How YNAB Is Like a Sensible Present Card

We have all skilled that exhilarating second once you attain into your pockets and pull out a present card, proper? It is like holding somewhat slice of economic freedom in your arms. The probabilities are infinite, and there is an simple sense of pleasure figuring out that you may indulge guilt-free in your favourite espresso store, splurge on a brand new guide, or deal with your self to a much-needed spa day—all because of that magical piece of plastic.

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

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

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

Present Playing cards and YNAB Give You Immediate Readability

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

Fungibility refers to an excellent 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 priceless as another greenback. They’re the identical. In the event you ask any economist why cash is so helpful, they’ll in all probability speak about fungibility. As a result of one greenback is precisely as priceless as another, we will use them to make the alternate of products and providers a lot, a lot simpler. 

So fungibility is a superb factor, nevertheless it additionally makes it tougher to make spending selections. You should use $100 to purchase ANYTHING price $100. It’s straightforward to turn out to be paralyzed by decisions, as a result of there are such a lot of prospects. What’s good a couple of reward card is it removes the fungibility. As a substitute of a large wad of money that may be spent on actually something, you’re holding a smaller quantity for one thing very particular. If in case you have a present card to a neighborhood therapeutic massage parlor, you immediately know you’re going to spend it on a therapeutic massage. No second guessing.

This is the reason we wish to get individuals reward playing cards as an alternative of simply giving them money. Once 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 a neighborhood restaurant feels extra considerate than a present card to Amazon. An Amazon reward card is sort of as fungible as money, as a result of they promote all the pieces. However a present card for one thing extra particular exhibits you have been extra considerate. 

Utilizing YNAB offers you a similar readability for all of your spending. Once you allocate $500 to your grocery class, it’s form of like shopping for your self a $500 reward card to the grocery retailer. You not must make any selections about that $500. You realize you’re going to spend it on groceries. 

Present Playing cards and YNAB Assist You Set Spending Limits

That brings up one other good thing about reward playing cards that YNAB replicates completely. Present playing cards additionally enable you to set a spending restrict.

Going again to our $500 grocery class—now, once you decide up some groceries, you possibly can have a look at your grocery class to find out how a lot you possibly can spend. It’s not an amorphous checking account stability that may be spent on actually something. Not solely do you could have readability on how you’re going to spend that $500, however you could have readability on how a lot you could 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 common rewards program held $1.8 billion (with a B) in money, both in reward 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 without doubt one of the solely instruments individuals must plan their spending. Starbucks prospects load cash of their app or purchase reward playing cards largely to allow them to resolve and implement a specific amount of spending on espresso inside a specific time interval. That’s one other large good thing about reward playing cards. They enable you to restrict your spending.

YNAB fulfills this want completely with out having to provide 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!)

Present Playing cards and YNAB Take away the Guilt from Spending

Another excuse we give reward playing cards is to lovingly pressure somebody to spend cash on one thing specifically. Once you purchase somebody a present card, you’re giving them the reward of paying for one thing, however you’re additionally giving them the reward 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 provide a present card to a very selfless individual. You realize your mother loves pedicures, however she by no means desires to spend cash on herself. In the event you purchase her a present card for a pedicure, you be sure she’ll spend it on one thing she enjoys. 

So once you set cash apart in a enjoyable spending class in YNAB, you’re giving your self the identical reward. Once you plan your enjoyable spending proper alongside your payments and non-monthly bills, you possibly can see that you just can spend cash on one thing enjoyable with out worrying about another obligations. Assign the cash on paper first, and you’ll spend freely with out guilt, disgrace, or fear. 

Present Playing cards Aren’t Versatile, However YNAB Is

Present playing cards convey 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 can use that cash some other place? Possibly you’ve even wished you can convert a present card to money so you can spend it on no matter you need. Bear in mind, reward playing cards take away among 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 purpose. The cash in your YNAB classes remains to be cash in spite of everything, and meaning it’s nonetheless fungible.

If a pal invitations you to exit to eat unexpectedly however your eating out class is depleted, you possibly can transfer some cash out of your trip class to cowl it. In the event you overspend on a spa reward card in your mother, you possibly can swipe some money out of your leisure class. No downside, no fuss. As long as you weigh the tradeoffs, you possibly can change your plan everytime you need. 

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

Would you like gift-card readability for all your cash? Strive YNAB right this moment. It’s free for 34 days and it’d simply change your life.