InvestNow Review

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There are a number of different Investment platforms for Kiwis and today we are going to be looking at InvestNow. We are going to be looking at how the service compares against other platforms such as Sharesies and SmartShares later in this article, but for now we are going to be focusing on the InvestNow review.

Our InvestNow Review

In this review we are going to outline what InvestNow is, when it started, whether it is safe to use, what funds they offer and how it compares to other platforms. We are also going to be looking at the fees and costs associated with InvestNow.

Note: Reviews Boss is not a financial adviser and we will not be advising you on whether you should invest or not. We are simply going to explain the platform and talk about the pros and cons of InvestNow. We will not be telling you what funds you should or shouldn’t invest in.

When Did Invest Now Start?

InvestNow is a relatively new platform that was launched in 2017 with the goal of giving New Zealanders more options when it came to investing in managed funds. At launch, InvestNow offered 25 managed funds that covered most global and local asset classes. Since then, the service has grown to offer more than 90 managed funds along with a range of term deposit options.

Who Is Behind It?

InvestNow is brought to you by Implemented Investment Solutions (IIS), a Wellington-based investment management company that works with both global and local fund managers.

IIS was established in 2011 and manages over $3 billion in PIE funds, covering all major asset classes including, global and NZ bonds, NZ shares, global shares, cash and property. You can read more about InvestNow and IIS’s founder, Anthony Edmonds, and other members of their team here.

What is InvestNow?

InvestNow is a Wellington-based platform that offers investment opportunities into over 90 different managed funds. There are no annual fees to use the platform, but there are annual fund fees and performance fees that range from 0.20% to $2.72%.

There are a range of different index funds on offer and investments from $250 can be made into any fund on a single occasion. If you are looking to setup a regular investment plan, investments from $50 can be made into any of the funds.

Many funds in InvestNow’s portfolio are run by big names such as AMP, Fisher Funds, SmartShares and Vanguard.

Children can also join InvestNow, which makes it one of the few investment platforms to offer this.

What Is in Index Fund?

For those that know what an index fund (or “ETF”) is, feel free to skip ahead to the rest of the review. For those that don’t know what an index fund is, we have explained them below.

An index fund is a type of investment that is created to invest in or track the components of a market index. Think of things like the New Zealand NZX50 (New Zealand’s largest 50 companies) or the Standard & Poor’s 500 Index (S&P 500), which the is largest 500 companies in the United States.

An index fund operates no matter the state of the market, which means your investment is worth more when markets go up and less when they go down.

The Benefits of an Index Fund

Index funds provide broader market exposure and diversity in risk as your investment is spread across a range of different companies, rather than one. They are also better for an investor who is seeking a cheaper way to get exposure to the market.

Index funds have lower management fees and low operating expenses as the fund must invest in companies within the index. This means that there is no need for fund managers who constantly evaluate, research and make judgements on the investments.

The Disadvantages of Index Funds

While the diversity of index funds is great, there are some disadvantages. Index funds can have a relatively high commission cost associated with them when you buy through a typical brokerage.

Due to the nature of index funds they are expensive if you plan on trading them on a regular basis.

Signing Up for InvestNow

Signing up and making your first InvestNow is a very straightforward, easy process. You have the option of either setting up your account as an individual, Trust, Joint or Company.

The first thing you need to set up is your login details, using an email, name and password. After this you will need to complete the signup process by entering your personal details (bank account details, tax details, financial disclosures, and any other information they need).

Once your account has been set up and you have transferred some money to your account, you can start investing.

Investing with InvestNow

Setting up investments with InvestNow is a breeze and even the most inexperienced investor will be capable of doing it. Once your funds have cleared into your account, you can pick the funds you want and start investing.

You can select one fund or split your investment into multiple different funds. For those looking to make a single investment, you will need to invest $250 or more. If you commit to a regular investment plan, you can invest from $50 or more into one or multiple different funds.

Users can select how often they want to invest (monthly, weekly, etc.) and when they want to start the investment. If you do not have the required funds to make your investment, your regular investment plan will be on hold until you transfer funds into your account and start the investment plan again.

What About the Funds?

Currently, InvestNow offers over 90 funds from 17 different fund managers. The funds include index funds (investing in specific markets, such as the American S&P 500 or New Zealand’s NZX50). These funds also cover a range of specific markets such as commodities, property and more. In addition to this, the funds cover passive, cash-based investments (bonds, bank deposits and government debt).

The funds on offer give individual investors a wide range of options to choose from when looking to invest. However, the large amount of funds can be confusing and overwhelming for first time investors.

What About Term Deposits?

In addition to the diverse range of funds on offer, InvestNow also gives you the chance to put some money away in a term deposit. Currently, the service is still in beta but you have the option of investing in a term deposit with either BNZ or SBS Bank. InvestNow is working with other banks to add more options to their term deposit service.

For those looking to start a term deposit with InvestNow, you will need a minimum of $2,000 to put away.  

Is Term Deposit Interest Compounded with InvestNow

InvestNow does not offer compounding interest payments for individual term deposits. The interest from you term deposit is paid back to your transaction account on InvestNow. However, you can select to automatically roll over a term deposit at maturity, including both the principal and interest in a new term deposit.

