We have all skilled that exhilarating second if you attain into your pockets and pull out a present card, proper? It is like holding a little bit slice of monetary freedom in your fingers. The probabilities are limitless, and there is an simple sense of pleasure realizing you could 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 option 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 reward playing cards, each designated for a selected goal, with out the worry of overspending or dropping observe of your funds. Welp, that is YNAB’s Rule One in a nutshell.

Whenever you observe Rule One: Give Every Dollar 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. Whenever you take your youngsters 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 selected goal. With a present card, it’s restricted to a selected retailer. 

And there are a variety of advantages to this. Reward playing cards provide you with crystal-clear readability, wholesome limits, and freedom to spend with out guilt. YNAB permits 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 Instantaneous Readability

Let’s discuss an financial time period that describes why cash is helpful. 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 or asset that may be exchanged for one more of the identical kind. When it refers to cash, it means any greenback is simply as helpful as some other greenback. They’re the identical. When 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 helpful as some other, we will use them to make the change of products and providers a lot, a lot simpler. 

So fungibility is a superb factor, but it surely additionally makes it tougher to make spending selections. You should utilize $100 to purchase ANYTHING value $100. It’s straightforward to turn into paralyzed by choices, as a result of there are such a lot of prospects. What’s good a few reward card is it removes the fungibility. As an alternative 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 an area therapeutic massage parlor, you immediately know you’re going to spend it on a therapeutic massage. No second guessing.

This is the reason we prefer to get individuals reward playing cards as a substitute of simply giving them money. Whenever 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 all the things. However a present card for one thing extra particular exhibits you have been extra considerate. 

Utilizing YNAB offers you an identical readability for all of your spending. Whenever you allocate $500 to your grocery class, it’s form of like shopping for your self a $500 reward card to the grocery retailer. You not should make any selections about that $500. You realize you’re going to spend it on groceries. 

Reward Playing cards and YNAB Assist You Set Spending Limits

That brings up one other good thing about reward playing cards that YNAB replicates completely. Reward playing cards additionally assist you to set a spending restrict.

Going again to our $500 grocery class—now, if you choose 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 precisely why Starbucks is (very arguably) one of the largest banks in the world. As of April 2023, their wildly standard 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 keen 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 individuals should plan their spending. Starbucks prospects load cash of their app or purchase reward playing cards largely to allow them to determine and implement a specific amount of spending on espresso inside a specific time interval. That’s one other enormous good thing about reward playing cards. They assist you to restrict your spending.

YNAB fulfills this want completely with out having to provide an interest-free mortgage to one of many largest firms 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!)

Reward 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 particularly. Whenever 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 assume is frivolous.

That’s why it’s such a pleasure to provide a present card to a very selfless individual. You realize your mother loves pedicures, however she by no means needs to spend cash on herself. When you purchase her a present card for a pedicure, you ensure she’ll spend it on one thing she enjoys. 

So if you set cash apart in a enjoyable spending class in YNAB, you’re giving your self the identical reward. Whenever 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 some 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 deliver 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 at least one retailer and actually want you would use that cash someplace else? Possibly you’ve even wished you would convert a present card to money so you would 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 Methodology is you could change your cash plan at any time for any cause. The cash in your YNAB classes continues to be cash in any case, and which means 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. When you overspend on a spa reward card on your mother, you’ll be able to swipe some money out of your leisure class. No drawback, no fuss. As long as you weigh the tradeoffs, you’ll be able to change your plan everytime you need. 

That implies 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.