How YNAB Is Like a Good 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 just a little slice of economic freedom in your arms. The probabilities are infinite, and there is an plain sense of pleasure understanding which you can 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 advised you there is a solution 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 reward playing cards, each designated for a particular function, with out the worry of overspending or shedding monitor of your funds. Welp, that is YNAB’s Rule One in a nutshell.

If you comply with Rule One: Give Each Greenback a Job, you divide your cash up into particular classes, like little digital envelopes on your {dollars}. So let’s say you put aside $50 in an leisure class. If you take your children 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 restricted to a particular function. With a present card, it’s restricted to a particular retailer. 

And there are lots of advantages to this. Present 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.

Present Playing cards and YNAB Give You On the spot Readability

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

Fungibility refers to a superb or asset that may be exchanged for one more of the identical sort. When it refers to cash, it means any greenback is simply as useful as some other 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 useful as some other, we will use them to make the alternate of products and companies a lot, a lot simpler. 

So fungibility is a superb factor, however it additionally makes it tougher to make spending selections. You need to use $100 to purchase ANYTHING price $100. It’s simple to grow 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. When you’ve got 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.

Because of this we prefer to get folks reward playing cards as a substitute of simply giving them money. If 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 fairly 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 had been extra considerate. 

Utilizing YNAB provides you an identical readability for all of your spending. If you allocate $500 to your grocery class, it’s sort of like shopping for your self a $500 reward card to the grocery retailer. You now not should make any selections about that $500. You understand 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 provide help to set a spending restrict.

Going again to our $500 grocery class—now, once you decide up some groceries, you possibly can take a look at your grocery class to find out how a lot you possibly can spend. It’s now not an amorphous checking account stability that may be spent on actually something. Not solely do you’ve readability on how you’re going to spend that $500, however you’ve readability on how a lot you’ve left to spend. 

This dynamic is precisely why Starbucks is (very arguably) one of many largest banks on the planet. As of April 2023, their wildly well-liked 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 likely one of the solely instruments folks should plan their spending. Starbucks clients load cash of their app or purchase reward playing cards largely to allow them to resolve and implement a certain quantity of spending on espresso inside a specific time interval. That’s one other enormous good thing about reward playing cards. They provide help to restrict your spending.

YNAB fulfills this want completely with out having to present an interest-free mortgage to one of many largest firms on the planet. 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

One more reason we give reward playing cards is to lovingly drive somebody to spend cash on one thing specifically. If 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 suppose is frivolous.

That’s why it’s such a pleasure to present a present card to a very selfless particular person. You understand your mother loves pedicures, however she by no means needs to spend cash on herself. In the event you purchase her a present card for a pedicure, you ensure that 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. If you plan your enjoyable spending proper alongside your payments and non-monthly bills, you possibly can see that you simply can spend cash on one thing enjoyable with out worrying about some other 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 carry an entire lot of worth to our life, however they do have a main disadvantage. They aren’t versatile. Have you ever ever had a present card to 1 retailer and actually want you can use that cash elsewhere? 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, reward 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 which you can change your cash plan at any time for any cause. The cash in your YNAB classes remains to be cash in any case, 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 possibly can transfer some cash out of your trip class to cowl it. In the event you overspend on a spa reward card on your mother, you possibly can swipe some money out of your leisure class. No drawback, no fuss. As long as you weigh the tradeoffs, you possibly can change your plan everytime you need. 

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

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