Today's post will both be a post dedicated to ranting at my (used to be) favourite zero-based budgeting software, as well as a guide on how to use/migrate to an open-source free alternative (or paying RM6.5/month with one-click setup & hosting for less-technically inclined or lazy folks like me).
Skip through the first part if you dislike rants, you have been warned! Like, really looooooong rant considering YNAB was once one of my most loved tools over the last decade.
The sentence above summarizes how I've been feeling the last few weeks, when YNAB, again announced another shocking price increase so that "they can continue to release new features". Look, I understand, inflation sucks. The same loaf of whole wheat bread which used to cost us RM3.20 in the past now costs us RM4.50. And that's inflation and I get it.
What frustrates me is how YNAB has been handling the whole situation, which can't help but make me feel that either the founder has been so out-of-touch with the community, simply doesn't care and wants to maximize his profits/squeezes, or is just being forgetful and forgot why their story of starting up YNAB - dedicated to helping change lives. I understand that YNAB itself is a business and not a charity organisation, but their endless greed with near-zero valuable upgrades since 2015 disgusts me, to say the least.
Just to share some context, YNAB was started both as a tool (excel spreadsheet) and a mindset/method (the YNAB four rules) in 2004, and gradually evolved into a beautiful desktop/mobile-based app with one-time purchase (YNAB4 @ 2011?) and later a web-based app with a subscription model (New YNAB @ 2015). I joined them and became their "cult" in 2013, when I found out how simple was it to budget using YNAB4 without feeling like I'm constraining myself - more on this part later. Probably the best $15 that I've spent during a Steam Summer Sales.
I don't have issues with app developers going for a subscription model, as it's how most software companies today sustain their business. The problem I have is how they've handled the transition, and also how they treat their cult fan base that has been following them since the early 2010s (myself included). In 2015 when they released their "New YNAB" app, gone with them were the days of one-time purchases, which was fine. I decided that I liked YNAB enough, and since they're giving their loyal fans a 10% lifetime discount, pricing the annual subscription at only $45/year, I decided to support their business, paid for it, and moved on with my life.
Aside from supporting YNAB's business, I moved along with their WebApp subscription model as I believe that is the way forward for most businesses, and had faith that they'll continue to develop the products for the better good. Scour through Reddit and you'll see countless mentions of "Reporting" feature lacking in YNAB4 (and the New YNAB) - and that was promised during the waves of migrating to new tool, as this enables them to deliver better features through a more sustainable platform vs. Adobe AIR/Flash-based YNAB4 App.
Fast forward to 2024 today, a good 9 years later, the feature is still yet to be seen or delivered - with roadmaps no longer publically published on their website recently, and most ironically: this feature was made available in 2016 through open-source collaboration - the YNAB Toolkit. It really makes you think - if random contributors can develop custom reports within 1 year after nYNAB's release, what have the YNAB team been doing with their profits over the last 9 years? Let's just recount the new major features nYNAB has released over the last 9 years: Bank/Card Direct Sync (selected banks in supported regions - not available in Asia anyway), Targets & Progress Bars, Loan Calculator, The Blurple (Coloured Theme), Buttons Changes, etc. 9 FREAKING YEARS!!!!!!
Anyway, to make matters worse, they've decided that the profits were too lucrative, and decided to continually hike the prices despite the rather disappointing developments over the last 9 years.
Since 2021 I have stopped proactively recommending YNAB to my friends, let alone readers, considering the unreasonable pricing strategy. Think about it - Microsoft Family 365 Subscription in the US costs $99.99/year - with up to 6 licenses for you and your family with total of 6TB Cloud Storage included. Put this into perspective and consider the weak MYR currency - $99 means plenty here.
I sucked it up in 2016, and again in 2021, but, not this time. YNAB, I've had enough. It's time to move on.
