YNAB You Need A Budget

[jafa]

Since all a buffer starts out as is one full month worth of expenses - in your case $3000 - then that is all you would need (on July 1st for example) in checking since that is where most people spend from. As the month goes by and you spend that pile of cash away, the checking account will be propped back up by your new paychecks as they arrive waiting to go to work on August 1st.

Wow, I think I am looking at Rule #1 a little differently then. For example if I get paid July 1st I would expect to have $3000 in my account on June 30th. Then On july 1st when i get paid that money($3000) goes on reserve for the next month. Steve, based on what you describe above, I am still living paycheck to paycheck since I let the current months income dwindle to 0 and then wait for the next paycheck to start spending again.

Somewhere in the start-up guide (or whatever the documentation is that comes with YNAB), Jesse addresses this question - the "for next month" does get kinda blurred if you are only paid once a month (on the 1st or the last of the month), since you don't have income "throughout the month" replenishing the buffer, so you very well could go down to zero before you have more primary income in place.

Whereas if you are paid a few times a month (or once a month, but in the middle of the month, perhaps), you have a full month's pay available on the first of the month, and then while you are spending that throughout the month, "new" primary income is hitting your account (even though it's designated available the following month) - but it's in your account as a buffer.

So for that specific situation (paid once a month on the last/first), he does recommend buffering an "extra" month ahead, you could say. So on July 1st, you mark that paycheck as Primary, which makes it available for August. Meanwhile your June 1st Primary paycheck is now available to budget for July. So at that moment you do have a full two months' pay in your account.

Hopefully that helped clarify things and wasn't more confusing

[Sairey724Gamp]

For example if I get paid July 1st I would expect to have $3000 in my account on June 30th. Then On july 1st when i get paid that money($3000) goes on reserve for the next month.

This is living with a Buffer. On June 30th you have $3000 Available for July . The July 1 paycheck is Primary Income, i.e. August's Available. Regardless of the balance of your Rule 3 funds, the minimum in your bank account is that "hidden" Buffer of Primary Income.

...I let the current months income dwindle to 0 and then wait for the next paycheck to start spending again.

This is not living with a Buffer. You should be spending last month's paycheck, not the current month. Your Rule 3 funds may be large enough to help you avoid overdraft fees, but your account does not contain the buffer.

Sairey

[wassupdoc]

For example if I get paid July 1st I would expect to have $3000 in my account on June 30th. Then On july 1st when i get paid that money($3000) goes on reserve for the next month.

This is living with a Buffer. On June 30th you have $3000 Available for July . The July 1 paycheck is Primary Income, i.e. August's Available. Regardless of the balance of your Rule 3 funds, the minimum in your bank account is that "hidden" Buffer of Primary Income.

...I let the current months income dwindle to 0 and then wait for the next paycheck to start spending again.

This is not living with a Buffer. You should be spending last month's paycheck, not the current month. Your Rule 3 funds may be large enough to help you avoid overdraft fees, but your account does not contain the buffer.

Sairey

So that is what i thought too...and that is why i was questioning Mudies response:

carrieant wrote:All right. So I thought I had it figured out, but it looks like I need more help. First, a clarification please. Say I determine my buffer is 3000. When wanting to start with a "fully funded buffer" do I make sure that I have 3000 in my checking account to cover or do I need 6000? I may be over thinking this, wouldn't be the first time.

Since all a buffer starts out as is one full month worth of expenses - in your case $3000 - then that is all you would need (on July 1st for example) in checking since that is where most people spend from. As the month goes by and you spend that pile of cash away, the checking account will be propped back up by your new paychecks as they arrive waiting to go to work on August 1st.

I understand now that the difference is depending on how often I get paid!
Thanks Jafa, sairey, mudie, and patzer for clarifying. No wonder people feel this is the best forum out there

[Mudie]

So that is what i thought too...and that is why i was questioning Mudies response:

carrieant wrote:All right. So I thought I had it figured out, but it looks like I need more help. First, a clarification please. Say I determine my buffer is 3000. When wanting to start with a "fully funded buffer" do I make sure that I have 3000 in my checking account to cover or do I need 6000? I may be over thinking this, wouldn't be the first time.

