There are many things to love about helping people learn YNAB in a live workshop. We get to chat with people of all backgrounds and financial circumstances. We get to help people build better financial futures for themselves and their families. And every time we see the words ‘Aha! Lightbulb moment!’ in the chat window, we know a life is about to be changed. We also love being asked and being able to answer questions about how we handle particular aspects of budgeting in our own lives, and if you’ve been to a workshop you’ll know we’re happy to share.
My fellow YNAB teachers and I all have our own YNAB journeys and we love answering questions about how we handle particular aspects of budgeting in our own lives.
I was recently asked how I handle savings, and after digging a little deeper, (in our workshops, attendees can ask questions and chat live with the teachers) the question became a little more specific:
“Dave, do you have lots of distinct, named savings categories like ‘New TV’, ‘New Kitchen Window’ that you hide once you’ve spent the money? Or do you have one category called ‘For the Home’, so you can report on that spending and see averages on spending ‘For the Home’ all in one place?”
The answer to both is yes.
Prefer to watch? Check out this video from Hannah!
Welcome To The Wish Farm!
After spending six years using YNAB to aggressively pay down debt, my wife and I both love the idea of saving very purposefully. We save for very specific, individual, named things. It provides clarity and a shared vision of what our limited funds are actually going to do for us. In fact, we have a category group called ‘Wish List’ where we list all the things currently competing for our money:
The (S), (M), and (L) are for Small, Medium, and ‘Look How Much That Costs!!’ (or Large, if you prefer).
You many wonder why ‘Next Computer’ and ‘Next Car’ aren’t on the list? Well, they’re safely tucked away among our True Expenses categories. They are not optional items for us, they are inevitable, so we save for them differently. We budget for those things before we get to even think about the Wish List.
The Home Of Unfunded Dreams…
Speaking of budgeting (as I often do), you’ll notice there’s no money budgeted to these items, and no YNAB Targets are set. Correct! This is the Wish List. This is the home of unfunded ideas. There’s no way I can budget for all of them simultaneously, so what to do?
If you guessed prioritize—you are correct! Prioritize, prioritize, prioritize.
Until They Get What They Need To Grow…
The Wish Farm is where dreams do come true. It’s a small place, it only has room for three wishes at a time. Like seeds, wishes are planted and watered until they’re ready for harvest:
Only one wish of each size can fit into The Wish Farm at any given time. To be considered, a wish must have been researched enough to attach a dollar amount, by way of a YNAB goal. (In this household, final decisions on what wish should be focused on next have been decided by games of Backgammon).
Water the wishes when you can, by budgeting money that you have. They won’t survive if you rely on the rain that you think is coming next week.
Spend the money, you’ve (literally) earned it!
And the cool thing is, unlike with seeds, you get to change your mind about what you will harvest right up until the very second you pull it out of the ground (aka spend the money). Are we sure this is still our number one small priority?
(Can you imagine? Oh great, *more* zucchini, I’ll just turn those last few plants into cabbages before I harvest them.)
Not only that, but plans change. This very day my YNAB Christmas present arrived via Canada Post’s highly efficient, effective, and not-in-any-way-super-frustratingly-slow dog-sled parcel delivery service. To my delight, within the carefully-wrapped box was a cast iron outdoor campfire pot! And there was me already $54.23 (see above!) of the way toward getting one!
One (lost) game of backgammon later:
One final thought on harvesting to finish off the question. When the time comes, I will record the spending on New Blackout Blinds to the ‘New Blackouts Blinds’ category. Then, I can delete that category and reassign the transactions and budgeted amounts to ‘Home Improvements’.
Ultimately, that spending is on ‘Home Improvement’. That’s where I want to capture it for averages and reports. No problem.
Another option would be to move the money assigned in the New Blackout Blinds category to the Home Improvements category, record the transaction there, and rename the New Blackout Blinds category to whatever wish will replace it.
Step-by-Step: How to Create a Wish Farm in YNAB
Here’s a simple summary so that you can create your own Wish Farm in YNAB.
Step 1: Make your wishlist
Grab a pen and a piece of paper or fire up a Word doc—wherever you’re most inspired to write down everything that you want. Don’t hold back, dream big!
Step 2: Create a Wish List category group
This is the home of unfunded ideas so you save for very specific, individual and named things. Enter every item from the Wish List as a separate category. The (S), (M), and (L) are for Small, Medium, and ‘Look How Much That Costs!!’ (or Large, if you prefer).
Tip: You may want to use the arrow next to the category group title to collapse/expand this category group so that it’s out of sight when you don’t need it.
Step 3: Create a Wish Farm category group
This is where dreams come true. It’s a small place and only has room for three wishes at a time. Move a wish of each size into The Wish Farm. Make sure the wish has been researched enough to attach a dollar amount, by way of a YNAB target.
Tip: set “target balance” in your wish farm items to utilize target tracking tools.
Step 4: Water by assigning extra dollars to the wish(es) when you can
That $20 you found in last year’s coat pocket? The money you saved when you canceled that Netflix subscription? Put some extra cash towards your wishes when you can.
Step 5: Harvest and spend the money
When the time comes, move money from the Wish Farm category to the category you want to capture the spending. Record the transaction as usual.
Step 6: Plant new wishes
After considering current priorities from the Wish List then you can rename the newly-available Wish Farm category and start the cycle over for a new wish.
And We Keep On Wishing…
Budgeting is so much fun! When a wish is granted, we hide that category, discuss reshuffled priorities, and play another game of Backgammon.
Here’s to hoping I get the chance to chat with some of you in the hundreds of workshops we have planned for the new year. Just mention solar-powered water heaters for chickens, and I’ll be sure to say hello.
Have you tried YNAB yet? Our Four Rules act as a decision-making framework for spending and our app is the perfect tool to help you save money, eliminate pesky debt payments, and finally feel in control of your finances. There’s no credit card required to try it on for size, so sign up now!