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5 Tips for High-Income Earners Using YNAB


I’m a software engineer in Silicon Valley, and I’ve been using YNAB for two years. Since starting YNAB, I’ve managed to cut 20% of my monthly spending overhead and track my FIRE progress. I’ve found that no matter how much you earn, a budget is still useful. Those with large incomes might find their salaries become even more powerful with the intentionality and analysis that a budget can offer.

Without further ado, let’s dive in.

1. Split Up Your Income Streams

For those with multiple sources of income (salary, bonus, equity, dividends, etc), it can be messy to figure out exactly what money came from where. 

Treat Company Inflows Separately

If you have a W2 and take a salary + bonus and some equity, you’ll want to split up the income streams for tax purposes and trend analysis. I have my Payees set up like this:

  • [Company] Paycheck
  • [Company] Bonus
  • [Company] Equity
  • [Company] Reimbursement

Where “Company” is replaced by the various businesses that I’m working with.

Give Credit Card Rewards a Single Payee

Some of my credit cards offer cashback services. While this is technically income, I don’t really want tiny transactions of $20-$50 cluttering up my income list on the reports tab. I created a  “CC Rewards” Payee to lump them all together.

Track Dividends By Reconciling 

Personally, I don’t track dividends. If I want to see the breakdown, I can check my 1099 or account reporting services.

Instead, I have my investment accounts set up as “Asset” tracking accounts and I reconcile the account every month or so. This saves me tedious work while still giving me the data points I want to see.

2. Add a Category for Reimbursements

When I travel for business, I put everything on my personal card (for the credit card rewards), and then later I file expense reports. 

To track this, I created a “Reimbursable” category. When I file the expense report, I mark the transactions with a blue flag, and then when they clear I mark them green to indicate I’ve been reimbursed.

Learn more about using flags in your budget.

screenshot reimbursement
I use blue flags for expense reports that have been filed and green flags once they’ve been reimbursed.

In the screenshot above, we can see that I’ve been reimbursed for my $200 purchase from Amazon (green flag), I’ve filed my Delta $300 charge (blue flag), and still need to file my Hotel expense (no flag).

To check the status of any of my reimbursable expenses, I simply go to All Accounts, filter by my Reimbursable Category and then click the top right checkbox to get the Selected Total (in the top right). As long as it’s zero, I know that I’m all clear.

reimbursement all txs
Searching for my Reimbursable Category in All Accounts shows the status of each one.

We can see from the Selected Total in the top right box that the company still owes me $800, as expected.

3. Find the “Just Right” Amount of Categories

It’s always a trade-off of how granular you want your data to be, versus how useful the reports are. My personal rule of thumb is no more than 12 category groups, and no more than 12 categories within each group. In my opinion the ~150 category slices should generally be enough no matter how complex your life is. If you’re approaching this limit, you’ll probably want a separate budget (such as to track your business / investment property that’s causing all those extra categories).

Read more about refining your budget categories.

In my budget, you can see that I only have nine top level groups, and at most nine categories inside my Monthly Recurring section.

top level groups
I have no more than nine Category Groups in my budget.
monthly recurring
I try to keep no more than nine Categories in each Category Group.

Group Naming for Simplicity

Ditch the Amazon, Costco, or Target category. Split it up into Household Supplies, Fun Money, or whatever it is. If you want to know how much you spend on Amazon, you can simply do a search by Payee. Why duplicate the information?

Give Each Vacation a Category

I have a Category Group called Travel, and I list each vacation as a Category following the “Location (Date)” format—for example: Roadtrip (9/21). This is useful for both trend and historical analysis. This way you know how much your week in France costs if you go again, or if a friend asks.

For upcoming trips, I’ll set aside $500-$750 each month in a Category called Next Trip, and then roll that into a specific trip once it’s planned.

I found this range by looking at my prior year’s reports for the Travel Category. I saw that I took three trips and they cost me $6,000 total, so after dividing by 12, I know I should put $500 aside each month this year.

