YNAB BLOG

Deconstructing ‘Available to Budget’: Clarity on One of Your Budget’s Most Important Numbers

Listen, I realize it’s not the most scintillating headline. I’d love to be able to use something along the lines of “Pics of Britney Spears’¬†Chihuahua Entering Rehab – Again!” But sometimes we just need to slow down and make sure you’re clear on some of the nitty gritty points of your favorite budgeting software. So stick with me.

Yesterday Jesse and I were discussing different aspects of the YNAB interface, and I mentioned how useful I found the “Monthly Header” – which is what we call the area above each month’s budget. The main feature of the header is ‘Available to Budget’ – the number of dollars in your budget that haven’t yet been assigned to a specific category.

Jesse’s reply was “I’m afraid the header confuses the heck out of most people – they don’t know how we come up with ‘Available to Budget,’ and they don’t know which of their actions affect it.”

Jesse’s comment reminded me that I’d quit YNAB a couple of times due to confusion about ‘Available to Budget.’

If that’s you – if you find ‘Available to Budget’ confusing – I have two pieces of advice:

1. Attend one of our live classes (and/or review the very thorough Quick Start Tutorial).
2. Read on to find out how we determine your ‘Available to Budget.’

Dollars Enter the Budget

$1,000 enters my budget through my checking account.

Click to enlarge.

$1,000 enters my budget through my checking account.

‘Available to Budget’ Reflects the Inflow

The $1,000 inflow gives me an 'Available to Budget' of $1,000.

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The $1,000 inflow takes my checking account balance to $1,000. In the ‘Available to Budget’ area above May’s budget, you’ll see the $1,000 reflected as ‘Income for May’ – which takes my ‘Available to Budget’ to $1,000.

Dollars Are Assigned to Categories

After allocating $900 of the available $1,000, my 'Available to Budget' number goes to $100.

Click to enlarge.

I assign $900 of the $1,000 to various categories in my budget, leaving me with an ‘Available to Budget’ of $100. Normally, I’d assign every available dollar to one of my categories; I’m only leaving $100 available to budget for the purposes of the tutorial.

See how my checking account balance didn’t change? That’s because account balances only change when money enters or leaves the budget (usually in the form of income or expenses).

Assigning ‘Available to Budget’ dollars simply moves them around within the budget – which is why account balances are unaffected.

You’ll notice I’ve updated some of my category names to show the typical amount for that category as well as the day of the month they bill is due.

Spent Dollars Leave the Budget

$50 leaves my budget (through my checking account) to pay for my home internet connection. This reduces my checking account balance and my 'Internet' category balance, but does NOT affect my 'Available to Budget.'

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$50 leaves my budget as I pay my home internet bill. I record the transaction on my checking account register.

Current Month’s ‘Available to Budget’ Unaffected By Normal Spending

5-a-budget-with-internet-paid-and-still-100-atb

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The $50 outflow reduces my ‘Internet $50 (21st)’ category balance to $0 and lowers my checking account balance to $950, but does NOT impact my ‘Available to Budget.’

Two Options for Dealing with Overspending

6-a-budget-with-22-overspend-popout

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Another $72 leaves my budget when I pay my electric bill. My checking account balance reflects the outflow, and the ‘Electricity $50 (17th)’ category shows a negative balance of -$22.00 because I’ve overspent in that category.

Here’s the important part: May’s ‘Available to Budget’ number still hasn’t changed. If you click on a negative category balance, YNAB gives you two options for handling overspent money:

  • I can subtract it from next month’s ‘Available to Budget’, or…
  • I can subtract it from next month’s category balance.

To keep things as simple as possible, I’d recommend choosing the default – subtract the money from next month’s Available to Budget.

This Month’s Decisions Affect Next Month’s ‘Available to Budget’

7-a-june-atb

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Clicking over to my June budget, I can see how June’s ‘Available to Budget’ is impacted by May’s decisions:

I have $100 ‘Not Budgeted in May’ and $22 ‘Overspent in May,’ leaving me with $78 ‘Available to Budget’ in June.