//END OF RANT//
Ever found yourself scratching your head, wondering where exactly your hard-earned ringgit went by the end of the month? If you're nodding right now, it's high time we talk about Zero-Based Budgeting, a strategy that could revolutionize how you handle your finances. In layman's terms, Zero-Based Budgeting is also seen as envelope-based budgeting where you assign monies you have at hand to a purpose (category), effectively giving every ringgit a job.
1 - 1 = 0
(Income - Budgeted = 0)
Unlike the usual budgeting methods where you adjust last month’s expenses to guess this month's, Zero-Based Budgeting requires you to start from zero every single month based on the income you have received. Only actual incomes that you have at hand.
Now, you might be thinking, “Why all the fuss every month?” or perhaps "I don't have the time to track every single transaction!". But look, here's the thing: Zero-based budgeting pushes you to justify every expense. It makes you ultra-conscious of where your money is going. Think of it like giving your finances a monthly audit, except less scary!
For example, let’s say you allocate RM500 for dining out. Too much? Too little? Just right given your social plans? This method doesn't just keep your financial goals in check but adapts to your ever-changing life scenarios, making it a dynamic buddy in your quest for financial freedom.
Most importantly, personal finances are personal. You must always make it work for you and ensure that you prioritize what's important to you, as Ramit Sethi calls it: "Your Rich Life is Yours". Some people enjoy fine dining, some prefer gadgets, and some prefer experiences instead. You do you.
It takes a bit of discipline, but it'll be a total game-changer once you have mastered the art of Zero-Based Budgeting. Imagine ending up with extra cash for investments or a holiday at the year’s end just cause you budgeted smarter!
To wrap it up, Zero-Based Budgeting isn't just about tracking expenses—it's about making your money work exactly how you want it to. It's all about control, and in the financial journey we’re all on, control isn’t just nice; it’s necessary. Less stress, more fun.
Now, the traditional envelope-based budgeting had existed many years or decades ago, and many people (including my mom) had used it so YNAB was definitely not "special" in any way. Except, they were. They were beyond just simple software tool offerings and went into the space of philosophies and methods, or their more famously known "YNAB Four Rules" when they first started.
In short, the whole principle of Zero-Based budgeting is explained above.
You must only budget with the monies you received into respective categories so that you can "trust" your budget file and spend confidently the monies you have, irrespective if you're on a daily/weekly/monthly wage.
In short, you plan for both the expenses which are either: known-knowns / known-unknowns / unknown-unknowns.
If you don't anticipate and plan for these expenditures to come, you'll just get stressed out and a billshock™ when it hits you, hard. Like the saying always goes - when it rains, it pours. So the whole idea of Rule#2 is to prepare yourself both financially and mentally to handle whatever life throws at you - which brings us to Rule#3.
Rule 3, out of the YNAB textbook, is perhaps my favourite rule of them all. And I quite literally rolled with their price-increase punch this time around.
In simple words, we're all humans and there's no way to plan & execute perfectly. Even AI as an algorithm/computer makes mistakes. Ever prepared for budget, realizing that you went overboard and overspent on certain categories, got upset and in the end, went into the "F*CK THIS SH*T" mode and gave up budgeting altogether? It happened to me many times before I was introduced to this philosophy.
Basically - whatever life throws at you, you adapt and adjust accordingly. Overspent on gadgets because I bought an iPad last month (really) out of impulse? Fine, no luxury meals or salon the next X months, and move the monies from other categories to fund my iPad purchase so that I don't overspend the month's total budget. As long as my total budget is still within my income (after mandatory savings/investments), I am free to spend in whatever way I want. Fancy fine dining? Move some monies there from... Salon?
That's why I really like Rule 3 the most, out of all four rules.
I believe the graph above is pretty self-explanatory. Rule 4 is nothing but to build enough buffer that you live on last month's income. That way, when you receive your income say in May 2024, you budget all that amount to be used in June 2024 so that come June, you are technically spending May's monies. Rinse and repeat.
Once you stop living paycheck to paycheck, it's mind-boggling and you realize just how much unnecessary stress you have put yourself into.