What is a Term Deposit and How Do They Work?

You may be wondering what a term deposit actually is and why you should use one. A term deposit is a deposit held at a financial institution such as a bank, credit union or building society for a fixed amount of time. This fixed amount of time is called a ‘term’ and when money is deposited into the account, it stays there for the pre-determined period. Terms usually range from 1 month, all the way to 5 years, and money can only be withdrawn at the end of the term.

If you want to end your term deposit early you will need to contact InvestNow. Depending on the bank you have your term deposit with, you may have to pay a penalty for getting your money out before the term has ended.

Term deposits are popular with those who prefer a safer, more stable investment plan without the fluctuations of something like the share market. They are often used in conjunction with other investment options such as funds or property.

What Are the Fees and Costs Associated with InvestNow?

  • There are no annual fees or sign up costs associated with InvestNow. Additionally, there are no purchasing or selling fees as well.
  • All the funds charge management fee, which range from 0.20% (Vanguard International Shares Select Exclusions Index Fund) to 2.72% (Fisher Funds Property & Infrastructure Fund).
  • Some funds charge performance fees and some do not. Do not assume that a fund will charge the same performance fee every year, as future performance cannot be predicted.
  • There is a minimum investment amount of $250, or $50 when you make regular repeating contributions.

What Investment Products are on Offer?

InvestNow offers the following investment opportunities:

  • Term Deposits
  • New Zealand Fixed Income (investments in company debt or government bonds
  • New Zealand Shares
  • Australian Shares
  • International Shares
  • International Fixed Income bonds and deposits

What Are the Risks with InvestNow?

As with all investments, there is an element of risk associated with them. Some of InvestNow’s funds are low risk, some are medium risk and some are high risk. The returns/profit you make don’t necessary depend on the level of risk you take on.

Additionally, not all funds are hedged to the New Zealand dollar. What this means for you is that if the NZD rises against any overseas currency and your fund is not hedged, the value of your investment will reduce in NZD. This applies the other way as well, if your fund is not hedged and the dollar drops, your investment will be worth more in NZD. Some funds on InvestNow are hedged and some are not, so we recommend you check before making an investment.

How Are Your Funds Protected?

You are probably wondering how your funds are protected with InvestNow and who holds them. InvestNow client funds are held in an independent custodial account which is run and operated by Adminis. This ensures that there is complete separation from client assets/funds from InvestNow as a business (means InvestNow can’t get hold of your funds or assets).

What & Who is Adminis?

Adminis provides investment accounting and administration services. The Adminis platform brings investment managers, investors, administrators and custodians together in one place.

What Is Good About InvestNow?

Investment from $250 or recurring investments from $50 is great for new investors looking to get some exposure.

No Annual, Signup or Administration Fees – This is a big plus of InvestNow and a major drawcard over its competition. Other investment platforms charge a signup or annual fee that can eat into your returns/profit. InvestNow does not charge any such fee, which can offer significant savings over time.

There are 90+ funds that provide plenty of diversity – It is great to have so many different funds to choose from and you will almost certainly be able to find one that is right for you. However, you need to check the fees associated with each funds as they do vary significantly.

You can focus on specific areas and industries – Are you someone who wants to focus on property? Or do you want to focus on emerging markets and global shares? InvestNow’s range of diverse funds let you focus on a specific industry or area of the market.

You have access to Vanguard Funds – Vanguard is a big name in investment funds and InvestNow gives you the opportunity to invest in Vanguard’s International Shares Select Exclusions Index Fund (both hedged and un-hedged). This fund gives you exposure to many of the world’s largest companies. The fund offers access to a broadly diversified range of securities that excludes companies that are involved in tobacco, controversial weapons, nuclear weapons and more. This fund usually has a minimum investment of $10,000 if purchased outside of InvestNow.

Access to funds which typically have high initial investment – InvestNow gives you the opportunity to invest in funds that usually have a higher initial investment level, like the Vanguard fund we explained above.

Simple to use platform – InvestNow online platform is straightforward to use and makes it easy for even the most inexperienced investor. Being able to easily set and forget a regular investment plan is great for those who want to use a passive service.

This customer service seems top notch – Those who have had to deal with InvestNow’s customer service seem to be pretty happy with their experience. InvestNow has also got an excellent FAQs section on their website for all the questions you need answering.

Children can use the service – for those who want to start an investment for their children, InvestNow is a great platform to use. You will just need to provide some ID and proof of address (which can be in the parents or guardian’s name).

What We Don’t Like

  • To learn more about a fund, you will need to download its investor prospectus. These can be up to 50 pages long and can take a while to read through. It would be nice if there was a shorter summary that explained the basics of the fund for newcomers.
  • It can be difficult to compare the performance of each fund, especially when you include the management fees. We think it would be great to have some sort of service where you could select a number of funds and then compare them on a graph (past returns).

