YNAB vs Pocketsmith

YNAB vs Pocketsmith

There are many apps and services out there designed to help you to get a handle on your finances. Today, we are comparing two of the more established and popular subscription-based budgeting tools to help you get started and to help you take control of your finances.

The two contenders are YNAB (You Need A Budget) and Pocketsmith. YNAB offers education and motivation as well as a digital solution. This shows itself in YNAB’s continuous efforts to communicate its fundamental beliefs about the power of budgeting. In contrast, Pocketsmith puts the digital solution and functionality first. This shows itself in Pocketsmith’s efforts to involve users in its pipeline of development work by publishing it on Trello.

Which of these is right for you depends on whether you are looking for inspiration or a kick-ass functional spec. Both are powerful budgeting apps and this article compares the two to help you decide.

Budget Set Up

YNAB is simpler to set up because you only set up a month at a time. When that month runs out all your expense categories are there and ready to use in the same order for the next month. There is a quick budget offering which enables you to replicate the previous month’s budget expense categories. Pocketsmith set up is more involved as you set up many months (or years) from the start. This makes you consider whether you want a short or long timeline for your budget. A valuable consideration. For each expense category you can decide the start and end date and regularity.

Winner – Depends whether you want a short or longer-term budget.

Bank Links

Pocketsmith links very efficiently to my various bank, savings, mortgage and credit card accounts.

YNAB has no bank links outside of North America. I strongly suspect that I’m in a small minority of folks who quite like the engagement aspect of manually inputting transactions and reconciling the balances when the transactions clear.

Winner – Pocketsmith

Account Balance Treatment

In YNAB the account balances (Bank, Savings, Credit Card etc.) are treated subtly differently depending on whether you are in budget or account mode. In budget mode you see the starting balance of the account for that month, the aggregated activity for the month and the net of these two which is called the working balance. You ideally want a high working balance when looking a bank accounts and low working balance when looking at credit card accounts. In account mode you see the cleared and the un-cleared balance which again net out to the working balance. It’s not clear why the working balance is broken down in these 2 ways. I find the split between cleared and un-cleared balances more helpful. Importantly, YNAB believe that you should only budget for income as it arrives so there is no concept of forecasting your balance into the future. In fact it is actively discouraged.

In Pocketsmith there are several choices of balance display. You can display the bank feed balance and there is the choice to split this between your current or available balance. I prefer the current balance. Alternatively, you can display a scenario balance which is a forecast balance based on category budgets and a snapshot starting balance. This does not take into account transactions. This is useful if you are more interested in your forecast balance rather than reconciling transactions. This would be the case if your forecast is a roadmap of where you want your finances to be and you want to correct your course as you go along.

Winner – Pocketsmith if you believe forecasting is important, which I do.

Transaction Treatment

Disregarding manual vs automatic transaction input, YNAB has a more intuitive treatment of transactions. This is because all transactions are accessed from the accounts permanently displayed in the fixed sidebar. When you click on any of the accounts you see all transactions for that account. You can reorder by date and it’s easy to reconcile the transactions as they clear and easy to thereafter reconcile the account balance. In Pocketsmith you have to click on the accounts tab in order to access the transactions. Then you see all transactions unfiltered by account. To filter by acount you have to click on the hamburger bar and then the accounts link. Not great UX. Also I was a bit disappointed that I could not mix and match manual and automatic transaction input in Pocketsmith. I would have expected to be able to manually input transactions and when such transactions cleared and came through automatically (through the bank link) I would be able to approve which of the transactions to keep. However, this is not the case and you have to delete the manually input transactions.

Winner – YNAB

Category Allocation

When you manually input the transaction in YNAB if it remembers the payee it will remember the expense category and allocate accordingly. This is helpful as the category remembered is correct more often than not. When Pocketsmith does not use its rules engine to categorise transactions it tells you how many transactions you have to manually categorise. The category rules engine in Pocketsmith is very impressive. It allows you to adapt the keyword search for optimal efficiency. For instance, if your Uber transaction has a long string of reference identifiers you can cut out the variable reference data and just search on the word Uber to categorise future transactions. This works very well. I would recommend turning on the setting in Pocketsmith that forces you to check and approve all categorisations. A word of caution. Do not trust bank categorisation at source.

