You need a budget. But do you really need to pay for one?

There’s never a bad time to think about budgeting your money, but one could argue that the week of a stock market meltdown and renewed anxiety of a recession is the best time. That’s where we are this week. So let’s talk about budgeting.

A few months ago, I stumbled across an app called YNAB. The name stands for You Need a Budget, and it’s fiercely popular with a certain set of personal finance enthusiasts on Reddit. 

With over 190,000 members, the YNAB subreddit is in the top 1 percent of popular subreddits — it’s about as popular, for example, as the surfing subreddit. It’s not just Reddit, either. YNAB has 581,000 followers on TikTok, 208,000 followers on Instagram, and 141,000 subscribers on YouTube. This is all for a budgeting app, mind you. 

So I downloaded YNAB with high hopes. It took quite a while to get through the complicated setup, which involved linking my bank accounts to it, and start allocating sums of money for absolutely every expense in my life, from rent to diapers. Then I realized that, after a 34-day free trial, the app costs money. 

Starting August 1, YNAB even raised its prices from $99 a year to $109 a year. Many of those hundreds of thousands of personal finance enthusiasts are not happy about this change, by the way. Some said they were going back to Excel, which is what I have been doing for years. Still, that’s a lot of people who are excited about personal finance.

“What a great place to be,” Scott Ward, senior vice president and wealth advisor for Compound Planning, told me. “We’ve gone from an environment where people were reticent to really even think about budgeting, to using spreadsheets, and now wanting to have an active interest in seeing their money work for them on a daily basis.” 

The concept of connecting your bank account to an app that will tell you how much you should spend and save has actually been around for a couple of decades. It went mainstream in the late aughts with the rise in popularity of Mint, a free budgeting website and app that was shut down earlier this year by its new owner Credit Karma. And when Mint shut down in March, millions of users scrambled to find a good replacement. 

Even though YNAB isn’t free, it’s one of several apps that are filling that void. All of them can track your spending, automate your savings, and generally make you feel better about your financial health. Most of them cost money, while you can make a spreadsheet in Google Drive for free.

Budgeting is inevitably a very personal thing. If you don’t have one at all, however, the best budget for you is any budget at all. Inflation has slowed but is not gone. The economy is feeling a little shaky right now, although it technically remains quite strong. And like I said before, there’s never a bad time to pay attention to your money.

So, you need a budget.

Behind many of these apps is usually a budgeting philosophy that’s been around for over 50 years. It’s called zero-based budgeting. Developed by Peter Pyhrr when he was a young accountant at Texas Instruments in the early 1970s, this method directs you to start your budget from scratch, or “zero base,” every month and assign a purpose to every dollar you must spend in your budget. That means accounting for recurring costs like rent and bills as well as essentials like housing and groceries. It also leaves room to budget for longer-term goals like savings and paying off debt. 

The system is also designed to be dynamic since not every month of the year is the same. If you’ve heard of the “envelope system,” when you set aside cash for each expense at the start of the month, this is the same idea. Other systems include the 50/30/20 rule, which was popularized by the progressive Massachusetts Senator Elizabeth Warren, and the “pay yourself first” method, which focuses on building a retirement or emergency fund. My own budgeting spreadsheet ended up being based on the zero-base budgeting strategy, although I didn’t even know what that strategy was when I built it for myself a few years ago. The method is just that intuitive.

YNAB started out as a spreadsheet, too. In 2004, an accounting grad student named Jesse Mecham built the first version of the spreadsheet to track his family’s finances and, with the help of a developer, built a desktop app a couple years later, before launching the first YNAB mobile app in 2015. 

Mecham pushed these four rules from the start: give every dollar a job, embrace true expenses, roll with the punches, and age your money. The first three are fairly self-explanatory. The last one about aging your money, however, is designed to help you break out of the pay-check-to-pay-check lifestyle and delay the time when you receive your money to when you actually spend it. In other words, the longer you hold onto your money and avoid spending like it’s an emergency, the more likely you are to make smarter decisions. Keeping more money around will also give you a bit of a cushion.

