# Understanding the YNAB Value Proposition

I am always trying to convince people that they need a budget. Always.

And occasionally I catch myself trying to motivate them by expounding on a lot of the intangible benefits:

Rule One – Give Every Dollar a Job: contentment on any income, satisfaction
Rule Two – Save for a Rainy Day: less stress
Rule Three – Roll with the Punches: built-in tenacity so you’re in it for the long haul. Accountability.
Rule Four – Stop Living Paycheck to Paycheck: save time, far less stress

Those are some of the intangible benefits, not all.

But today, we’re going to talk just about the tangible benefits. We’re going to talk about YNAB’s value proposition with real dollars.

## YNAB’s Value Proposition

I propose that your spending money on the software will bring you a reward far greater than the software’s cost. Normally, this is where I would talk about those intangibles mentioned above. Not today. I have hard data.

## An Informal Survey

A while back I surveyed YNAB users (there were just over one thousand respondents) and asked them a few questions:

1) How long have you been using YNAB?
2) How much debt have you paid off since you began using YNAB?
3) How much have you saved since you began using YNAB?

The results I found were absolutely stunning.

Note: I pulled out crazy outliers, and I only used the median. One guy had paid off \$30,000+ in debt in three months because he sold basically everything that was holding him back financially. There were others that were almost as crazy, but his report was the craziest.

## What Do You Have to Look Forward to After Using YNAB?

After one month, users had a median \$200 turnaround in their finances. That means they either paid off or saved a combined \$200. This likely represents the lowest-hanging fruit available. It’s akin to just starting an exercise program — you can do just about everything wrong and you’ll still make excellent progress in the beginning.

After three months, the median turnaround is \$450. You can see the pace slowed by about 25% (would have expected \$600 if the pace held from month one). I’m inferring from this that the low-hanging fruit is being exhausted, and users are starting to get a fairly good feel for the system and how to tweak it for their own needs.

After six months, the median turnaround is \$850. If we take the average pace from the three month group of \$150/mo., then you can see here that the pace has slowed just a little bit, dropping by five percent.

I find the six month group particularly interesting because you can see that the dropoff is really slowing. In fact, it leads me to believe that the low-hanging fruit that is now exhausted completely, is no longer causing the gains. The cause of the gains now is coming from fundamental change to the users’ behavior. Their awareness has increased tremendously, their dollars are stretched further, and they’re much happier about their money situation.

## But here’s where it gets crazy

I can’t make heads or tails of the nine-month group, to be honest. I looked at the data again and again and have two ideas as to an explanation. We’ll get to that shortly. First, the results:

After nine months, the median turnaround is \$3,300. No, that’s not a typo. That’s three thousand, three hundred dollars.

Going off our three-month pace of \$150/month, the nine-month group shows a pace increase of 144 percent. Where we would have expected them to be at \$1,350, they’re \$1,950 higher. Again, I have two ideas as to the explanation. The real answer probably lies somewhere in the middle:

1) The group is self-selected. By that I mean that I’ve found, through the survey, a group of very focused people. If you’ve been able to fundamentally change your behavior for nine months, you’re just killing it. You’re intense. You’re taking no prisoners.

I’m not sure why there’s such a change from the six- to the nine-month group. Perhaps if you can stick to this for nine-months, you’re just being more aggressive from the get-go and your pace has been quick from the start (the survey didn’t ask people where they were at with different months’ usage, just how long they’ve been using it, and what their overall change has been since they started).

OR

2) We’re seeing a tipping-point. Some time after six months, something has “clicked” with these users. They now no longer just believe the testimonials– they’re living proof that the method works. Having that validation triggers more intense action on their part. Where you’re first just testing the waters with the method, once you have enough experience under your belt–proof of its efficacy–your mind opens. Your doubts start to crumble, and your power to focus and do more increases.

Now, I’ll admit that the end of my second point is sounding a lot like a Sunday sermon, but I still think that can explain some of the increase in the nine-month group. They’ve rounded a psychological corner.

## What Results Have You Had? Why?

So, let’s turn this back to you. What results have you had with YNAB? How long have you been using it and what have you been able to accomplish? What have you discovered about your relationship with money?

If you haven’t started, start.

If you’re doing it half-baked, do more.

If you’re going all out, keep going.

The proof isn’t in the intangible benefits I love to talk about. The proof is in these numbers. Do you want to have an \$850 turnaround in six months? Implement the method.