It’s important to point out that there are three ways to “slice” transaction data. You can slice by: 

  • Payee
  • Category
  • Hashtags 

If the hashtags surprise you, let me explain. You can set all of your plane tickets as “#airfare”, and then simply search for “#airfare” in 2019 to know how much you spend. 

Learn more about using hashtags in your budget.

Set Goals for Everything

I strongly recommend setting goals on EVERYTHING. If your target seems off, you can just check the historical spend and update accordingly. I have oddly specific goal numbers set on all my categories, because I know that I historically spend $437 on food or $161 on gas.

This also makes it really easy to use the quick budget options and auto budget your paycheck into next month.

Set Up a Financial Independence Category Group

If you’re pursuing FIRE, I’ve found it very useful to set up a “Financial Independence” group with the following categories:

  • After Tax 401k
  • Stock Investing
  • Real Estate
  • IRA

By having all of these categories under one umbrella, I can easily toggle them on and off in the reports. For example, typically when viewing the YNAB Toolkit “Income vs Expense” report, I turn them off, so that I can see my true cash flow. When I check my “Spending by Category” report, I turn that group on so that I can see what percentage of my income is being spent on Financial Independence. 

My goal is to set aside at least 50% of my post-tax income. With one simple click I can see that right now, I’ve only saved 43% of my post-tax income. This is highly useful for FIRE projections.

For those of you interested in FIRE (Financial Independence / Early Retirement), check out Beyond Rule 4. This is a YNAB API integration created a few years ago by a YNAB user. All data is client side and never leaves your computer. This tool allows you to map out your expenses and project when you will hit various FI milestones.

4. Set Up Separate Budgets for Businesses and Rental Properties

If you have income streams from businesses or rental properties, you can set up separate budgets within your YNAB account. You only need one YNAB subscription, but you can have multiple YNAB budgets (learn how!). 

You can have one for a rental property, your business, side hustle, etc. Money moves easily between them by setting up payees such as “Business A” or “Property B”, and outflowing money from your personal budget into them for investing, or taking a “salary” into To Be Budgeted if you are withdrawing money for personal use. This also makes it a ton easier for accounting.

5. Analyze Your Financial Situation Regularly

I believe that as a high earner, it is even more vital to you that you take some time every single month to sit down and analyze your financial situation. It’s all too easy to play catch up with the Joneses, or spend way more than you expect on Uber/Postmates/Magic/etc.

Every month, take a look at the following reports:

  1. Net worth: It’s important to know if you are trending up or down. It doesn’t matter how much you have, but what matters is the trajectory. I onboarded a person to YNAB who was earning 3x what I do, but her net worth graph ended up being completely flat.
  2. Spending by Category: As mentioned earlier, the most useful data will be the percentages spent on each category group. If your “Financial Independence” is sub 15%, that’s a signal. If your “Just for Fun” group (Bars, Uber, Parties, etc) is 40%, that’s a signal. Again, the goal here is to get data.
  3. Income vs Expense: This is a great detailed breakdown of where the money went. Rather than track down individual transactions, it’s really useful to eyeball any standout numbers. For example, in April I had a giant outflow due to taxes. That’s expected. However, if I’m seeing increases in my “Grocery” budget, that’s a signal.

Use this analysis time as a pulse check. It’s OK if 1-3 months are not looking great. However, if you are forming a new trend in the wrong direction this will help you catch it.

More information in this video that I found a few weeks ago.

Onwards and Upwards

YNAB works for many different people in all sorts of situations. You may be a high earner with no debt and think a budget isn’t helpful to you, but with YNAB you’ll have access to easier reimbursement tracking, income analysis, FIRE projections, and so much more. Remember to check your budget often: with good data, it’s easier to make good financial decisions and reach all of your goals with ease!


Ivan is a software engineer in Silicon Valley, with an interest in personal finance. In his spare time, he likes to read books, work on his blog, plan adventurous vacations, and go on bike rides.