Things to Think About

  1. InvestNow does not pay tax on your behalf for Australian-domiciled managed funds which are not PIEs. You will need to report income from these funds on your tax return. InvestNow provides a Tax Summary Report that you can use to find out your taxable income.
  2. Some funds are not marked as “sustainable” and they may make investments in companies that trade/produce tobacco, weapons, nuclear and other “unethical” businesses.
  3. You can end a term deposit early, but you will have to pay any penalties set by the bank your term deposit is with.
  4. If you are a tax resident of another country as well as New Zealand, InvestNow may be legally obliged to pass on financial information about your accounts, to tax authorities in that jurisdiction. InvestNow will need to know your tax residence and the Taxpayer Identification Number (TIN) for the account holder.
  5. Large institutional brands like ANZ, AMP and Fisher Funds make up a large percentage of all funds on offer.
  6. The stock market can be volatile and you need to be prepared to see your funds go up and down in value. Past performance is not indicative of future performance.  

How Does InvestNow Compare Against the Competition?

InvestNow is a great investment platform for Kiwis, but how does it stack up against the competition?

InvestNow vs Sharesies

Sharesies is another popular option for New Zealand investors and is aimed at young people. The great thing with sharesies is that it gives you access to buy investments from as little as $5 (compared with InvestNow’s $250 minimum, or $50 when recurring). There are also no brokerage fees and free withdrawals at any time, and any amount.

The catch with Sharesies is that it does cost. Depending on the size of your portfolio’s value, the monthly cost will change. If your portfolio’s value is $50 or under it is free to use the service, if it is valued at $50 to $3,000 the cost is $1.50/month, and over $3,000 is priced at $3/month. Alternatively, you can opt for an annual membership for $30/year for any portfolio value (which is what we would recommend).

So, how does Sharesies compare with InvestNow. Overall, we feel that InvestNow offers a lot more than Sharesies. This is because it offers a lot more investment opportunities than Sharesies (over 90 compared to 11 offered by Sharesies). The annual or monthly fee will also eat away at your profits/returns with Sharesies, so you need to take that into account.

InvestNow vs Simplicity

Simplicity is a non-profit, online investment manager that is owned by the Simplicity Charitable Trust. They offer five investment fund options outside of their KiwiSaver scheme. The funds include the following:

  • Conservative
  • Balanced
  • Growth
  • New Zealand Share Fund
  • NZ Bond Fund

The Conservative, Balanced and Growth funds are $30 a year in membership fees, plus a 0.30% investment fee. The investment fee for the other two funds is 0.10%.

While the low fees investment fees for Simplicity are a big bonus, the minimum investment amount is $5,000. This is significantly higher than InvestNow and you are limited to only five different funds.

InvestNow vs SmartShares

SmartShares offers access to a range of different global and domestic ETFs across the main investment asset classes of Cash, Bond, Shares and Property. InvestNow offers some SmartShares funds on their service, which we recommend you check out.

SmartShares accepts direct investments from new investors from $500 per fund and $50 per month for recurring investments. There is a $30 establishment fee, but this does not apply to subsequent contributions.

The service offers 20+ different funds to choose from and the management fees are relatively low (0.33% to 0.75%). We do feel that InvestNow offers investors more with its 90+ funds and no annual or establishment fees.

The Key Points

  1. The investment funds offer diversity in the share market, with varying levels of risk.
  2. We like that InvestNow offers the Vanguard fund with its low 0.20% annual fee. This is usually an expensive fund to buy into, so this is a big win for InvestNow.
  3. Signing up is easy and straightforward. Even the most inexperienced investor could set up an account and get investing.
  4. There are over 90+ different funds available and there are no set up or annual fees to use the service.
  5. Gives both new and old investors access to local and global share markets at an affordable price.
  6. Offers secure password protection to make log in secure.
  7. Investments can be made from $250 for a one off investment, or $50 when they are recurring.
  8. Children can use the service and it can be set up for individuals, trusts and more.
  9. InvestNow may not be the best for everyone. New investors will love its simplicity, but may be overwhelmed by the number of funds on offer. We would love to see a quick-guide on each fund and maybe a risk level as well. This way, new investors can quickly look to see what they are getting into. We would also love to see a tool that can pick a number of funds and compare performance.

What You Need to Remember

The funds InvestNow offers are not some get rich quick scheme. Like most managed funds, they are long term investments rather than short term. The longer you leave your money in these funds, the faster and larger they will grow.

Other Things to Know About InvestNow

You can have more than one account – InvestNow lets you operate multiple accounts, and multiple types of accounts. However, you will need different email addresses for each one.

No cheques – InvestNow only allows online deposits into your InvestNow Transaction Account.

InvestNow is not a KiwiSaver scheme – If you are searching for a KiwiSaver scheme you will be disappointed to find that KiwiSaver is not one. Simplicity offers a KiwiSaver scheme and InvestNow’s SmartShares funds are also used by SuperLife, a KiwiSaver provider.

Dividends you receive can be reinvested easily – Many of the shares your fund invests in will pay out dividends. These dividends represent profits the company has made. When a company declares a dividend, the fund you are invested in will receive money. You can have your account setup so that the dividends get automatically reinvested, or you can select to have them paid to your transaction account. Reinvesting your dividends is a good way of building your portfolio long-term.  