Ideally, I’d like to get June’s ‘Available to Budget’ to $0 – reducing the opportunity for confusion later on.

Cover Overspending with Available Dollars

8-a-may-atb-78-after-covering-elec-overspend

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My first step is to go back to May’s budget and budget an extra $22 in the category called ‘Electricity $50 (17th).’ This takes my budgeted amount to $72 – which matches my $72 outflow.

Up in the ‘Available to Budget’ area, ‘Budgeted in May’ jumps by $22, which reduces May’s ‘Available to Budget’ to $78 – because I’ve assigned those $22 to cover the overspend in my Electricity category.

If I didn’t have any dollars ‘Available to Budget,’ I’d have either allowed the overspend to roll into June (which is part of a realistic budgeting method), or I’d have taken available dollars from another category to cover the overspend in my Electricity category.

(Again, notice how these moving money within the budget doesn’t affect my checking account balance.)

9-a-june-atb-with-no-may-overspend

Click to enlarge.

Going back to June’s ‘Available to Budget’, the ‘Overspent in May’ has gone to zero, and the ‘Not Budgeted in May’ has dropped to $78, leaving June’s ‘Available to Budget’ at $78.

Getting ‘Available to Budget’ to $0

10-a-may-atb-budgeted-to-0

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Because I want to give every dollar in my budget a job, I (arbitrarily) allocate the remaining $78 to my ‘Phone’ category, increasing my ‘Budgeted in May’ to $1,000 and taking May’s ‘Available to Budget’ to $0.

11-a-june-atb-after-budgeting-may-atb-to-0

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With no unassigned dollars and no overspending in May (and no income yet for June) my June ‘Available to Budget’ also sits at $0.

You’ll also notice how I have positive balances in several categories of June’s budget, but those positive balances don’t affect June’s ‘Available to Budget.’ Why? Because those dollars already received their jobs, and now they’re sitting in their respective categories waiting to be spent.

Hopefully this tutorial gives you some insight into how YNAB determines your ‘Available to Budget’ number.

As always, the education team is ready to support you with free live classes, and your questions are always welcome in the YNAB community forums.

16 Responses to “Deconstructing ‘Available to Budget’: Clarity on One of Your Budget’s Most Important Numbers”

  1. Patrick

    Well done. It does take a little practice to get it down.

    Reply
  2. Tom Bushaw

    I found this a very nice explanation. I tend to shuffle money between categories in the current month to cover overspending (when it happens), rather than carry it over too the next month (I don’t like seeing “red”), but it’s good to hear that either is an acceptable practice. I suspect there may be times when the budget is so “tight” that the in-month-shuffling may do more damage than good…

    Reply
    • mark

      Yup – the 4 Rules don’t care much about how you deal with your overspending, just that you officially acknowledge it with your budget.

      Reply
  3. Emma

    Thank You. I am still new and trying to learn everything I can.

    Reply
    • mark

      Hi Emma – welcome to YNAB! It will change your life. If you ever feel confused or discouraged, make sure you tap into any of the support channels: the forum, the live classes, and the tutorials.

      Reply
  4. BarossaOzMudgy

    Since reading your Monopoly Money post last , I realised that I have been breaking Rule 1 without even realizing it too. After 3 years using YNAB, I thought things weren’t improving because of moving to bigger house and less income due to second bub, but I can now see it more clearly after only budgeting based on the income we currently have, not for the whole month as a forecast. So glad I caught that post. But I was just about to request an explanation on the ‘monthly header’ and here it is. If it is included in a specific class or tutorial, please let me know so I can watch it – if it isn’t, I would suggest adding it.

    Reply
    • mark

      Thanks for the feedback, Barossa, and glad you’re finding the posts helpful. You can find a pile of helpful tutorials by visiting our Support page and scrolling down to “Help Topics.”

      Reply
  5. Nathan Hittle

    This article was very helpful to me – Thank you. One idea that I have for your software is something like a “transfer from category” or soemthing like that so that you can keep track of where you transferred money from.

