As I mentioned in my last post, I have recently switched from using the app Money Lover (which while good, ate all of my data) to You Need a Budget, aka YNAB. I have been using it for around a week now, and I have to say, I am a complete convert!
Prior to YNAB, I thought of my money as either spending money or apartment savings. There was nothing else. I had the money for the month ahead, and I had the money I was saving towards an apartment, and beyond that I had nothing to fall back on, so when I overspent it just came straight out of the savings, which was pretty disheartening. Though YNAB hasn’t yet changed the amount of money I have, what it has done is changed the way I look at my money.
I am using the newest version of YNAB, which costs $50 per year to subscribe to. While I could have used YNAB4 for $50 for life, the subscription-based version just had everything I wanted, especially the ability to set savings goals as well as budgeting for the month ahead.
For the new YNAB, they have 4 simple rules that they suggest users abide by:
- Give Every Dollar a Job
This first rule means that you should budget every single dollar, or in my case, won, that you have. Now obviously this doesn’t mean just going ahead and spending every dollar, but instead it means budget not only for your expenditures, but also for your savings, too. This means that savings are no longer just a case of what is left over at the end of the month, but instead they become a priority.
- Embrace Your True Expenses
When I have previously tried budgeting, I have just tried to convince myself that I am going to have a superhuman level of self-restraint, telling myself that I’m not going to spend any money on takeout or games or any of the things I love. Obviously this has never ended well. In embracing my true expenses, I’m not trying to budget under what I think I can spend and then forcing myself to adapt, but instead I’m budgeting for money that will allow me to live in a way that is reasonable to me and my needs.
- Roll With the Punches
Sometimes things don’t go to plan, so this rule means that if something goes wrong, it’s okay – just figure it out and take it in stride. Personally, I have issues with fluid build-up in my ears, for which I needed small tubes surgically inserted into my eardrums so I can hear. One of them fell out last week, and now I can’t hear my students well. The solution is getting surgery again. Am I going to put that off? No. I need to do it. So, my solution has been to make an emergency fund. I started at 1,000,000 won, and have resolved to put at least 100,000 won into it every month for things just like this.
- Age Your Money
This last one just means that you shouldn’t be living paycheck-to-paycheck. You shouldn’t be going hungry at the end of the month and praying that the money gets deposited in your account soon. I have decided to budget a month ahead every month so that I have that added security on top of my emergency fund. Then you budget for future months, YNAB automatically deducts it from the money you have available to budget for the current month, so you’re not fooled into a false sense of security. I really like this feature.
So back to what I was saying about how I viewed my money – spending money, and apartment money. YNAB has taught me that this just wasn’t reasonable or attainable, and I was basically setting myself up for failure. So what I have done to rectify this is, as I mentioned previously, set up an emergency fund, along with a few other savings goals for big priorities in my life. This includes a vacation fund (200,000 won a month), gift money (80,000 won a month) and clothing money (50,000 won a month). Having these savings in place is really going to help me deal with big spends as they come up. By the time my friends visit Korea in October, or I start Christmas shopping in November, all of that money is going to be there ready for me.
The unfortunate side effect of all of these new savings goals is that my apartment deposit fund is not getting the attention or focus it once got, and the savings in this area are going to build up a little more slowly than I once hoped (but still at least 420,000 won per month). I originally hoped to be into my own apartment by this time next year, but now it’s looking like it won’t be until June 2019. But that’s okay. This new plan that YNAB has set me on is livable and gives me both financial security and control. More than anything, that is how I want to live my life.