If you’re reading this, I’m assuming you
1. Give Every Dollar a Goal
Envelope-style budgeting is not a new concept, but this is the cornerstone of the YNAB method upon which the other three rules rest. Simple has a guide on how to use Goals as your envelopes, but to do it the YNAB Way, you’ll need to make sure you assign every dollar of your paycheck to a Goal.
The big exception to this is your ‘fun money’ envelope - the money you don’t set aside for goals or automatic bill payments in Simple shows up front-and-center in your account as your ‘Safe-to-Spend’ amount, which makes it the perfect default category for your fun money. When your coworkers invite you out for happy hour, a quick glance at the first screen of the Simple mobile app will give you the information you need to make an appropriate judgement call.
2. Save for a Rainy Day
Many of the Goals you set up in Simple will likely be for monthly expenses like rent or your phone bill. But YNAB’s second rule encourages you to think about everything as a monthly expense, including the things you can’t always plan for. The common example is car repairs. If your monthly oil change costs $30 but you put $130 into your ‘Car Maintenance’ budget each month, in a year you’d have $1200 set aside for that inevitable fuel pump replacement or bumper repair.
It doesn’t always have to be a ‘rainy day’ fund either. These Goals are your chance to look beyond your next paycheck and the corresponding round of bills to plan for larger things like a down payment on a house or this year’s Christmas presents.
3. Roll with the Punches
This is the YNAB way of saying, “shit happens.” Sometimes your'e going to spend too much money from one Goal. Rather than beat yourself up about it, just move some money from another Goal. This wasn’t entirely obvious to me at first, but Simple’s web app makes it as easy as dragging one Goal onto another to initiate a transfer between the two.
4. Live on Last Month’s Income / Age Your Money
The last rule is the hardest to achieve but ultimately the most rewarding, and that is to pad your account with a month’s worth of income, known as The Buffer. This breaks the paycheck-to-paycheck cycle because there’s no way that happy hour excursion from earlier could lead to you over-drafting your account and bouncing your rent check. When you pay your phone bill, you’ll actually be paying it with money you earned 30 days ago with your previous paycheck. This means your money is 30 days old, which is why YNAB now calls this rule ‘aging your money.’
Getting to this point is where Simple’s date-targeted Goals really shine. For the unfamiliar: you can create a Goal with Simple to save a certain amount by a certain date, and Simple will divide the amount of money you want to save by the number of days until the target date and automatically transfer that amount from your Safe-to-Spend balance into that Goal each day.