In the previous article, I explained you how we shared our expenses on a pro-rata basis with Mrs. MP, as well as the creation of our first joint account.
The next step was the transition to a small piece of software that we still use today. Just so you know, thanks to it, our wealth went from CHF 50'000 to CHF 380'000+ in 5 years!
YNAB
I fell in love with the concept of financial independence in 2013. Every morning while waiting for public transport in Yverdon, with a smile on my face, I imagined myself watching people get on the bus or train for a new 9-5 ride. As for me, I stayed on the platform until the commuters left. Then, I went for a walk on the shores of Lake Neuchâtel the rest of the morning to fully enjoy my financial freedom.
My daydream stopped when the bus driver asked me for my ticket…
In order to make this dream a reality, the first thing we had to do was to have visibility on our money.
After searching the web looking for the perfect solution, I came across YNAB (aka “You Need A Budget”). We never went back.
The first step I took was to create a budget for our common finances. The goal was simple: never have any more surprises with invoices. YNAB allowed us to achieve this objective since all invoices were planned (including annual ones) and money was set aside each month to pay them. The software even allows you to change plans along the way when an expense is unexpected thanks to a system where you can transfer money between categories. Really great!
Ouch, did you see that -7'141.50 CHF in your MP budget?! Don't worry, everything's under control! We had a big unexpected expense and we're waiting for our salary to regulate it but I wanted to be transparent to show you the usefulness of the thing: a flashy red thingy that begs me not to spend anything until the situation is resolved!
In parallel with this common budget, I had created another YNAB budget for my own finances in order to start saving for my dream of financial independence.
I see this transition as if we had gone from a company without accounting to one with an accounting department. It seems inconceivable to any entrepreneur who reads these lines, but in the end it all comes down to the same thing. If you’re in deficit in your personal life, it becomes the same mess when you go bankrupt with a business.
“Enter each transaction by hand, really…?”
One of the key points of YNAB is that you have to enter each transaction (they have a great mobile and web app for that).
At first, Mrs. MP was a little very reluctant to have to enter each expense by hand.
In a way I can understand it because it’s not really something fun. Nevertheless, I still find it good because it allows us to consciously realize what we spend rather than just draw a credit card and not think about the fact there is really cash getting out of our fortune…
Side info: there is a feature to automatically import transactions from your bank. The YNAB team regularly adds new financial institutions, but at the time of writing, the option is still not available in Switzerland, but it will soon be available.
Nevertheless, as with any friction in life, it is quite easy to overcome it if you have a sufficiently motivating objective :) It’s one of my secrets if you want to convince your half!
In our case, what convinced Mrs. MP to play the game was our common goal to buy our apartment in Switzerland.
You can cite us as an example, and mention that we were able to buy our apartment a year in advance thanks to YNAB!
Our setup
At the time, we had a separate YNAB budget for:
- Our common budget
- Myself
- Mrs. MP
As my SO did not envisage that financial independence was something possible, she wasn’t regular with the use of her own YNAB (it took 2 years for that, but it’s for the next chapter of this series).
I must also be completely transparent: this transition to YNAB did not happen overnight. Like we didn’t install the software and then boom, no more stormy discussions all at once.
The quiet sheep by the river that remains in its bed is like me and my budget: imperturbable, everything is under control :)
On the contrary, there have been new tensions about being “limited” by a budget. But the advantage of this application was to provide us upstream with the reason why we shouldn’t make this or that expense.
An example: Mrs MP who proposes a movie night at the end of the month; we check YNAB who tells us that we no longer have cash because we have the quarterly electricity bill that will arrive the following month.
As you will have understood, the key was (and still is) to be informed before the expenses were made. And avoid the “Oh damn, I forgot we had this invoice… and here I am again in trouble this month…”
Next step
In summary, from 2013 to 2015, our common finances have improved significantly with more and more savings thanks to all the optimizations we have made, and less and less bad surprises.
But at that time I had the impression that we were not giving ourselves every chance to achieve this objective of financial independence. It was mainly because we still had half-separated finances.
As a result, it wasn’t ideal to support such a common life project. Because no, I don’t imagine being financially independent on my own as that would mean that if I want to do 1 month of roadtrip in South America, I would do it alone. Inconceivable with my vision of the couple.
So I undertook the project to put all of our money into a single YNAB family budget. Easy on paper, much more complicated in practice when you are in a relationship. I will give you all the keys that allowed me to do this in the next article in this series.
Note 1: Would you be interested in a YNAB tutorial “Made by MP”? I had some requests for advice via email, but if there is really a lot of interest, I could imagine doing a small series. Let me know through the comments.
Note 2: I’m finishing reading “Sapiens : A Brief History of Humankind”. I’ve been hearing good things about it for a long time. And I can confirm, it’s a masterpiece! If you are interested in better understanding where our current world comes from (e.g. the origins of capitalism), and being more open-minded in general, then this book is for you. I’ll prepare a little review as usual.