Fund performance is updated daily – When you log into your account, you will be greeted by the performance of your portfolio. This is updated daily and you will be given a total valuation of your portfolio, as well as individual performance of each fund. You can see details like increases or decreases in value from the previous day, monthly and yearly returns.

The transaction account does not accrue interest – The transaction account is intended to be used to make investments into managed funds, make withdrawals following fund sales and for any other payments. InvestNow receives the interest on any money held within the Transaction Account, which helps to pay costs associated with offering and operating InvestNow.

InvestNow does not provide financial advice – InvestNow simply provides the service to invest with and any material that goes along with the fund. If you need any investment advice, it is best practice to find an independent financial advisor.

You can cancel orders – InvestNow lets you cancel a buy or sell order up until 12pm of the business day in which you placed the order. If you have placed an order on a non-business day, you can cancel the order up until 12pm of the next business day. You cannot amend an order, so you will need to cancel a pending one and create a new one.

After signing up, you will need to wait a couple of days before you make your first investment – Signing up for InvestNow is easy, even for the most inexperienced investor. You will need to set up your login details first and then complete your registration by entering your personal details. InvestNow will have to verify your ID and other details. Once your account is open you will be able to transfer money into your transaction account and start investing.

You Need A Budget (YNAB) Review 2019

Welcome back to another quality review. Now, today I’m gonna be talking about something that, it isn’t really an internet marketing product as such, but it is a product I use every single day without fail, really, and it all ties together because obviously if you’re doing internet marketing, unless you’re just doing it for fun and literally just for the fun of it, you’re going to be doing it because you want to make money. I mean, it’s all about making money online, and part of that process of running a business, it’s all … Something that people tend to forget about, I guess, is the whole business of trying to actually maximize your savings, trying to be smart with your money.

Too often, especially in the sort of affiliate marketing side of things, you see products that are advertised on the basis of, I guess, very heavily they’re advertised around “make loads of money and spend it all on fast cars and first class flights and expensive electronics and all that kind of thing.” I can remember right back to when I first started doing affiliate marketing, guys like Rich Jerk, I think was one of them. He was pretty famous for promoting that kind of thing, and yeah, affiliate marketing, especially, and to a large extent, internet marketing in general – anything from doing Shopify, drop shipping from Aliexpress, selling services on places like Fiverr or Source Market or any of those kind of things – we’re all doing it for a reason, and that reason’s to make money; no one’s really doing it just for the love of it, or at least I wouldn’t believe anyone who said otherwise.

What Is You Need A Budget?

What I’m reviewing today is a product called You Need A Budget. This is a really, really popular piece of software. As the name implies, it’s all about budgeting and personal finance, and it’s a subject that’s really interesting for me. I can remember when I was a little kid, probably about maybe 12 years old, I actually got into reading some sort of personal finance books. I was pretty strange as a kid. I never really liked fiction books particularly much. I always would read from my dad’s collection of nonfiction books and he had heaps of them. Way too many of them, in fact.

Still to this day and age, I’m still exactly the same. I hardly ever read fiction. Last time I read a fiction book was when I had to for school, so anyway, I got a start being interested in personal finance when I was a kid and You Need A Budget is sort of like the next evolution. It’s gone from just being books about finance to software that can really help you actually improve your finances. I’m reviewing the new version of You Need A Budget for a very simple reason. I’m reviewing it because it is a software that I use every single day. That doesn’t mean you need to stop reading. I haven’t said whether or not it’s actually worth using. I just want you to know it is something I use every single day, and I think it would be relevant to anyone who wants to manage their finances properly, especially people who work for themselves.

If you run a little freelancing business or consulting business or affiliate marketing business or anything like that, compare to people who earn all their money just through salary or wages, your cashflow can sort of peak and trough, and this is pretty stressful. Sometimes you do really, really well and you have loads of jobs or orders or sales come through at once and you’re wash with cash and then the temptation’s there to go spend it all. Then three months later you lose a couple of clients or one of your sites gets penalized by Google and it drops off the rankings and then, “Oh shit, I don’t have enough money to pay for rent this month,” so I think using a product like You Need A Budget can really, really, really help with this kind of problem.

Anyway, let’s kick off with the review. What does You Need A Budget do? Well, You Need A Budget, and I’m gonna call it YNAB as well, because that’s the common abbreviation for the product, especially amongst users. As the name implies, it’s a budgeting software, but it’s a budgeting software with a difference. Firstly, it’s designed around being easy to use. Some of this budgeting software I’ve used in the past, I can remember, like back in the day, Microsoft Money for example. It was pretty terrible stuff, really, and I didn’t much like using it at all. Obviously I was quite young at the time, so I didn’t really have much money. Now I’m a bit older. I’ve got more to play with, so it’s important for me to manage my finances, so You Need A Budget basically is a software that is aimed at helping you to maximize the efficiency of the money you have available to you. In that process, the biggest goals are getting your spending under control and maximizing your savings rate.

Who is You Need A Budget For?

YNAB is really for anyone who earns money and who wants to maximize the value they get out of that money, really. It’s not a sort of “get rich software” or anything like that. It’s really quite heavily focused around ordinary people, finding ways to be creative and smart with managing their money and creating a plan and sticking to it. That’s a sort of philosophy that really appeals to me, so why would you want to buy it? Well, I think you’d want to buy it if you have any interest whatsoever in becoming better with money.

