How YNAB Is Like a Sensible Reward Card

We have all skilled that exhilarating second if you attain into your pockets and pull out a present card, proper? It is like holding a bit of slice of monetary freedom in your palms. The chances are countless, and there is an plain sense of pleasure understanding that you may indulge guilt-free in your favourite espresso store, splurge on a brand new ebook, or deal with your self to a much-needed spa day—all due to that magical piece of plastic.

However what if I advised you there is a approach to seize that very same feeling of liberation with each greenback you earn? Think about having the facility to allocate your cash like a stack of customized present playing cards, every one designated for a selected function, with out the worry of overspending or dropping monitor of your funds. Welp, that is YNAB’s Rule One in a nutshell.

If you observe Rule One: Give Each Greenback a Job, you divide your cash up into particular classes, like little digital envelopes on your {dollars}. So let’s say you put aside $50 in an leisure class. If you take your children to the bowling alley, you spend the cash out of your leisure bucket. Isn’t that loads like utilizing a present card? With YNAB, your spending is restricted to a selected function. With a present card, it’s restricted to a selected retailer. 

And there are lots of advantages to this. Reward playing cards offer you crystal-clear readability, wholesome limits, and freedom to spend with out guilt. YNAB enables you to expertise all of those perks—with not one of the drawbacks. Let me break it down for you.

Reward Playing cards and YNAB Give You Prompt Readability

Let’s speak about an financial time period that describes why cash is helpful. Earlier than your eyes gloss over, I promise this will probably be enjoyable, as a result of we’re speaking about fungibility. (FUNgibility. Not FUNGIbility.)

Fungibility refers to or asset that may be exchanged for an additional of the identical sort. When it refers to cash, it means any greenback is simply as beneficial as every other greenback. They’re the identical. Should you ask any economist why cash is so helpful, they’ll most likely speak about fungibility. As a result of one greenback is precisely as beneficial as every other, we will use them to make the trade of products and providers a lot, a lot simpler. 

So fungibility is a superb factor, nevertheless it additionally makes it tougher to make spending choices. You should utilize $100 to purchase ANYTHING price $100. It’s simple to change into paralyzed by decisions, as a result of there are such a lot of potentialities. What’s good a couple of present card is it removes the fungibility. As a substitute of an enormous wad of money that may be spent on actually something, you’re holding a smaller quantity for one thing very particular. In case you have a present card to an area therapeutic massage parlor, you immediately know you’re going to spend it on a therapeutic massage. No second guessing.

Because of this we prefer to get individuals present playing cards as a substitute of simply giving them money. If you purchase somebody a present card, not solely are you giving them cash, however you’re taking away the burden of deciding how they need to spend that cash. That’s precisely why it feels higher to purchase a present card for somebody’s birthday current quite than simply giving them money. It’s additionally why a present card to an area restaurant feels extra considerate than a present card to Amazon. An Amazon present card is sort of as fungible as money, as a result of they promote all the things. However a present card for one thing extra particular exhibits you have been extra considerate. 

Utilizing YNAB provides you a similar readability for all of your spending. If you allocate $500 to your grocery class, it’s sort of like shopping for your self a $500 present card to the grocery retailer. You now not must make any choices about that $500. You recognize you’re going to spend it on groceries. 

Reward Playing cards and YNAB Assist You Set Spending Limits

That brings up one other advantage of present playing cards that YNAB replicates completely. Reward playing cards additionally allow you to set a spending restrict.

Going again to our $500 grocery class—now, if you choose up some groceries, you’ll be able to have a look at your grocery class to find out how a lot you’ll be able to spend. It’s now not an amorphous checking account stability that may be spent on actually something. Not solely do you might have readability on how you’re going to spend that $500, however you might have readability on how a lot you might have left to spend. 

This dynamic is strictly why Starbucks is (very arguably) one of many largest banks on the earth. As of April 2023, their wildly in style rewards program held $1.8 billion (with a B) in money, both in present playing cards or in app deposits. That’s wild, you all! Why are so many individuals prepared to fork over a lot cash to Starbucks earlier than they really purchase espresso?

As a result of with out YNAB, this is among the solely instruments individuals must plan their spending. Starbucks clients load cash of their app or purchase present playing cards largely to allow them to determine and implement a certain quantity of spending on espresso inside a selected time interval. That’s one other large advantage of present playing cards. They allow you to restrict your spending.

YNAB fulfills this want completely with out having to present an interest-free mortgage to one of many largest companies on the earth. How a lot do I’ve left to spend on espresso? Simply verify the espresso class. (Oh, and now you don’t have to purchase your espresso solely at Starbucks!)

Reward Playing cards and YNAB Take away the Guilt from Spending

One more reason we give present playing cards is to lovingly power somebody to spend cash on one thing particularly. If you purchase somebody a present card, you’re giving them the present of paying for one thing, however you’re additionally giving them the present of permission to deal with themselves. You’re taking away the guilt related to spending on one thing they could assume is frivolous.

That’s why it’s such a pleasure to present a present card to a very selfless individual. You recognize your mother loves pedicures, however she by no means needs to spend cash on herself. Should you purchase her a present card for a pedicure, you ensure she’ll spend it on one thing she enjoys. 

So if you set cash apart in a enjoyable spending class in YNAB, you’re giving your self the identical present. If you plan your enjoyable spending proper alongside your payments and non-monthly bills, you’ll be able to see that you simply can spend cash on one thing enjoyable with out worrying about every other obligations. Assign the cash on paper first, and you may spend freely with out guilt, disgrace, or fear. 

Reward Playing cards Aren’t Versatile, However YNAB Is

Reward playing cards carry an entire lot of worth to our life, however they do have a main downside. They aren’t versatile. Have you ever ever had a present card to at least one retailer and actually want you possibly can use that cash someplace else? Possibly you’ve even wished you possibly can convert a present card to money so you possibly can spend it on no matter you need. Bear in mind, present playing cards take away a few of the fungibility of cash. That brings all the advantages we’ve talked about, however at the price of flexibility. 

However with YNAB, you don’t have that price due to Rule Three: Roll With the Punches. A core a part of the YNAB Methodology is that you may change your cash plan at any time for any motive. The cash in your YNAB classes continues to be cash in any case, and meaning it’s nonetheless fungible.

If a buddy invitations you to exit to eat unexpectedly however your eating out class is depleted, you’ll be able to transfer some cash out of your trip class to cowl it. Should you overspend on a spa present card on your mother, you’ll be able to swipe some money out of your leisure class. No drawback, no fuss. As long as you weigh the tradeoffs, you’ll be able to change your plan everytime you need. 

That implies that whereas YNAB provides you gift-card readability, gift-card limits, and gift-card freedom to spend, it additionally provides you cold-hard-cash flexibility. It’s all the advantages, however not one of the drawbacks. 

Would you like gift-card readability for your whole cash? Strive YNAB in the present day. It’s free for 34 days and it’d simply change your life.