YNAB You Need A Budget

[blarg]

I find it helps to group my categories by how mandatory they are to pay as well. It wasn't my idea, but I can't find the post I read it in right now either. Basically I have:

Bills (Things I'm committed to paying or I don't have a house/power/etc)
Savings (Rule 3 categories)
Discretionary (Clothing, a few other could splurge if I want to categories, and actually I put Groceries in here because you have so much control over it)
Recreation (Fun money!)

I start at the top and allocate generally towards the bottom. Obviously I put some money in Groceries before I worry about saving (eating is good!) but generally flow from top to bottom. So let's say I get halfway through the month and realise I've got an overspend in Groceries. I see a category with $600 available, but it just so happens to be Bills: Car Registration and Insurance. Ok, certainly not going to raid that... Let's start from the bottom. Oh, I've got $1000 in Car Replacement I could poach if I need to... You get the picture.

If your categories are set up in order of importance, you realise pretty quickly which categories you can raid. It keeps you from taking money out of something you need to cover a lumpy bill, and also helps you budget in order of importance.

[creamintheblues]

Thank you to everybody for all your help. You've certainly been busy beavering away whilst I've been sleeping!!

I see now that the category has a balance in the right most column and that this accumulates each month. I should ignore any over-budget message and realise that there is the 'squirrel factor'.

The idea of adding the note to the category for the bill date and amount is sound and shall be employed.

I will also do the sensible thing of fractioning the bill amount by the months available before it is due, (which may be 1/7th, 1/9th) and then moving to the 1/12th rule. Currently I have just used 1/12th but of course not all my variable bills will fall due exactly 12mths from now.

All of the advice I have received is sound and will be taken on board to improve my YNAB experience and finances.

Thank you again to all. I think I'm going to enjoy this - I don't know why I held such a fear for looking at my money or lack of it in the past!!

[malisab]

I see now that the category has a balance in the right most column and that this accumulates each month. I should ignore any over-budget message and realise that there is the 'squirrel factor'.

You mentioned over-budget before and mention over-budget messages here. I'm a bit concerned. If you're accumulating money for your buffer in a category (Pro-way, then you should be budgeting to $0, not over. If accumulating your buffer at the bottom of the screen (3-way) then you definitely shouldn't see an over-budget message. When/where are you seeing this message?

If you had an unlimited supply of income, you would absolutely budget for all of these things at the proper fractional rate. But if your income isn't great enough to accumulate them each month, then something's got to give or you'll be overdrawn right and left. If this is the case, then you may not be able to budget evenly each month and may have to budget some but then play whack-a-mole at the end of each month, re-distributing money that was over-budgeted in categories in which you don't want to build a surplus. Or in my case, as a teacher that doesn't get a check in July, I don't quite budget 1/12 of expenses. I look at things that are due before summer and after. I budget a lower amount monthly for the car registration that's due in August from Dec to July, then I budget a higher monthly amount from Sept to Dec for the one that's due in Dec. In any case, sometimes, the perfect-world 1/12 doesn't work and you have to be more creative.

Or, do you mean that you've budgeted into future months and THAT's where you're seeing over-budget messages? Because you're entering expenses but not income? YNAB methodology warns against entering future items into the budget. Here's a recent thread on not doing so. That being said, many people do (I do) and are very content doing so.

And if you're interested in the category arrangement that blarg mentioned (I do that too) here are a couple threads:
post35076.html#p35076

the-rules-f1/topic4776.html

(Note: the threads are old and may be in Pro-speak)

[creamintheblues]

Or, do you mean that you've budgeted into future months and THAT's where you're seeing over-budget messages? Because you're entering expenses but not income? YNAB methodology warns against entering future items into the budget. [

Yes I have been budgeting into the next month without entering income. I see why I would get this message. I realise I should only budget when I have funds available but I prefer the idea of budgeting expenses (not income) one month in advance - I now don't mind this message as I know it's not really cause for concern but the shortfall (over-budgeted) amount next month makes me more frugal this!! I also understand that with the envelope method I could not put money away for an expense if it were not there.

I guess my concern though is how the program deals with 'over-budgeting' or 'over-estimating' expense categories in the current month - in this case I do not mean budgeting money that isn't there I mean spending under budget. Let's say I set aside £100 for 1/12 of a £1,200 bill due in 12mths time. I won't actually be spending the amount so will not have an outflow in that month that correlates with the budget - I would have appeared to over estimate, over budget. Does this go into YNAB buffer which would confuse me next with with how much I have available to budget. Or do I 'pretend' to have spent the money by transferring the amount or outflowing the amount to a dummy category such as 'sinking fund'?

Does this make sense?

[creamintheblues]

And if you're interested in the category arrangement that blarg mentioned (I do that too) here are a couple threads:
post35076.html#p35076

I like this a lot! But I don't know if I can suffer the pain of re-categorising and re-budgeting again

[Patzer]

I guess my concern though is how the program deals with 'over-budgeting' or 'over-estimating' expense categories in the current month - in this case I do not mean budgeting money that isn't there I mean spending under budget. Let's say I set aside £100 for 1/12 of a £1,200 bill due in 12mths time. I won't actually be spending the amount so will not have an outflow in that month that correlates with the budget - I would have appeared to over estimate, over budget. Does this go into YNAB buffer which would confuse me next with with how much I have available to budget. Or do I 'pretend' to have spent the money by transferring the amount or outflowing the amount to a dummy category such as 'sinking fund'?

Neither. This month you budget £100, spend zero, and have £100 remaining. Next month you budget £100, spend zero, and have £200 remaining. The unspent positive balance carries forward so you can build up to £1200 when you need it without having to budget all of the money in one month.

I'd recommend you create a new YNAB file called "test" with maybe two accounts and a few categories. Put some fictitious numbers into it over two or three months and play around with the scenarios you aren't clear on. Then you can see what the program is doing over time without waiting for actual time to pass or messing up your real budget.

Patzer

[creamintheblues]

I'd recommend you create a new YNAB file called "test" with maybe two accounts and a few categories. Put some fictitious numbers into it over two or three months and play around with the scenarios you aren't clear on. Then you can see what the program is doing over time without waiting for actual time to pass or messing up your real budget.
Patzer

Of course! This is the logical answer. I hadn't twigged that I could actually do this. But of course I can as I have loaded other 'sample' YNAB files without affecting my own budget.

This is a very good suggestion, in fact, rather than downloading the software and seeing how it works with real data, it probably would have been worth trialing it with dummy data and dummy scenarios, put it through its paces, see how it really copes and find its nuances.

I guess I could make a duplicate of my YNAB file to see exactly how my specific concerns pan out and use this strategy in the future to try out some 'what-if' scenarios with projected income and expenditure amounts.

So simple but genius Patzer, as many great ideas are.

Thank you.