Basically, YNAB is going to give you a system, or claims to give you a system that makes it easier to manage your money effectively and get good results from savings and things like that, and what I’ll do now, normally I’d dive straight into the product details, but what I’m gonna do instead is actually talk a little bit about the sort of philosophy that YNAB runs on. I think it’s important because it’s not just a super conventional piece of software. I’ll talk about this for a bit and I’ll try not to get too long-winded, but I think understanding the philosophy behind YNAB is really simple.

The YNAB Philosophy

The biggest thing to understand about it is it’s not really a backwards looking software in many respects. When you use the software, you do track your expenditure but at the most basic level, you load up the money you’ve got now, you load up money you owe on your credit cards, for example, or car loans, or student loans or whatever. I try to basically only spend what I’ve got, avoid using credit. I do use credit cards, but only for the points. I never buy anything I can’t afford, but obviously there are loads of people out there who do, and if you do have higher purchases or outstanding credit card balances that you run month to month and you’re trying to cut it down, well, YNAB is equally as valid for you.

Basically the way to think about it is it’s almost like a software version of what some people call the envelope system of budgeting. Imagine you have on a table in front of you, you’ve got a bunch of different envelopes and one of them is labeled “rent” or “mortgage,” depending on whether you rent or own your house, one of them is labeled “car bills,” so fuel, insurance, maintenance, whatever. Another one’s labeled “groceries” for your food shopping. Another one’s labeled “entertainment” and from that entertainment wallet, envelope, you can sort of go out to the movies or buy clothes or whatever, and basically what you would then do is say you’ve got those four envelopes, those four basic ones, obviously you’d probably have more in real life.

Then, imagine you’ve got a thousand dollars and that thousand dollars has got to cover those four categories for the coming fortnight. You’re paid a salary once a fortnight like many people are, so you say, “Okay, I’ve got a thousand dollars here. I’ve got four categories. I’ve got to divvy it up.” Well, my rent payment is … I live with a housemate. I pay 300 dollars a fortnight so I have to put 300 dollars in that rent envelope. Now my car, I drove a lot. It costs me roughly 200 dollars a fortnight all up, all expenses, for payments or fuel or insurance or maintenance or whatever. Then you eat a lot. You just love eating, so you think, “Okay, well I spend 150 a week on groceries. That’s 300 a fortnight,” so what is that? You put that in the envelope and suddenly you’ve got another 200 dollars left, so that goes in the entertainment envelope.

That’s your money set up for that fortnight across those four categories, so if you go to the grocery store to buy your groceries, you take that envelope with you and you know that all you’ve got to spend on groceries for that fortnight is 300 dollars. With those sort of key expenses, that sort of stuff is actually fairly easy to keep track of in my opinion, even without a software like YNAB. Really, the philosophy is you’re creating digital envelopes instead, and you can be a lot more granular with it. You can have a digital envelope, or as the software calls it, a budget category for things like insurance or you could break it down to medical insurance, car insurance … I’ve got pet insurance, for example.

The whole point is what you’re doing is from the second you start using the software and as you start bringing more money in through salary or investment income or whatever, you’re allocating that money to different virtual envelopes. You’re giving it jobs. That’s a term that the YNAB people talk about a lot, is giving money a job, so you say, “This 500 dollars I got yesterday from selling an old computer on eBay, I’m gonna give that money the job of paying for my groceries for the next month. That thousand dollars I got in salary payment today, I’m gonna split that. 700 of it’s going towards my mortgage and house upkeep for the next fortnight, and the rest is going to go to entertainment,” and so yeah, basically that’s the sort of the core of how the software is built around, really. This idea of taking the envelope budgeting system and making it digital and now cloud-based with the new version of YNAB.

The reason you’d want to use this budgeting system is actually really simple. What it allows you to do is when you go to spend money, you know what’s in the envelope. It’s not like you’re looking at a pool of money. I guess here’s a way to think of it. You go to the shopping mall on a Saturday afternoon and you walk into a video game store. You like to play PlayStation, so you walk into EB Games and there’s the newest Star Wars game sitting on the counter and you think, “I really want to buy that. It’s 100 dollars.” You pull out your phone, you check your bank balance. “Oh, awesome, I’ve got 500 dollars in my bank account to last me until next Monday. Plenty of money, so I’ll buy that.”

You’ve now got 400 dollars in your bank account, but then you get to the next day and you suddenly get hit with your insurance payments and then you’ve gotta pay groceries and then you’ve gotta pay rent and suddenly you don’t have enough money left in your account, and that’s because what you’ve done is you’ve made the mistake of just saying, “I’ve got this big swimming pool  of cash,” or in many people’s cases it’s more like a paddling pool. “I can afford something that’s less than that amount and it doesn’t matter what category of spending it comes from.”

Well, YNAB’s telling you to do the opposite. What it’s saying is if you’d set your system up properly, let’s say video games came under entertainment, which it would make sense to, and you had 75 dollars in your entertainment budget for that month, you get to the store and you go, “Oh, hang on, I don’t have 100 dollars. I’ve only got 75 dollars to spend on it,” even though you’ve got more money in your account than that 75 dollars.