    For instance, at the beginning of this month, I budgeted $100.00 in Recreation for myself. I have spent $6.98. But my budgeted amount has come down to 27.78, and I can’t remember where I took that money.

    Reply
    • mark

      Hi Nathan –

      Thanks for the feedback. I wouldn’t get too caught up in where the money came from – only where it’s going. In the case of recreation, if you have some plans you need to fund, just look elsewhere in the budget for how you can re-fill that category.

      Reply
    • Kate

      I like knowing what I did with the money too. That way I can keep the guilt alive and well when I realize I don’t have the money I thought I was budgeting for x because I decided to spend it on y! :)

      Anyway, I’ve been using “Notes” for that and it’s really nice.You can put a note in any cell and it stays there so you can go back and look at previous months notes.This has been super helpful in keeping track of various money ins and outs, and also making notes about what I’m PLANNING to use the money for.

      Reply
  6. Tiago

    It would be nice to have to have in the down menu for quick budget options an new one, that allow us to add (if positive) or subtract (if negative) the budget value using the “available to budget”.

    I like to keep my ‘available to budget’ zeroed, so I am frequently moving budget values between categories – or in most of the cases, from/to ‘emergency fund’. Today this work must be done manually, so an option to quickly change the budget value based on what’s availabe to budget or overspent would fix that.

    Thanks!

    Reply
  7. S

    Thanks for the good explanation.

    I am struggling with how to deal with paychecks not landing on the exact beginning of the month. For example, I get paid every two weeks … those paychecks landing near the end of the month confuse me a bit … I’m not sure if I should assign to as Income for current or next month. Is there anyone else who deals with this? Am I missing an FAQ item already in the support section?

    Reply
    • Ronnie

      I think you really have to do what works for you. I’m paid on the 15th and last day of the month. My husband is paid biweekly. My last of month paycheck goes toward the next month, as does my hubby’s second bi-weekly check. His first paycheck is split, half for the current month, half for the next month (our bills are very front-loaded). We have to be very diligent about that second paycheck, because of course over the months that second paycheck comes earlier and earlier, and we have to act as though there’s no money for a few weeks.

      Obviously, once we have out buffer in place we won’t have this problem, but that’s what works for us now. This allows us to use those two months with the three paychecks for savings or paying down debt, whatever we need at the time.

      Reply
  8. Andrew

    While I realize Rule 1 states “Give every dollar a job”, what is the difference between leaving money in the ‘Available to Budget’ area and having a category named “Available to Budget” (or more likely “Emergency Fund”, “Rainy Day” or something similar) in which you dump all unbudgeted funds?

    I follow rule 2 and budget money for expenses that occur less than monthly (property tax, car repairs, etc) but Rule 1 always seemed odd to me, instructing that every dollar should have a job. Sometimes I don’t know what that job will be. Arbitrarily assigning that dollar to a job that’s either too vague or broad (sort of like how that black hole of ‘Misc’ spending is bad) just doesn’t seem right. Neither does assigning the dollar to a job that I know it has little chance of ever doing. So I leave that money in ‘Available to Budget’ and after a few months if that value grows enough I’ll assign some of it to a savings or investment account. If I end up needing it for some expense I wasn’t expecting – that’s fine too, as I have the money available to budget for the expense.

    Reply
    • Nathan Hittle

      In my opinion, it is smart to “give every dollar a job” so that you have all of your rainy day funds setup. For instance, I keep $500.00 in my “medical bills” fund. I might not have a medical bill for the next 6 months, and that’s ok. But when I do have a medical bill, i’ll have the 500 sitting there waiting for it. If the bill comes and is $800, then I can take $300 out of my emergency fund to cover the extra.

      If you have all of your rainy day funds setup, then I put the available to budget money in a retirement account. When it gets to be enough to transfer it, I transfer it. If I end up needing it somewhere else (which is unlikely if I have all of my rainy day funds fully funded), I transfer it somewhere else.

      I think the whole point of giving every dollar a job is to have a plan for your money. If the plan changes, that’s ok too.

      Reply

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