I know what you’re thinking. Budgeting software? I’m an artist! Just tell me more about illustrator. Or Photoshop! Heck even Flash is better than financial software!
I can totally relate! My mind doesn’t tick that way as well. No matter how you cut it though, having a good grasp of your financial situation is equally important as honing your artistic skills! But don’t be afraid. I’m not going to discuss complicated excel formulas or spreadsheets. I’m not an accountant and I never will be! Even if I wanted to! It’s just going to be a short overview of a great software! Probably the best budgeting application for creatives. Simple, easy to use, and efficient.
The name of it? YNAB. YNAB stands for “you need a budget”. What makes this software so special? The very first thing that comes to mind is its ease of use. The other and probably the most important thing of all is its ability to change the way you think about money. The way it manages to do that is quite simple. It basically treats your salary as money that has specific tasks.
Here’s a short breakdown. You input your income every month and you assign every single penny to different categories. Rent, bills, entertainment and so on and so forth. Basically tasks you need to fulfil every month. Every time you make a transaction you log it in. This money then is deducted from the specific budget you assigned for that category. Since every cent has a specific task you immediately realise there is no money to burn. Everything is accounted for. This gives you a clearer picture of your spending habits.
You can quickly see categories that need improvement and take action. For example your eat out category might be too big. Easy. You note down a smaller amount for next month and maybe an even lower amount the month after that. Until you get the perfect monthly budget for your wallet. Without having to mess with complicated and unfriendly software. Let’s not forget! We’re designers! We like things that are simple and effective!
Most of YNABs competition works in a more passive way. You just log in your expenses and when you get at the end of the month you realise that the money is not enough to cover that months expenses. YNAB has a more proactive than reactive approach. With YNAB you work with several small budgets for different categories. You need to make things work with those specifics amounts in mind. The program though is not punishing you for going over your budget on categories. Things happen so you need to adjust. If for example you’ve spent more than you budgeted on groceries things are still fine. You just take money out of another category and put it in to your groceries category. This further solidifies the idea that you work with a finite budget. Not an “infinite” credit card budget.
The program also tries to help you with those “unexpected” events that are usually not that unpredictable. We just don’t account for them until it’s too late. Like car services, or christmas gifts. Expenses that are basically less frequent than monthly ones. What do you do about those expenses? You budget for them on a monthly basis. So when the moment arises you don’t have to fight to find the amount of money needed. Or start charging your credit cards.
YNAB is a really simple and easy to use. You build your categories and assign money to them. And that’s it!
YNAB also wants you to work towards living on last months salary. As one more financial safety net. That depending on your budget, will take some time to build up, but this gives you an extra cushion if things go haywire. You can also slowly build other longer term categories. Like retirement money or that new fancy computer you’re craving.
Since you’re more aware of your financial state you start realising also that you don’t really need everything you think you do. For example you don’t have to buy a new phone every year or a new computer every other year. You start to be financially responsible. And you thought that time would never come! This way you can concentrate on the things that interest you the most. Your creative work!
So what happens if you’re a freelancer and you don’t have a fixed income? All the rules still apply there. And I would have to say for freelancers, YNAB is absolutely necessary. Let’s say this month you’ve earned 6000 euro but next month your income is just 1000 euro. Before YNAB, on your good month, you would spend more money than actually needed and next month you would scramble to get by.
With YNAB’s rules you would divide your 6000 euro in to two or more months. You would fill up all the necessary categories first. Like rent, bills etc and then you would slowly move up to the more luxurious stuff. Like fun money, vacation money etc.
So with all your main categories filled up you have peace of mind that everything can work out really well even if the next few months won’t be good. As you slowly build up your buffer categories you will have a bigger safety net for all those dry spell months. Without you realising, you now have the freedom to pursue projects you would never have thought of pursuing before. Without YNAB you would stick to your small but steady smaller projects. But now that you know that you’re financially secure you can pursue the bigger longer term projects.
Budgeting has this negative connotation of a person being in a terrible financial state. Which couldn’t be farther from the truth. Budgeting applies to everyone. Wether you’re earning 100 euro or 10.000 euro. Even if you don’t like the idea of budgeting I would highly suggest giving YNAB a try. It will transform the way you think about money! The company behind the program is offering a very generous demo. It’s a 30 day trial without any restrictions. So you can test it and see if it suits your needs. Have a look at the video below and also check the great success story forum, a very inspiring forum with loads of interesting stories. From people who managed to get out of huge debts to people who managed to retire several years earlier than planned!
It’s probably one of the only non design-y programs I will ever talk about but it’s definitely worth it!