You’ve got 500 dollars in there, but you’ve only allocated 75 of it to spending on entertainment, so you buy a cheaper game or you say, “I’ll wait til next month and I’m gonna be adding 25 dollars a month or 50 dollars a month to my entertainment budget, so next month I’ll be able to afford it comfortably.” Really, the whole philosophy behind YNAB is getting you into the habit of giving your money jobs, so allocating it to various types of spending, whether it’s essential spending or superfluous stuff like entertainment or saving up for a new car or whatever. You build up those categories month on month with the income you’ve got. Obviously income minus the expenses within those categories.

The whole point is to try and have no money not budgeted. They talk a lot in the training about making sure every dollar has a job, and I guess without actually using the software yourself, it’s a relatively hard concept to understand maybe. Hopefully I’ve done an okay job of explaining it. There is lots of information on the YNAB website about it as well, but I thought it was worth discussing the philosophy behind the software, simply because I think that without understanding the philosophy of why you’d want to use it in the first place and how it differs from just a spreadsheet that tracks your expenses …

We don’t have it here in New Zealand where I live, but Mint.com, I’ve heard people talk about and that seems to be a backwards looking expense tracker, so you get to the end of the month and you look at your Mint report and go, “Okay, last month I spent 300 dollars on takeaway coffees,” because you drink two a day from Starbucks. With YNAB, you probably wouldn’t get into that situation as long as you’re disciplined in the first place because you might only allocate yourself a hundred dollars a month for takeaway coffees. You think, “Okay, that means I can have a couple a week,” or whatever it would be per week in terms of five dollar coffees, so that’s really the difference.

There is an element of backwards looking transaction tracking to YNAB but really, the key of it is actually budgeting money for the future that you’ve got now and giving those dollars jobs and then when you’re about to spend money, checking. Do you actually have enough in your allocated budget category to cover the spending or if you don’t and you really need it there and then, can you divvy up the money you have budgeted some other way? Let’s say I’ve got 500 dollars in my entertainment budget for the month and I’ve got a thousand dollars in a budget that I’ve built up for car maintenance and my clutch dies in my car. I go and get a quote for 1,250 dollars to replace it.

Now, that doesn’t mean I can’t get the clutch done. What it would mean is that with YNAB I would say, “Okay, well look, I’ve got to have a car to get to work and get around and go to the gym and go see friends, so what I’ll do is I’ll actually take 250 dollars out of the entertainment category and put it into the car maintenance category.” Then I haven’t spent more than I had. That’s the key. You’re not then spending more than you have, because what a lot of people would do is say, “Oh, well I’ve still got 500 dollars to spend on entertainment. I’ve budgeted that much, but then I need to put the extra 250 dollar bill for the car over what I’ve got budgeted on the credit card or just overspend it and go into overdraft or whatever,” so hopefully that helps you understand that there is an element of sacrificing from various budget categories, especially nonessential, when it comes to using YNAB.

Now I’m going to talk through the benefits and the downside of You Need a Budget. So, we’ve seen what the software is, we’ve seen why you might want to use it, we’ve seen all the features and facts. Now it’s really time for the meat of things, that’s you’re looking at what’s good about it and looking at what’s bad.

Things I Like About You Need A Budget

So, I’ll start with the good points of the product, the positives of You Need a Budget. The first is that it’s very, very easy to use, really simple to get set up with, the only thing that’s tricky probably is getting your head around if you’ve got existing balances on a credit card, and how that works with the way the software is set up, but there is good training around that. I might even add a little bit of my own training to the website, just to make it easier for people to understand if you’re reading this review, but overall, easy to set up, very, very simple. You don’t need to be particularly proficient in computers to be able to use it.

Second benefit is, with this new version of YNAB, the cloud based version as opposed to the desktop only version, it’s really good that you can sync your data across your desktop, and your mobile phone, and everything like that. So you can sync your budget up using your desktop computer, which is a much nicer interface for serious work, but then when you’re out and about you can enter your transactions directly into the mobile app, and because it syncs the data as well, you can pull your phone out at the supermarket to see how much grocery budget you’ve got left for the month. So yeah, really, really good that you can basically use cloud power to have a very harmonious and synchronized experience with the software, that’s great.

Next benefit is the flexibility and power of the system, you can be as broad or as granular as you want when it comes to setting up your budget categories, that’s something I think is really cool. You don’t have to feel constrained by having preset categories, some people might want to have entertainment as one big category, and everything that would remotely constitute entertainment, whether it’s going out for dinner, or buying clothes, or going to the movies, or whatever that all sits under that one big category. Other people, like myself, might like to break it out into more distinct and numerous smaller categories, so for example, you would have a placeholder of entertainment, I showed that feature earlier, but underneath it you might have clothing, you might have going out for dinner or coffee, you might have movies, or video gaming, or whatever you want to do. So yeah, that’s one of the best things about the software is you can take the framework of it and work the way you want to work, which is really impressive.

