Episode 45: Why YNAB Is the Budgeting System Every Entrepreneur Needs

  📍 Welcome to the Creative Minds Smart Money Podcast, where we turn financial confusion into creative confidence. I’m Samantha Eck, bookkeeper and fractional CFO for creative entrepreneurs. Each week I’m sharing my financial expertise and actionable strategies to help you build a thriving creative business. Plus, you’ll hear from industry experts who bring fresh perspectives on growing your business beyond the numbers. Because building a successful creative business starts with strong financial foundations. Your next chapter starts now.

 You are listening to the Creative Minds Smart Money Podcast, and I’m so excited because today, of course, was the first episode in my new space after moving and not being able to film for a while. I’m just so excited to get back on the podcast and chat and really get into one of my favorite topics ever, which is YNAB.

I know a couple episodes ago I talked about YNAB and I was like, I’m gonna do a deep dive into YNAB and it’s here and I’m so excited for it because there’s so much to talk about and so much to go into with YNABB, but we’re gonna really focus on like the high level of it. I will mention that. It’s not something I advertise, but I do help people get set up in YNAB and like fully grasp the concepts of YNAB because a lot of some people get really overwhelmed with new systems, and I’ve helped a couple people do this and get really set up.

So if that’s something you’re like, I love this app, Samantha, I wanna use it, and you’re just like, I’ve no idea where to start and you want some help with it. You know, I can absolutely, absolutely help you out with it., but if you’re like a systems pro, I promise you this will be one of the best things you ever do for yourself.

And a lot of people tend to try like rocket money or something like that. I like YNAB app because it helps you to plan your money before it kind of even hits your bank so that you know, like where things need to be going, so that you can allocate your money. Before I even got on YNAB app, like me and my husband had no budget.

We had no idea where our money went. We tried a bunch of different budgeting apps. You know, we tried the rocket monies, we tried everything like that. But what I found a lot of the time was that those apps specifically were more like based on your spending. So it wasn’t like you set up pockets, almost like YNAB does.

It was like. When you had spending, so let’s say that month we spent $600 on groceries. The next month, rocket Money would say, okay, well last month you spent $600 on groceries. So this month our budget is $600 for groceries. And I’m like, that’s great and all, but I would rather have like money that I put into that bucket where I’m like, Hey, I have $600 for groceries.

Now what? So to me, budgeting is always felt restrictive. Like before I even got into my whole money kick or anything like that, budgeting always felt restrictive. And I’ve always thought of budgeting as something where when someone brings up budgeting, I’m like, okay, well.

If I put $800 in groceries, I can only spend $800. But that concept is so wrong. It’s so limiting to what budgeting actually is. And a lot of people, again, they get anxiety because they’re like, oh my gosh, like what happens if I overspend in this category or if I overspend in that category? Or a lot of people were like, oh, if you know, you know, if you have money in the bank account, that’s all you need to worry about.

But the problem with, and like I honestly do believe. In the power of a budget, like every person, every business needs a budget because it’s not just for specific people. Like when you have a budget, you identify where your money’s going, and you also identify like the trends of what you’re spending. So it really does help you grow as a person, as a business owner.

So again, this episode is so important because most budgeting systems, you know are built for nine to five employees. So they’re built for people who actually have a full-time job and not necessarily entrepreneurs. And what I love about YNAB A is that you can build it around your business, unlike other apps like Rocket Money or something that, where it’s not as business friendly, like you could do it, but it’s not as business memory.

So. YNAB definitely changed the way I handled my personal funds, and then when I finally started to use it for my business, it just transformed everything about my business as well. So if you are like, I really just need a budgeting system that will actually work for me, then this is definitely one of the ones you’re going to want to check out.

So with most budgets, most budgets, they assume consistent paychecks. So I’m just gonna use an example. For example, I think Rocket money, I can’t remember if it does, but I know like every dollar by the Ramsey show as well does this, where they have the amount that you need to put in for how much you’re gonna earn in a month.

And usually they’re like, oh, you can estimate it and then if you make more, you know, you can have more in there. But the problem with that becomes your kind of forecasting. So. When we’re thinking of like CFO mindset here, when we forecast, we kind of make up numbers based on historical data or based on what we think we know is coming in.

So if you had monthly recurring revenue and then we know that you’re gonna have like a big launch this month, we’re like, okay, you’re gonna hit this target. Similar to those budgeting apps where they’re like, okay, you know, you know you have $3,000 coming in, you know you’re gonna sell your bed this month.

This is what we’re expected to make. But YNAB is really built for variable income, and that’s specifically because it allows you to allocate your money as it comes in. So yes, there’s future planning involved, but the money that comes in, when the money hits your bank, that’s when the real. Real planning begins.

So it really does help you give every dollar that comes into your bank account a job instead of hoping that it lasts until your next client pays you. But if you’ve been following kind of what I’m saying with cashflow and things like that, you’ve probably been getting your clients onto a set like payment schedule, whether it’s the first, the 15th, whatever it is.

