We have all skilled that exhilarating second once 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 fingers. The chances are countless, and there is an plain sense of pleasure realizing that you may indulge guilt-free in your favourite espresso store, splurge on a brand new e-book, 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 personalised present playing cards, every one designated for a particular objective, with out the worry of overspending or shedding monitor of your funds. Welp, that is YNAB’s Rule One in a nutshell.
Whenever you comply with 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. Whenever you take your children to the bowling alley, you spend the cash out of your leisure bucket. Isn’t that so much like utilizing a present card? With YNAB, your spending is restricted to a particular objective. With a present card, it’s restricted to a particular retailer.
And there are quite a lot of advantages to this. Reward playing cards offer you crystal-clear readability, wholesome limits, and freedom to spend with out guilt. YNAB allows 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 Immediate Readability
Let’s speak about an financial time period that describes why cash is beneficial. 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 a great or asset that may be exchanged for one more of the identical kind. When it refers to cash, it means any greenback is simply as worthwhile as every other greenback. They’re the identical. When 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 worthwhile as every other, we are able to use them to make the change of products and providers a lot, a lot simpler.
So fungibility is a good factor, but it surely additionally makes it harder to make spending choices. You should utilize $100 to purchase ANYTHING price $100. It’s simple to grow to be paralyzed by selections, 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.
That is why we prefer to get individuals present playing cards as a substitute of simply giving them money. Whenever 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 nearly as fungible as money, as a result of they promote every little thing. However a present card for one thing extra particular reveals you had been extra considerate.
Utilizing YNAB offers you a similar readability for all of your spending. Whenever 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 need to 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 good thing about present playing cards that YNAB replicates completely. Reward playing cards additionally aid you set a spending restrict.
Going again to our $500 grocery class—now, once you decide up some groceries, you may take a look at your grocery class to find out how a lot you may spend. It’s now not an amorphous checking account stability that may be spent on actually something. Not solely do you may have readability on how you’re going to spend that $500, however you may have readability on how a lot you may have left to spend.
This dynamic is precisely why Starbucks is (very arguably) one of many largest banks on the earth. As of April 2023, their wildly widespread 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 keen to fork over a lot cash to Starbucks earlier than they really purchase espresso?
As a result of with out YNAB, this is likely one of the solely instruments individuals need to 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 big good thing about present playing cards. They aid you restrict your spending.
YNAB fulfills this want completely with out having to provide an interest-free mortgage to one of many largest firms on the earth. How a lot do I’ve left to spend on espresso? Simply test 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 pressure somebody to spend cash on one thing specifically. Whenever 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 may suppose is frivolous.
That’s why it’s such a pleasure to provide a present card to a very selfless particular person. You recognize your mother loves pedicures, however she by no means needs to spend cash on herself. When you purchase her a present card for a pedicure, you ensure 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 present. Whenever you plan your enjoyable spending proper alongside your payments and non-monthly bills, you may see that you just 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 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 1 retailer and actually want you can use that cash some other place? Perhaps you’ve even wished you can convert a present card to money so you can spend it on no matter you need. Keep in mind, present playing cards take away a number of the fungibility of cash. That brings the entire 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 Technique is that you may change your cash plan at any time for any motive. The cash in your YNAB classes remains to be cash in spite of everything, and which means it’s nonetheless fungible.
If a good friend invitations you to exit to eat unexpectedly however your eating out class is depleted, you may transfer some cash out of your trip class to cowl it. When you overspend on a spa present card in your mother, you may swipe some money out of your leisure class. No downside, no fuss. As long as you weigh the tradeoffs, you may change your plan everytime you need.
That signifies 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 the entire advantages, however not one of the drawbacks.
Would you like gift-card readability for your whole cash? Strive YNAB at the moment. It’s free for 34 days and it would simply change your life.