Of course, the rules have changed over time and their latest Four Rules looked slightly different to what is written above, but the principles are mostly the same. These were the reasons that I was motivated to give Zero-Based Budgeting a try, despite the discipline required. If you're interested to take some read (mind you this was in 2014), check out their old YNAB Way book published by Jesse Mecham in 2014 - at least when his sole purpose was to drive greater awareness & help as many people as possible.
Over the years, I simplified my approach to ease my data entry so that it's easier to maintain my discipline. For example, I don't track down the exact balances across my 456534 different bank accounts/credit cards/e-wallets. Rather, I simply create one On-Budget (more on this later) account named "Monies" and all spending irrespective of the payment method will be documented here instead.
In the past, most people (myself included) had to suck it up with YNAB despite their outrageous price increase without much developments - mainly because we just couldn't find any other product offerings in the market that does zero-based budgeting well. Quite frankly, I was very sceptical when I forced myself to scour the market again in 2024 to look for a real alternative to YNAB.
But after trying out the open-sourced variant of Actual Budget (free!), my perspectives had changed completely. I no longer view Actual Budget simply as "another YNAB Alternative" but rather, as a true contender in the zero-based budget space. I mean, just look at this side-by-side comparison below:
Yes, we can argue that YNAB is/was the market leader and started the whole cult following fan base (myself included) and made the whole envelope/zero-based budgeting more approachable to the general public, and any other apps that came later are simply "just another YNAB clone". But that's how most products/technology today grow ain't it? Due to competition. Just like how Tesla started the whole EV & self-driving bandwagon and later, all the other car manufacturers came out with their own EV cars - some with improved battery cells at cheaper prices.
Quick introduction about Actual Budget - the founder started Actual Budget as a side gig and slowly grew it into a solid product over 4 years, with aims to build it differently than most SaaS as a local-first finance app (and succeeded in building it).
However, as a business, it was difficult to sustain as a one-man team alongside his full-time job, plus at $4/month which is an acceptable price for a subscription but without volume, it simply does not generate enough revenue to warrant hiring full-time developers to support the project.
And that's when he decided to go open source with Actual Budget to leverage the power of the community. And truly, that was probably the best decision he has made for the overall finance community - as Actual Budget (Community Edition) truly shined with support from various community members.
In this article, when referring to Actual Budget, we're talking about the Community Edition which is 100% open-source and maintained by the community. We're not talking about the now-deprecated Commercial Edition. Some additional contexts are summarized below:
Actual (Commercial Edition)
actualbudget.com which has since been deprecated since April 2022 (source: twitter) following the founder's decision to cease business operation and open source the entire project
Actual (Community Edition)
actualbudget.org, which started then is fully open source, maintained by community for community, with monthly releases.
When it comes to the features, I will probably leave you with the blog post published by the open-sourced Actual team: https://actualbudget.org/blog/2024-07-01-actual-vs-ynab
But in my view, Actual (Community edition, not to be confused with the now deprecated Commercial edition) is perhaps the second most polished zero-based/envelop-based budgeting app in the market today.
Some features are still under development and rightfully so, leaving the UI/UX experience to be less than desired but at the pace of Actual's Community development since 1.5 years ago, it'll be just a matter of time before Actual catches up (or even surpasses) YNAB.
In short, Actual has these features:
If you're coming from YNAB4 or nYNAB, then Actual will feel like home to you. If you're new to Envelop/Zero-based budgeting, then there'll be some transition period where you may need further guidance but the good thing is, envelope-based budgeting is not new and this topic has been discussed everywhere irrespective of tools used (YNAB4, nYNAB, Actual, or other Envelope-based Alternatives.
Personally, I've been budgeting using zero-based since 11 years ago so there's almost zero friction when I migrated (aside from discovering the technicalities since it's a different tool/software).
You'll have to decide whether if you're planning to migrate from YNAB4/nYNAB, or start afresh. Of course, if you're not using either one of those today, then your only option is to start fresh (which by the way, is often the most recommended approach as it helps you to have a clean-slate budgeting rather than being daunted by historical messes.)