And then of course YNAB does support that true cash flow awareness, like what’s available right now and what it needs to, and that’s what I’m talking about where they’re so, it’s so powerful because it’ll literally show you like what you have in your bank that you can do with. So yes, you wanna give every dollar a job, but at that point in time it’s literally showing you.

What you can do with the money that you have in your bank account. Again, you budget based on what you have, not what you hope to earn. And that’s the power here is because when we forecast and we’re like, okay, we’re, we’re gonna earn this much. The truth of the matter is, what if a client doesn’t pay? What if someone leaves. What if something happens? We, it’s unpredictable, right? So you can try and plan and forecast and like say, okay, I’m gonna have this much money all you want. But when you actually get the money in your bank account, it changes everything. And then as well, this is a great way for managing a feast or famine cycle because you know.

We always have these ups and downs and slows and everything like that. So it’s a great way to analyze that and understand it so that you know kind of what’s coming and you know, you have things covered in your bank account. So I know that with us, like Yev has taught us to like put aside money for certain things and, and things like that.

And I know budgeting apps are like. A dime a dozen. But I swear if you even give YNAB a try and you wholeheartedly just put your heart into it for like a month or two months, it’s going to change the way that you see budgeting, I promise. And it works for business and it works for personal. And you can have up to think, I think.

Unlimited budgets with YNAB when you pay for it. If I’m not wrong, I might be wrong. So you, before I used to have our business and personal or separated in the budget, now I kind of have lumped them together because it’s really nice to just see them together, still put separate bank accounts, but then when I transfer money back and forth, it’s just really easy to say, okay, I transferred money here and I transferred money here.

As well as making sure that if I need to transfer money to my business or to my personal, I know that I’ve already got that covered. Again, when we get into this, are we talking about personal and business budgets? Do we keep them separate? If you’re going to do and keep them visible on the same page, but with your separate bank accounts, you can do that.

You can connect both of your business and your personal bank account and then keep them on the same page, or you can create a separate budget if you just wanna keep them completely separate and have those separate line items. You can create groups, which is what I did I grouped all my firestorm expenses so I know exactly what I have to have,

one of the things that I love about YNAB. It’s where you set up your categories. So let’s say. You have an annual subscription to HoneyBook or Dubsado, and you paid that $400. Now in YNAB, you would go in there and you would set up that subscription to say, okay, I paid $400 to Dubsado a year from now I need to pay another $400 to Dubsado.

On this exact date, what YNAB is going to do is it’s going to break down the money you need to set aside monthly. So that come next March, next February, next year, whenever it is, you have enough money like stocked up in your bank account that you can pay that without having to stress about it. And that is exactly what I love about it because it’s all about allocating the money to what’s important.

And of course you don’t have to fill that category. I think that’s very important as well. So the whole process and point of YNAB up is how you set it up, is you set up it based on categories. So you think about everything that you spend money on, groceries, if coffee is one of them. Absolutely. Coffee taxes, an emergency buffer fund, software, education, whatever categories you wanna set up.

Like I said, if you, I think I talked about this in another podcast, not on this podcast specifically, but if you wanna set a set up a fund for coffee. You build that into YNAB and you make that purposeful, you give every dollar that job. So then you know when you get money in, you make sure your subscriptions are covered and you still have $20 left over and you’re like, I’m gonna put that $20 in my coffee fund.

You have $20 you can spend completely guilt free because all of your expenses are covered. I know this is gonna sound crazy because I’m trying to explain an app to you in words instead of being able to show you. I might even do like a YouTube like walkthrough of this at some point and just show you how to set up YNAB.

Because I think it’s so important and I love, like, I absolutely adore YNAB it’s. I don’t think I’ll ever change. I’ve tried to change apps. There was one called Monarch Money that I tried to change to, and it just doesn’t work. Like it doesn’t work for my brain. Why NAB works so amazingly. And you know what, I wanna say this as well.

It might not work for your brain because I think that every budgeting app is built for certain people of a certain like mindset or a certain brain. And so this one might not work for you, but I just want you to give it a wholehearted try and I think they have a 30 day trial, and I would love that for you.

But again, like I was talking about, so YNABp helps you plan for those big expenses and it also compliments your bookkeeping setup. It does not replace things like QuickBooks or Zero, but it works with it and helps you to identify. Like what you have left over. So for example, at the beginning of the month, like I’ve told you before, all of my client payments come in on the first of the month.

What happens is when that money finally hits my account on the third or the fourth, I will go into YNAB and I will allocate the money to all of the categories, making sure that every single expense that I have that I know is coming out that month is covered. From there, I will say, okay, do I wanna allocate extra money anywhere?

If I say no, then that money comes. Like to me, or it goes to taxes or it goes to whatever category that needs to be filled. So it’s very important to kind of look at that. Okay, so we’ve talked about what the app is, what the benefits are of it, things like that. But we wanna talk about why budgeting is not restrictive.

And I think I’ve talked like, we’ve had an app on budgeting before and smart budgeting, but I wanna. Let you know that budgeting isn’t a punishment, it’s giving yourself permission. So when I’m talking about like when we put that extra $20 in that coffee fund, like I said, you now have 20 extra dollars that you can just spend.