“I want people to take the fear out of the money conversation,” YNAB CEO Todd Curtis said in an interview. “We all spend, and imagine if you could do it confidently. Imagine if you could do it without second-guessing. Imagine if you could talk about it with your partner without real dread about walking into that conversation.”

Over the years, people have become obsessed with this system. But YNAB isn’t the only app pushing the zero-based budgeting approach. Monarch Money is a popular option that automatically categorizes your spending, tracks your investments, and gives family members access to the budget. (YNAB has its own version of family access.) Monarch Money also costs $100 a year. PocketGuard is a beginner-friendly app that offers some zero-based budgeting features. There’s a free tier with limited functionality or a premium version for $75 a year. Copilot uses artificial intelligence to categorize expenses and creates adaptive budgets for you. So it’s kind of like a robotic zero-based budgeting system and costs $95 a year.

If you’re not convinced the zero-based budgeting method is for you, there are a variety of different approaches represented in these recommendations for more budget apps here, here, and here. 

But you don’t want to pay for a budget. Now what?

It costs money to manage your money with the help of a good app. That comes with some benefits. You’re paying for something that’s easier to use than a free Google Drive spreadsheet, and you’re paying for the convenience of having your bank accounts, including all of your transactions, synced with the app instead of needing to manually add every expense yourself. You’re also paying for security, so that hackers don’t get their hands on your financial info. 

By the way, if you use a free budgeting tool, there’s a chance the company making it is selling your data to data brokers. (Here’s a great rundown of how privacy and security work in these apps, and what to look out for.) 

But sometimes the most compelling free option out there is the trusty spreadsheet. After all, if one of the leading budgeting apps started out as a spreadsheet, why not get back to basics?

If you DIY your budget, the bonus is a system that’s better tailored to your needs than even the best and priciest apps could ever be. The drawback is that it can become a huge time suck. Trust me. I’ve resorted to tracking everything on a Google Drive spreadsheet of my own making, and it’s practically turned into a hobby. My spreadsheet isn’t particularly complicated, but it’s highly customized to my particular situation. When my wife and I got married and combined finances, it got a big overhaul, and that happened once again when we had a baby. 

But along the way, I’m paying close attention on a weekly if not daily basis. It’s almost like a problem that I can never solve, but the process of simply trying — adding transactions here, reallocating funds there — calms me down. The time I spend in my clunky spreadsheet relieves some of my anxiety about family finances. It’s still time I’m not doing other things.

“The main downside to most budgeting and money management spreadsheets is that they do not automatically import transactions from bank accounts,” Jon Wittwer, founder of Vertex42, which offers a wide range of free spreadsheet templates. “Importing transactions is the number one reason why I still use an app for my own finances.” Wittwer added that he still uses a combination of apps and spreadsheets to manage his business.

You’re also not entirely alone if you do decide to create your own system. Much like its budgeting app counterpart, the budgeting spreadsheet community is active and always coming up with innovations on this tried and tested way of tracking your expenses. 

Completely free options do exist, and they’re so ubiquitous, that the only real challenge is finding one that fits your needs. Google and Microsoft have their own libraries of free budget spreadsheets that are very simple but customizable. I’ve also used free Excel templates from Vertex42 and would recommend them for their sophistication and price of $0. 

Like I said before, though, budgeting is such a highly personal endeavor. Spreadsheets can be a solitary affair, where you might not know who to ask if you’re looking for a better way to do something. Apps are great, as long as you’re willing to pay a fee, and they can offer some community. 

Curtis, the YNAB CEO, told me, “With YNAB, you can turn around to that community and say, ‘Hey, this just happened to me. I’m at this moment. What can I do?’ And you’ve got millions of people there who can help you with that question, because they’ve been there before you.”

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