One of the miracles of YNAB is Rule Two: Embrace Your True Expenses. Annual subscriptions are great examples of true expenses. When you’re following Rule Two, you put away one-twelfth of the annual expense every month. When the bill comes due, the money is waiting. In my life, these bills are often autopaid and easily forgotten. So when the payment comes through and I see the money in the budget I am thrilled.
When you buy a new annual subscription, you’ll want to find the money in the budget, of course. And then there’s an important second step: Set a target for the renewal.
Personally, I like to separate out my individual subscriptions. In our personal budget, we have two subscription-related category groups: Computer Subscriptions and Other Subscriptions. Within each are individual categories. I prefer that over a single category with a lump sum because it makes it easy to see where the money is going. And it makes it simple to excise a subscription in YNAB and see the benefits.
So if we started a new computer subscription (perhaps a new cloud backup service), I’d create a category in that group, categorize the transaction into that category and find the money to cover it. Then I’d set a Refill Up To target with the due date a year from now and let YNAB do its magic. (Hot tip: This is the way to handle your YNAB subscription so you can save money by subscribing annually rather than monthly.)
This is great for new subscriptions and it’s also great for surprise renewals. Setting that target after you find the money in the budget for the initial charge is the key to a smooth financial life. Just another reason I love YNAB!
Leave a Reply