And I think the final biggest benefit of it, actually I’ll mention one more before I continue, it’s very well priced. I mean what is it? About $60 a year, $50 a year? That’s just, yeah, you’ll save that in your first week of using the software, I almost guarantee it. So the price is so sharp, it would be worth it at ten times the price, honestly, it really is that good value I think, especially when you start using it consistently and seeing the benefits, which leads me on to my final point about what I love about YNAB, and that is just how effective it is. When you’re diligent with using the software, and following the philosophy of giving your dollars, or pounds, or whatever you use, giving your money jobs, and checking your budget in advance of making spending decisions, well you’ll see some amazing results in a fairly short space of time in terms of improving your financial situation.

It would probably take you maybe a couple of weeks to really start noticing a difference, after a couple of months, definitely. You get into the swing of using it, you get used to how it works, and you’ll find yourself going into a shop where once upon a time you might have said, “Oh yeah, I’ve got a bit of balance left on my credit card for the month, I’ll buy that pair of jeans.” Instead, you pull out your phone and you go, “Oh, look. I just don’t have enough budget to cover it.” If you really want them, and you’ve got some money sitting in another entertainment budget category, for example, that you might want to sacrifice, or you can divvy it up, but the best way to use YNAB is to be really consistent in saying, “If I don’t have enough money budgeted right here, right now to buy this product or service, then I won’t buy it.” And when you get into that swing of using it you’ll find that very quickly you start to improve your financial situation.

It’s not the silver bullet, I guess, that will make you a millionaire in the space of a year, really the only way you’re probably going to do that is to increase your income very, very significantly, but what the software is absolutely fantastic at making your relationship with better. If you’re an everyday person who earns a salary, or pulls some money out of your business, or anything like that. You don’t need to be earning a lot to see value out of it, in fact probably the less you earn, the more valuable the software is, but overall it’s absolutely fantastic, it’s well worth using, very, very easy, and cost effective and all those kinds of things, but of course it’s not perfect, so now I’ll talk through a few things that I don’t like about the software, and you can make your mind up for yourself.

Things I Don’t Like About YNAB

So the first thing I don’t like about it is that there are still some inconsistencies in the interface of the software, especially when it comes to dealing with credit cards, and these inconsistencies, or I guess bad design choices, or whatever you want to call it, can make the software hard to use on occasion. The credit card one is probably the biggest issue, it’s improved from the old version of YNAB, definitely, but still when you start your account, if you’ve got, say, a couple of credit cards with $150 owing on one and $500 owing on the other, you’re obviously starting off with a balance allocated against that, and just the way that it works with when you spend money on your credit card towards a category, like entertainment, you’ll get an equivalent amount of money jump over to that credit card as a payment allowance. So then you should know that come statement time you’ve got that pool of money sitting there to pay your recent spending off on the card in full, and I personally can’t speak to how well YNAB works with paying off debt on a credit card at a slower rate.

So, what a lot of people so, they’ll buy a TV and then pay a ruinous interest rate and pay it off over six months or something, I don’t do that, I pay every single thing off in full every month. So I think it would become even more complex in that situation, but yeah, definitely the way the software’s laid out around credit cards and working with them is a little bit tricky, it will take some time to get your head around it, but thankfully there’s pretty good training, so that will help.

The next thing I don’t like about the software is there are the occasional bugs, things not saving, or sometimes my phone version locks up a bit, but it’s not really too bad. For the price of the software, the relative complexity of it, because it’s cloud based, it’s pretty impressive to be honest, but yeah, there will be occasional bugs. And the final downside I can see is that, well it’s not so much a downside of the software, but it’s more a downside of people in general, but it’s only going to be worth it if you’re consistent in using it.

There is no way to justify using the software if you know you’re going to be the kind of person who rarely ever fills out transactions, you don’t actually bother checking your budget, or anything like that. It’s actually, if you think, “Right. That doesn’t really sound like me, I’m just inconsistent with the way I do things.” And there’s nothing wrong with that, that’s just a different approach to life. Well, don’t bother with YNAB because you just won’t get your money’s worth, but overall, as you can see, it’s a pretty small list of negatives for this product. Really the positives massively outweigh the negatives, which leads me onto the conclusion.

Review Conclusion

So now comes the really fun part of the review, the conclusion. This is the bit I always look forward to. I like working through the benefits and the concerns or the negatives of a product and all the features and facts, and this is the bit I really look forward to. Basically, making my conclusion and recommending whether or not you should buy it, and I think to be honest it’s been pretty clear from what I’ve said so far about You Need a Budget that it is definitely worth buying …

Look, even if you’re rich to be honest, even if you have a big salary or you make loads of money from your business or whatever, you can still benefit from managing your money effectively, and if you’ve ever read the classic book, I think it’s The Millionaire Next Door, it’s been a date now, but it is worth a reading. Well, worth your time to read I should say. And one of the things that book talks about is the fact that the reason rich people are often rich is not necessarily because they’ve had massive, massive incomes. I mean, obviously it’s a bit different if you’re a movie star making $10 million a movie or if you’ve got some sort of a high-end Wall Street banking job where you’re getting million dollar bonuses and things like that, but a lot of wealthy people they got there because they’re careful with their money.