I've personally started afresh multiple times when I screwed up my finances, but this time around since I'm still on a streak since 2019 (as you know, from my blog updates) so I had no plan to start afresh so I imported all my historical data from nYNAB. Surprisingly easy.
Skip this if you're not planning to import your historical data, or you simply do not use these tools today.
Depending on which version of YNAB you're currently using, your instruction differs slightly:
For those of you who prefer to tinker around with self-hosting options, I'll redirect you to Actual's comprehensive documentation here: https://actualbudget.org/docs/install/
But if you're like me - either less technically inclined or simply just being lazy to tinker more stuff, just go with the simplest PikaPods-hosted option at approx. $1.4/month (or $16.8 per annum - still $92 cheaper than paying for nYNAB annually plus you get to own your data).
It's really easy. Firstly, create an account or login through PikaPods. New Users will also get a free $5 welcome credit, enough to last you for three and a half month's worth of hosting!
Then go through their One-Click Setup: https://www.pikapods.com/pods?run=actual.
The best part with PikaPods is also that they'll manage all the server administration works for you in terms of infrastructure maintenance as well as updating the Actual software, though they will usually wait 1-2 weeks after release to ensure that everything is stable before pushing the updates automatically to you.
Use the Domain that was generated for you earlier to access your budget - and make sure to bookmark this in case if you forget! When you launch it for the first time - you'll be prompted to set up a password for the server.
This will be prompted for anyone trying to sync data to your server, and you should keep it to yourself unless you want anyone else to have the ability to sync (download/upload) your budget data to their local browsers on desktop/mobile.
If you're coming from YNAB4/nYNAB - then simply import the budget file you've prepared earlier.
Otherwise, you can just click Start Fresh to set up your new budget file. You can also View Demo to get a gist on how the app works using dummy data.
Whilst I won't go through each and other details in today's post (I'll write a dedicated post separately once I've used Actual long enough to provide my long-term review/feedback) but here are some of the basic call-outs which I think will help both new Zero-Based Budgeting users or YNAB Refugees.
Once you set up your budget, the first thing that you should do is configure settings to your liking under "More > Settings". Be sure to turn on End-to-End Encryption if you prefer extra privacy as it'll give you the same peace of mind like how WhatsApp does it - only you can access the data with the 2nd tier password to keep it safe. The server will see nothing except gibberish encrypted data which cannot be decrypted without your keys.
Personally, I've also turned on some of the experimental features (note: Custom Reports and Split in Rules are now officially live in the new version from v24.7.0 onwards so you won't see those toggles anymore). Eventually, these features will make it into the official release once bugs / UI / UX are optimized, so don't touch these unless you know what you are doing.
First thing is to create an account - this is basically where you will input your transactions (spend money or receive money). There's few ways to do it - some like the extra precision and keep track of all their 10 different bank accounts/credit cards/e-wallets by creating all of them individually in Actual. Some, like me, have grown to enjoy simplicity with minor trade-offs in accuracy by creating only one single account to spend from, irrespective of payment method.
One thing to call out is the differences between "For-Budget" vs. "Off-Budget" which you need to choose when creating an account - simply put,
There's many nice way to utilize both of these accounts (such as transferring money from On-Budget "Wallet" account into Off-Budget "StashAway" account, and spending it from your "Investment" Budget Category which I'll demonstrate later.
You have your accounts, now you manage your budget and plan your spending.
Remember, plan only with the money you have received (which is why Fresh Start is often recommended) and over time, build up enough buffers that you can Live On Last Month's Income.
As an example, assuming I have RM1,500 as the income recorded on 1st July, my wallet now has RM1,500 for my to plan my budget for the month.
Throughout the month, there would have been multiple spendings across various categories recorded in my wallet, or even transferred to another account (example: a transaction entry of -250 categorized under 'Investment' and also transferred to Off-Budget account Stashaway. Note the small arrow -> in the Payee).
