I’m a big YNAB fan. After we signed up in 2017, the software + method categorically changed our family’s financial trajectory for the better. Before YNAB we struggled to stick to budgets; they were hard to track, and thus easy to break.
YNAB stopped that cycle cold. The digital envelope approach helped us answer two critical questions: “where is our money going?” and, “where do we want our money go?” Over time the stress surrounding our spending eased because things were planned. We were in control of our spending, vs the other way around.
But over the last year, something shifted for me. I began feeling like I was spending time managing our money in a way that I didn’t need to anymore. The mechanisms of YNAB started to feel unnecessary and overly restrictive.
I reeeeeally wanted to carry negative balances into the next month.
If any category of your YNAB budget is in the negative on the last day of the month, you either need to move funds between envelopes to cover it, or YNAB will shuffle the overspending off to your credit card category as debt… or something. To me it looked as though our debt had simply vanished into the digital ether (wouldn’t that be amazing). I always struggled with this behavior. I understand why YNAB is adamant about this rule; if you overspend in one category, you don’t really have all the funds in another category. But the end of the month timeframe can be arbitrary and counterproductive. We often have refunds coming in to cover overspending, and there are plenty of times where I’d be content letting NEXT month’s budget cover the difference.
I reeeeeally wanted to stop approving every transaction.
YNAB won’t “count” a transaction until you’ve categorized and approved it. Even set-it-and-forget-it costs like the mortgage payment must be manually approved. Miss a day or two, and you’ve got a backlog to plow through in order to see what you’ve spent, and how much is left. Again, I understand why the software works this way; to get your spending under control, you need to be aware of every dollar spent. But this functionality required me to be very hands on with our money once we’d gotten it under control, and it simply felt unnecessary.
And so last month I surprised Renate by declaring that I was venturing out into the sea of personal finance apps to see if there was a different zero-based budgeting tool to love.
I didn’t find one.
But! I found something that gave me the capabilities I wanted – and also provided a new way to think about our money.
Here are all the tires I kicked along the way, and why I went with Monarch Money in the end:
Mvelopes emerged as a solid option because the software would let me carry a negative balance forward, and it employed a digital envelope approach. I also really liked that I could budget the entire year without having cash to actually budget (my first interaction with cash flow budgeting). You can’t do this in YNAB – you can only budget what you have. But, like YNAB, Mvelopes requires that you approve every transaction. The web and native app are also a little dated and clunky, and the service wouldn’t sync with some of our credit cards. Entering transactions manually is the opposite of what I’m after, and I wanted something with more capabilities and a better mobile experience.
Simplifi wants to do everything for you, but I want more control. It also operates off a ‘safe to spend’ approach, which is already built into my budget. As I interacted with the app, I felt like it was going to take a lot of work to set things up the way I wanted to. Their marketing also frowns at the things I like to do when it comes to budgeting, so it quickly felt like this wasn’t going to be a fit.
I signed up, poked around, and didn’t stay long. No zero based budgeting. Account balances were oddly disassociated with the budgeting tool. Drew out.
Personal Capital didn’t contain the budgeting toolset I was looking for (it’s more of a retirement planning / wealth management tool), but the insights that the app provided into my net worth were interesting in a way they hadn’t been before. I could see every purchase and sale within my Betterment brokerage accounts (I’d never seen that). The biggest point of interest for me was that I could connect to all my loan accounts (mortgage and HELOC, which I couldn’t in YNAB) alongside the Zestimate for my home value. Watching my mortgage principal slowly decrease and my net worth increase? VERY SATISFYING.
I liked A LOT about Copilot. (Like – a lot a lot.) The interface is beautiful and contemporary, if a bit overpacked. I was able to customize my categories with colors and emojis which was way more enjoyable than I had anticipated. Importantly, the app briskly auto-categorized expenses then asked me to review and confirm. Copilot showed me net worth stats similar to Personal Capital’s, plus a real-time estimate of my investment account value (fun, but not critical). Overall, Copilot didn’t require a lot of my time, which was great – but I found myself wanting to log on to see what was new. The app was powerful, convenient, and fun to use.
But. Copilot is missing some key components for my needs. Namely, there’s no way to set savings goals, and you can’t move funds between specific categories to cover overspending. Copilot does let you rebalance your budget if you overspend, but that’s not a viable option if you want more control. (I want more control.) There’s also no desktop access; the app is solely available on iPhone. Knowing that the end was coming to our time together, I dragged things out. I didn’t want to say goodbye. When I finally canceled my account and deleted the app, my heart hurt a little bit.
At this point I revisited a few of the previous candidates.
Monarch Money Take 2
When I looked at Monarch Money’s site again and dug back into the trial, I quickly realized that it would be a great fit:
- I could carry negative balances forward. Plus, I could still cover overspending in one “envelope” from another if I wanted to.
- Transactions are auto-categorized like they are in Copilot.
- I could view net worth data.
- I could create savings goals.
- The UI is clean, efficient, and attractive. I love their dark mode.
- Renate could log in to help recategorize expenses without having to learn a vastly different toolset.
I also realized had grown to like the cash flow budgeting approach that initially threw me for a loop, now that I’d encountered it in Mvelopes and Copilot. With cash flow budgeting, you budget this month’s anticipated income, vs budgeting your current account balances and budgeting again each time you get paid. Put another way, it’s “what will I make this month, and how will I use it?” instead of “What have I made, and how will I use it?” This was a real mental twist, and it made the YNAB user in me a little squirmy. How could I trust the budget if it wouldn’t account for / track every dollar I currently have? But really, with either approach I’m looking at the same amount money, just in a different way:
- In YNAB, your current account balances cover this month’s budget, and you work to save enough over time so that this month’s income can be set aside for next month’s budget. The budget itself can cover ovspending, but so can next month’s budget.
- In Monarch Money, your current account balances (minus debt) are available for savings goals, and this month’s income is this month’s budget. The budget itself can also cover overspending, but so can money for savings goals.
You can see why this took some getting used to 😵💫
Still, I took the plunge. After I finished setting up our income and budget categories, Monarch hummed along, recording transactions and income. The changes were immediately noticeable. With YNAB, getting a paycheck meant sitting down to distribute those funds across the budget. The first time we got paid while using Monarch I… did nothing. I also didn’t have to pay attention to every single transaction anymore. I just curated pre-categorized transactions when I wanted to, then went about my day. If I missed a day, I didn’t feel like I’d fallen behind.
I’m not sure this would’ve been the right fit for us 5 years ago. The rigor of YNAB has real benefits. But I’m sold, and I’m keen to see where Monarch Money goes. The company has barely been around two years, but they’ve rolled out new features with startling speed. Looking at the roadmap, I’m encouraged by what’s coming up. (I’m still looking longingly in your direction, though, Copilot. Let’s not be strangers forever.)
Tried any apps you love? Let me know in the comments, or shoot me an email!