There’s no restriction there. So it gets you out of this narrative where you’re thinking, okay, I am not good with money. I don’t have money in the bank account. And it encourages you to reassign your money. So Let’s say you have a flexible category, and I’m just gonna use a personal category because this is the easiest to talk about. Let’s say you have flexible category like groceries and you assign $300 to groceries. Sometime during the month you spend another a hundred dollars in groceries. The point is not to be restrictive.

It’s now to shift money elsewhere. So let’s say that you spent a hundred dollars less in gas, that a hundred dollars less that you spent in gas will now get allocated to groceries to cover that overage. So you see, I’m saying it’s not restrictive, it’s more about like just reassigning that money to wherever it’s needed going with the flow, but also

looking at it and saying, okay, I wanna put $400 in groceries. I’m going to try and only spend $400 in groceries. Again, it’s not trying to say, okay, I can only spend $400 in groceries. It’s saying if I go over $400, I need to bring in money from elsewhere in my business and my personal life to cover that money.

It just helps you feel so in control. It doesn’t give you a lot of guilt, and it just keeps your mind clear. It’s. That whole point of intentionality that I’m talking about, that’s what YNAB is going to give you. one of the things that I wanna talk about, that I’ve talked about in a lot of other podcasts is some of these bunny traps that I wanna talk about now, and what windup helps you avoid. I have heard people say before that they forgot about yearly subscriptions with YNAB. It’s hard to forget about it because it’s already there and it’s telling you to allocate money to it monthly so that you have it for an annual subscription.

You don’t have to. I want that to be clear. You really don’t have to allocate that money or those subscriptions. If you don’t want to, if you’re like, I’ll just get to it next year. You don’t have to do that, but it’s really good because it helps you to track those subscriptions you signed up for.

So if you signed up for a new subscription and you have a 30 day trial and you know that the subscription is gonna cost you 1499, put that in your budget right away and say, okay, 1499. And then when, at least when you’re allocating money, you’ll see that and be like, woo, do I still need this type of thing?

It helps you to calm yourself in April because you’re already putting money aside in your account. Oh, well, just because I’m putting that money aside in my account doesn’t mean that I won’t spend it. But I think that’s where I really love to go into YNAB and look at YNAB, not really necessarily look at my bank account and say, okay, you know, I have $300 left over in this account.

Do I have money? I can shift in the budget here. Is it, ’cause it gives me that o opportunity to be like, okay, I don’t have the money. I can’t spend it. And that’s where we’re talking about that emotional spending. You’re more likely to curb that emotional spending because you’re gonna look at that and say, okay, well I don’t actually have that money to spend in this area.

Okay, so some final pieces of advice for you when it comes to YNAB and if you’re gonna give it a shot, first of all, start slow. Don’t try to be perfect. The whole point of this is to observe your spending habits, see what’s going on, and see, again, see what’s coming in and out of your business outta your personal life so that you can analyze it.

The first 30 days are the learning curve. You’re gonna have to learn how to use it. It’s best probably to start it at the beginning of the month so that you can work your way through a month with a budget. Start with categories that you know you have to allocate money to, like your subscriptions.

I will mention that if you link. Credit cards and you spend money on credit cards, that is now a part of your budget. YNAB doesn’t discourage credit cards, but it treats credit cards as if it’s your own money, which is something you absolutely should do. So if you’re gonna put your subscriptions on a credit card, it’s gonna tell you at the end of the month that you need to like, cover that credit card or, that’s money that’s come out of your budget now.

Like when you assign it, it’s money that’s come outta your bank account. You need, to move that money to your credit card.

I also want to say that you don’t have to link your accounts right away. Manual entry works really great. I always tell my clients that I’m working with in YNAB that if you’re gonna start with YNAB, just look at your bank account on a weekly basis and add the transactions manually so that you can see where everything’s going. You can also do it daily. I do mine daily because I love to see where my money’s going daily and understand what’s going on in my bank accounts and in my budget so that I’m consistently on top of it. But I do wanna mention that as well. Budgeting is a habit. It’s not a one-time setup, so you’re gonna set it up and you’re gonna have to repeatedly use it.

You’re gonna have to repeatedly go into it, and you’re gonna have to make it a habit. And then again, don’t be afraid to move that money around. That’s literally the point. If you overspend, it’s not a moment to shame yourself. It’s not a moment to say, oh my gosh. It’s a moment to say, okay, I overspent here.

I now need to move money from elsewhere to cover that spending.

📍 Otherwise you guys, I could rant all day about it. If you guys are like, I wanna see a YouTube video on this, I need to know how to use it, Samantha, break it down for me in the simplest terms, I would absolutely love to do that. And then if you guys need more help from there, of course we can work together on that budgeting side of things because I think that budgeting is just so much fun.

And now I wanna help you guys set it up in a way that works for you. So if you find this episode useful, please rate and review the episode and share it with a friend who you know also needs help budgeting. Otherwise, I wish you all the best and we’ll see you next week. Farewell fellow Travelers.