue with privacy and security because they are no longer keeping a physical copy of their budget on their computer.
The old YNAB had no way to automatically import your transactions from your bank. You could either enter them in manually one-by-one or download a file from your bank to use for batch entering transactions. I can speak from personal experience that this became frustrating at a certain point. In the beginning I enjoyed staying “close to my budget” and staying accountable by entering all of the various transactions manually every day. After a while though, it gets tedious. I would skip them and wait days at a time to enter my transactions. This definitely got me messed up on more than one occasion as I would sometimes forget exactly which category that purchase belonged in!
If you trust the company with your account details it will make your experience with YNAB much more hassle-free and convenient. Simply click the import button and any transactions from that took place before today will automatically pop up waiting for a category assignment.
Goals are a pretty neat feature added in the new software. They allow you to visualize what you are trying to accomplish more easily and make budgeting recommendations based on the goals you set for yourself. You can set a target for a category, add a target date, or just set a contribution goal. It will handle the math and break it down for you and show you exactly how much you need to be saving each month to meet your goal.
There are a few new color options for your budgeted categories now. Whereas in the old version they had black, white, and red to signify money budgeted, nothing there, or overspending.
The color scheme is now:
- Gray – nothing going on
- Yellow – underfunded for current goals or upcoming transactions
- Green – Everything is good
- Red – Overspending
This gives a bit more feedback as to exactly what is going on and what might need your attention.
Should You Change? Should you Start?
So. We’ve talked a LOT about the old YNAB vs new YNAB. Should you change if you still have the old one? Should you jump on board if you’ve never used budgeting software at all?
In my humble opinion, while setting aside all of the pricing biases, I think that YNAB offers a good solution in their new product. Admittedly I said to myself “hell no” when I saw what they were doing with the price, but really, who cares about $45 when you are able to do so much more with a good budget. A lot of people allowed the pricing change to blind them to the motivation behind all of these changes – progress.
If you want to check out the software head over to their website to start a free trial of YNAB!
I think that the folks behind YNAB have made progress and I look forward to seeing what is next in store for us budgeters!!
Are you still hanging on to the old YNAB? Using the new stuff? Haven’t yet made up your mind about which is the winner between the old YNAB vs new YNAB? Use something else entirely? Heard about another piece of software you would like me to check out?
Chime in with a comment!