We have all skilled that exhilarating second whenever you attain into your pockets and pull out a present card, proper? It is like holding a bit slice of monetary freedom in your arms. The probabilities are infinite, and there is an plain sense of pleasure figuring out that you would be able to indulge guilt-free in your favourite espresso store, splurge on a brand new guide, or deal with your self to a much-needed spa day—all due to that magical piece of plastic.
However what if I informed you there is a strategy to seize that very same feeling of liberation with each greenback you earn? Think about having the facility to allocate your cash like a stack of customized reward playing cards, each designated for a particular goal, with out the worry of overspending or shedding monitor of your funds. Welp, that is YNAB’s Rule One in a nutshell.
While you comply with Rule One: Give Each Greenback a Job, you divide your cash up into particular classes, like little digital envelopes to your {dollars}. So let’s say you put aside $50 in an leisure class. While you take your children to the bowling alley, you spend the cash out of your leisure bucket. Isn’t that loads like utilizing a present card? With YNAB, your spending is proscribed to a particular goal. With a present card, it’s restricted to a particular retailer.
And there are a whole lot of advantages to this. Present playing cards offer you crystal-clear readability, wholesome limits, and freedom to spend with out guilt. YNAB helps 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 Prompt Readability
Let’s discuss an financial time period that describes why cash is beneficial. Earlier than your eyes gloss over, I promise this can be enjoyable, as a result of we’re speaking about fungibility. (FUNgibility. Not FUNGIbility.)
Fungibility refers to an excellent 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 beneficial as some other greenback. They’re the identical. Should you ask any economist why cash is so helpful, they’ll in all probability discuss fungibility. As a result of one greenback is precisely as beneficial as some other, we will use them to make the alternate of products and providers a lot, a lot simpler.
So fungibility is a good factor, however it additionally makes it tougher to make spending choices. You should utilize $100 to purchase ANYTHING value $100. It’s straightforward to grow to be paralyzed by selections, as a result of there are such a lot of potentialities. What’s good a few reward 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. If 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.
Because of this we wish to get folks reward playing cards as an alternative of simply giving them money. While 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 relatively 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 reward card is nearly as fungible as money, as a result of they promote every thing. However a present card for one thing extra particular exhibits you have been extra considerate.
Utilizing YNAB provides you a similar readability for your whole spending. While 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 choices about that $500. You already know 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 enable you set a spending restrict.
Going again to our $500 grocery class—now, whenever you choose up some groceries, you possibly can have 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 may have readability on the way 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 this 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 among the solely instruments folks should plan their spending. Starbucks prospects load cash of their app or purchase reward playing cards largely to allow them to resolve and implement a specific amount of spending on espresso inside a specific time interval. That’s one other big good thing about reward playing cards. They enable you restrict your spending.
YNAB fulfills this want completely with out having to offer an interest-free mortgage to one of many largest companies on this planet. How a lot do I’ve left to spend on espresso? Simply examine 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
Another excuse we give reward playing cards is to lovingly drive somebody to spend cash on one thing particularly. While 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 may suppose is frivolous.
That’s why it’s such a pleasure to offer a present card to a very selfless particular person. You already know your mother loves pedicures, however she by no means desires to spend cash on herself. Should you purchase her a present card for a pedicure, you be certain she’ll spend it on one thing she enjoys.
So whenever you set cash apart in a enjoyable spending class in YNAB, you’re giving your self the identical reward. While you plan your enjoyable spending proper alongside your payments and non-monthly bills, you possibly can see that you would be able to 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 deliver a complete lot of worth to our life, however they do have a significant disadvantage. They aren’t versatile. Have you ever ever had a present card to 1 retailer and actually want you could possibly use that cash some other place? Possibly you’ve even wished you could possibly convert a present card to money so you could possibly spend it on no matter you need. Bear in mind, reward playing cards take away among 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 value due to Rule Three: Roll With the Punches. A core a part of the YNAB Methodology is that you would be able to change your cash plan at any time for any purpose. The cash in your YNAB classes continues to be cash in spite of everything, and meaning 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. Should you overspend on a spa reward card to your mother, you possibly can swipe some money out of your leisure class. No downside, no fuss. As long as you weigh the tradeoffs, you possibly can change your plan everytime you need.
That implies 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 whole cash? Strive YNAB right now. It’s free for 34 days and it’d simply change your life.