And these are basically envelope-based / zero-based budgeting in a nutshell. Even if I accidentally (or intentionally) overspend in any category, I can simply move monies around so long as I do not exceed my net earnings for the month. In another word, the next time you decide to splurge on something - check if you have category balances, and simply forget about the existence of your bank account.
From time to time - we may have recurring bills that we'll need to enter every month, or those that happens once a year which we may accidentally forget from time to time. That's where the Schedule & Recurring Transaction comes into place. And boy, Actual took it to the next level, beyond even what YNAB4/nYNAB can offer out-of-box today.
There's so many advanced rules/capability that you can tweak with Schedule, but keeping it simple we'll use the TNB bill earlier as an example. I can simply create a schedule with an approximate / range / exact amount that happens on a certain date / certain day of the month or week and repeated on a predetermined window, and Actual will remind me from time to time to clear my bills.
Probably one of the most important questions - does Actual support Mobile App? Yes and No!
No in the sense that you don't go to the Apple App Store / Google Play Store to "install' it as you normally would, but Yes in the sense that Actual has native Progressive Web Apps (PWAs) that can be installed on your phone and behaves exactly as any other apps natively.
The only differences are the steps to install it are... pretty unconventional. Similarly, navigate to the website that was generated for you earlier (or the custom domain that you've set) to access your budget from any browser of your choice - Safari, Chrome, etc.
Once you're in, just click share/more (depends on IOS or Android) > Add to Home Screen and give it a name, then you'll see it "installed" in your app library just like any other app. It has both auto-cloud-sync feature with end-to-end encryption enabled (should you choose to) as well as local-copy of data in case of internet inaccessibility.
There are so many other features but it's simply too much to cover today - so hopefully these would be sufficient to either get you started with Actual or move you from YNAB to Actual.
In case you need further help or support, always check out their documentation which is already very comprehensive: https://actualbudget.org/docs/. If you ever run into any issues, they also have a strong active community in Discord where you can chat with other users / volunteers to seek help.
For those interested, another blogger has also written about their experiences and some tips on migrating from YNAB to Actual Budget, so do check it out if you're interested in this topic: https://samw.dev/2024/07/01/actual-for-ynab.html
The post went longer than I initially planned for, especially the ranting part. But I've been wanting to write this topic for so long, and I'm glad that YNAB managed to push me to the edge - both to migrate out of it (after their ridiculous pricing strategy) and write this article.
For those of you who've been doing envelop/zero-based budgeting, I promise you'll enjoy using Actual Budget as much as I had, especially if you came from YNAB4 or nYNAB. Actual Budget, whilst still undergoing developments for some of the features, has already come a long way and can put up a fight with nYNAB for sure.
If you're new to envelop/zero-based budgeting, don't worry too much at this stage, and just Roll with the Punches. Slowly but surely, with enough discipline, you'll love to grow this model, especially during emergencies, when you realize that you've had the budget to handle whatever is thrown at you. I've personally been following many YNAB success stories and I'm sure Actual will do the same, given the similar feature offerings.
All in all, whilst I am disappointed (again and again) with where YNAB has been heading since 2015, I definitely cannot deny that YNAB as a psychological method, and a tool, has helped me to achieve the great heights I am in today. Without YNAB, I'll probably still be struggling from paycheck to paycheck, getting unnecessarily stressed by bills and all.
It's just that, after almost a decade of being abused (pricing and lack of features development-wise), I've decided to end the "relationship" with YNAB for good. Nothing personal. At least now that I've managed to save $90/year (or ~RM425/year in today's exchange rate), I'll have the opportunity to review my budget (Rule #3) and see where else I can best use these savings... perhaps more good food for my mom?
As always, thanks for reading and I will see you again in my next post! If you haven't already, be sure to follow me on my Instagram, Facebook and YouTube for the latest updates!
Cheers,
Gracie
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