We have all skilled that exhilarating second while you attain into your pockets and pull out a present card, proper? It is like holding a bit slice of monetary freedom in your fingers. The chances are limitless, and there is an simple sense of pleasure figuring out you could 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 technique 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 customized present playing cards, every one 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.

If 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. If 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 number of advantages to this. Reward playing cards provide you with 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.

Reward Playing cards and YNAB Give You Prompt Readability

Let’s discuss an financial time period that describes why cash is helpful. Earlier than your eyes gloss over, I promise this will likely 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 an additional of the identical kind. When it refers to cash, it means any greenback is simply as invaluable as every other greenback. They’re the identical. If you happen to ask any economist why cash is so helpful, they’ll in all probability discuss fungibility. As a result of one greenback is precisely as invaluable as every other, we will use them to make the trade of products and providers a lot, a lot simpler. 

So fungibility is a superb factor, nevertheless it additionally makes it tougher to make spending selections. You should use $100 to purchase ANYTHING value $100. It’s straightforward to grow to be paralyzed by decisions, as a result of there are such a lot of potentialities. What’s good a few present 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.

That is why we prefer to get individuals present 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 somewhat 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 present card is nearly as fungible as money, as a result of they promote every thing. However a present card for one thing extra particular reveals you had been extra considerate. 

Utilizing YNAB offers 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 present card to the grocery retailer. You not need to make any selections 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 advantage of present playing cards that YNAB replicates completely. Reward playing cards additionally enable you to set a spending restrict.

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

This dynamic is strictly why Starbucks is (very arguably) one of many largest banks on the planet. 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 without doubt one of the solely instruments individuals need to plan their spending. Starbucks prospects load cash of their app or purchase present playing cards largely to allow them to determine and implement a specific amount of spending on espresso inside a selected time interval. That’s one other enormous advantage of present playing cards. They enable you to restrict your spending.

YNAB fulfills this want completely with out having to offer 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 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

Another excuse we give present playing cards is to lovingly power somebody to spend cash on one thing specifically. If 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 could suppose is frivolous.

That’s why it’s such a pleasure to offer 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. If you happen to purchase her a present card for a pedicure, you be sure that she’ll spend it on one thing she enjoys. 

So while you set cash apart in a enjoyable spending class in YNAB, you’re giving your self the identical present. If you plan your enjoyable spending proper alongside your payments and non-monthly bills, you’ll be able to see that you simply 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 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 could possibly use that cash elsewhere? Perhaps 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, present 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 Technique is you could change your cash plan at any time for any purpose. The cash in your YNAB classes remains to be cash in any case, and meaning it’s nonetheless fungible.

If a pal invitations you to exit to eat unexpectedly however your eating out class is depleted, you’ll be able to transfer some cash out of your trip class to cowl it. If you happen to overspend on a spa present card to your mother, you’ll be able to swipe some money out of your leisure class. No downside, no fuss. As long as you weigh the tradeoffs, you’ll be able to 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? Attempt YNAB at the moment. It’s free for 34 days and it’d simply change your life.