They might have only earned a relatively modest salary or certainly not an outrageous salary throughout their careers, but they got to the point they did maybe by the time they retired or they retired early in their 40s or early 50s, and they might retire with millions in investments and cash on hand in property and things like that, and often, yeah, the reason they’ve done it is because they’ve followed a similar system to what You Need a Budget is teaching you to do. They’ve basically identified how they need to put their money to work to make sure firstly they don’t spend more than they’ve got because debt is pretty much what cripples you financially, and secondly that they can maximize the value of every dollar they earn.

I think, yeah, fundamentally YNAB is amazing as far as a piece of software goes that allows you to achieve this, and makes it easy to achieve this. It’s fast, it’s easy, it’s very well priced. It works on multiple platforms. It’s always being updated. There’s great training available. To be honest, it’s pretty hard to actually find a negative about it. The biggest negative for me being based here in New Zealand is that the software doesn’t work with automatic transaction importing from New Zealand financial institutions. That’s probably the most frustrating thing about it because you do have to be diligent at remembering to actually enter transactions, and the way to do that is to get set up with the mobile app. If you go to the café down the road for a coffee before work and you spend $5, just as you’re waiting for them to make it just put that $5 transaction straight into YNAB rather than sort of trying to remember at the end of the week, “Oh crap, what did I spend my money on?”

Obviously, with internet banking these days it is pretty easy to reconcile all of your transactions anyway and I basically have a habit of using the mobile app when I remember to, and then once every few days just going in and reconciling transactions and clearing them as well. So that works really well for me, but obviously it would be great to have the American style system where I could link up my credit cards, bank accounts, and all the transactions are pulled over automatically for me. That would make things a lot easier, but overall, yeah, there’s very little negative I can say about the software to be honest.

I think it is absolutely worth using. Certainly, within the last few months of using it very diligently. I had used it a bit in the past, the older desktop only version, and I had fairly slack habits to be honest with using it, and I didn’t see the biggest amount of value, but I’ve been consistently using YNAB now for a few months every day, been really diligent and not missing any transactions, and sticking to my budgets, and oh, man, the difference is huge. I’ve got a lot more spare money. It’s really helping with me budgeting for things I’ve got coming up like a wedding and hopefully buying a house not too far in the future and things like that. It’s just easy. That’s all I can really say about it. It’s easy and worth your while to use.

There are a few features I’d like to see added. The biggest one I’d like to see, as I mentioned, is like some sort of receipt tracking system that lets you take a photo of a receipt on your phone and then add it or store it on a cloud server, or even tie it in from a Gmail, sorry, Google Drive or something like that just so you could have it all your sort of financial information in one place.

That would be really helpful for like if you make sort of allowable expense purchases for your business and track those through YNAB. That would be really cool. I mean, you know, when you just flag a transaction with a red flag because it’s a business purchase on your personal credit card. Then you take a photo of the receipt. Then you could do an export at the end of the financial year or the end of the quarter with all that data in one place. That would be really, really handy to see, but it’s not a biggie. It would just be a nice thing. Even if you had to pay a couple of dollars a month for the storage, it would make things a lot easier because keeping receipts is a good thing to do and it’s something I want to get better at because I’m pretty slack at doing it. But apart from that, yeah, I can’t really fault YNAB I think.

Honestly, try it for 30 days, but be diligent with it. If you try it for 30 days and just muck around and hardly ever track anything and if you go out for a meal and you look at your account and you look at your entertainment budget and you’ve got $50 but you decide, “Oh, screw it, I’ll spend $150 anyway on drinks and dinner,” well, yeah, don’t waste your time because you do have to have some commitment and sort of nous I guess to make the most of the software. But if you are the kind of person who can commit to trying something and doesn’t mind waiting a little bit to see the results and updating it daily or least once every couple of days, well, I think you’re going to be pretty impressed.

I’m not going to say it’s going to make you a millionaire. Certainly, not overnight. It’s not a software that’s built around trying to help you make more income, which is why I was a little bit reticent to review it because it is a little bit outside the remit of what I normally talk about on this blog, but look, for anyone who earns money, which is pretty much all of us, I think the software is fantastic. I consider it an essential tool now. It’s as essential to me as having internet access or having internet banking or having a cell phone with me. Managing your money and being good with your money it really does improve your life.

You know, knowing I had a medical bill that I knew I was coming up, a consultation with a surgeon, and it was quite a lot of money for this very short visit, which is probably why they had a really nice car parked out in the sort of parking area of their practice, but that’s a sort of discussion for another day. But, yeah, it was good because I knew that this expense was coming up and I’d budgeted for it, so when it came along, yeah, it still sucked to have to pay it, but I wasn’t scrabbling for the money, and it’d be exactly the same thing if you thought, “Right, I’ll put $50 a month away for medical expenses,” and then you suddenly get hit with a couple of doctor’s visits. Well, yeah, you’re not having to sell your shoes and walk home in order to pay it.

So, yeah, you need a budget. Awesome piece of software. I use it every day. I highly recommend it. It’s cheap, it’s effective, it works, it will make you better with money if you’re diligent at using it. Go and try it for free today and buy it. It’s a game changer. Frankly, I think if you’re not using it, you’re not being as smart as you could be with your money!