Winner - Pocketsmith

Monthly Rollover

In YNAB at the end of the month positive or negative category amounts roll into the next month. That’s what you would expect. However, you have to input all your budgeted expense categories again at the beginning of each month. There is a quick budget offering which enables you to copy the previous month’s expense category amounts. But the next month’s category amount may not be the same as the previous month whereby you would have to manually re-set to a different amount. There is no concept of a monthly rollover in Pocketsmith as you set up a longer-term budget at the start.

Winner – If you don’t mind more effort at the original set up rather than more effort at the start of each month – Pocketsmith

Monitoring

If you just want to monitor your actual vs budgeted spend YNAB is the poster boy. YNAB does not make any claims to monitor more than that. Pocketsmith makes hard work of monitoring your actual vs budgeted spend. Furthermore, Pocketsmith should make it easier to monitor your forecast balance amounts vs actuals. For instance, if I forecast that I was due to have a bank balance of £100 on 29th January and the balance came in at £40, I want to be alerted that that I am £60 behind my forecast and I’d like to be alerted as to which expense or income categories were responsible. This is where Pocketsmith should come into its own but struggles to make it easy for the user.

Winner - YNAB

Mobile Treatment

Pocketsmith only unlocks a tiny amount of its range of functionality.

YNAB service is more complete albeit that YNAB generally has considerably less functionality than Pocketsmith. YNAB’s mobile transaction input is very clear and easy.

Winner – YNAB

Customer Support

YNAB respond quickly to emails and answer your questions but understandably within the constraints of their system limitations. This means that they often reimagine your question so that they can answer within the scope of their 4 fundamental rules and their somewhat limited functionality.

Pocketsmith also respond quickly to email but seem to intuitively understand what you are trying to achieve. I have been introduced to many valuable aspects of the Pocketsmith functionality which I would have missed without customer support interaction.

Winner - Pocketsmith

Personification

YNAB’s founder Jesse Mecham drives YNAB’s promotion machine. He is personally involved in all aspects of social media touch points. These include podcasts, weekly whiteboard Wednesdays on You Tube and regular blogs. Getting to know Jesse through these channels makes you feel like you understand the heart of the company.

Pocketsmith’s Jason Leong is much more low key. It’s the Pocketsmith team that takes centre stage in the about section of their website. Jason does not promote the ethos or culture of Pocketsmith.

Winner – YNAB

Miscellaneous UX

There is no category search in YNAB. Also, there is no quick means of ordering your expense categories alphabetically without manually dragging each item.

I like the fact that you can apply some excel shortcuts to YNAB. An indication of the spreadsheet roots of the software.

Category search in Pocketsmith highlights the category name but does not transport you to the searched category, so you still have to manually scan up or down. In Pocketsmith you can automatically order expense categories alphabetically.

Winner - Draw

Miscellaneous Other

The reports in both YNAB and Pocketsmith are unhelpful for tax returns.

Pocketsmith offer a Trello link to allow customers to vote on the most useful functionality to work on next.

Pocketsmith allow you to have a combination of offline and online accounts. Offline accounts are useful if you want to include rarely used accounts.

Pocketsmith enable multiple scenarios so that you can model sets of potential financial decisions. I have not yet tested this.

Winner – Pocketsmith

Summary

YNAB Pocketsmith
Budget Set Up Draw Draw
Bank Links
Account Balance Treatment
Transaction Treatment
Category Allocation
Monthly Rollover
Monitoring
Mobile Treatment
Customer Support
Personification
Miscellaneous UX Draw Draw
Miscellaneous Other

The Winner – I use both but if I had to give up one I would give up YNAB and keep Pocketsmith because I believe in the value of forecasting. However if you are looking for inspiration to start budgeting and to stick with your budget YNAB is probably the better option for you.