Since all a buffer starts out as is one full month worth of expenses - in your case $3000 - then that is all you would need (on July 1st for example) in checking since that is where most people spend from. As the month goes by and you spend that pile of cash away, the checking account will be propped back up by your new paychecks as they arrive waiting to go to work on August 1st.

My bad. The whole idea of getting paid only once a month - and that being the last day of the month - threw me. So indeed, $6k is where the checking account should be on July 1st.

I understand now that the difference is depending on how often I get paid!
Thanks Jafa, sairey, mudie, and patzer for clarifying. No wonder people feel this is the best forum out there

Exactly, "the difference is depending on how often I get paid!"

Steve

[mmaun2003]

Hi!, Newbie here. Just set up today, but I'm close to having a buffer (but no emergency fund). my question is once i "reverse budget' my buffer and have it to use for the upcoming month...do i then keep funding my buffer? or do i just have that be zero forever and just start putting money toward an emergency fund?
Thanks!
-M

[nskiddo21]

Hi!, Newbie here. Just set up today, but I'm close to having a buffer (but no emergency fund). my question is once i "reverse budget' my buffer and have it to use for the upcoming month...do i then keep funding my buffer? or do i just have that be zero forever and just start putting money toward an emergency fund?
Thanks!
-M

Hi and welcome. This forum is a wonderful place to bounce ideas and get answers to all your questions. I'm fairly new, but have been on the boards every day for 2 months. Hopefully I can help...

You always want to make sure you have your total buffer amount revolving from month-to-month. For example, say your buffer is $2000. Every month, you want that $2000 to revolve/roll to the next month. Never spend more than the buffer amount in any given month without replenishing it. If you spent $2200 in one month, make sure to replenish the extra $200 so that you have your full buffer for the next month.

To answer your question , once you have funded your budget, you can do whatever you would like with the $ you would be saving toward your buffer; whether debt-reduction, Emergency fund, savings, kitchen remodel (on my mind now). Just remember to keep your buffer rolling from month to month.

Hope that helps.

N

[domino]

Once you've saved up a buffer and deploy (or "reverse budget") it to fund the budget then it has fulfilled its purpose. Subsequent income will be classified as "Primary" and will start showing up in the following month's Available.

You can retire the category or rename it to keep track of your emergency fund, whatever makes the most sense to you. Just don't delete it or it'll cause havoc with the rest of the budget. I keep a juggling fund called "Buffer" just because I like the sound of it.

[mmaun2003]

Hi and welcome. This forum is a wonderful place to bounce ideas and get answers to all your questions. I'm fairly new, but have been on the boards every day for 2 months. Hopefully I can help...

You always want to make sure you have your total buffer amount revolving from month-to-month. For example, say your buffer is $2000. Every month, you want that $2000 to revolve/roll to the next month. Never spend more than the buffer amount in any given month without replenishing it. If you spent $2200 in one month, make sure to replenish the extra $200 so that you have your full buffer for the next month.

Hope that helps.

N

Actually, that sorta confuses me, sorry!

Once you've saved up a buffer and deploy (or "reverse budget") it to fund the budget then it has fulfilled its purpose. Subsequent income will be classified as "Primary" and will start showing up in the following month's Available.

You can retire the category or rename it to keep track of your emergency fund, whatever makes the most sense to you. Just don't delete it or it'll cause havoc with the rest of the budget. I keep a juggling fund called "Buffer" just because I like the sound of it.

That, makes more sense to me. Thanks. I read the boards ALL weekend and my brain is fried, but i'm so excited to get home and enter what i spent today! -M

[Sairey724Gamp]

You always want to make sure you have your total buffer amount revolving from month-to-month. For example, say your buffer is $2000. Every month, you want that $2000 to revolve/roll to the next month. Never spend more than the buffer amount in any given month without replenishing it. If you spent $2200 in one month, make sure to replenish the extra $200 so that you have your full buffer for the next month.

Actually, this method reflects life without YNAB's brilliant concept of Primary Income in place. With YNAB, once you have used the buffer, every month thereafter the buffer remains in place automatically (as long as you continue receiving your normal income); however, it is "hidden" by tagging your income as Primary rather than Supplemental, so you no longer use the actual category unless you redirect it as Patzer suggests.

If you don't want to rename it or use it for another purpose, you could rename it Z:Buffer so at least it drops to the bottom of the Budget screen. In your case, I would simply rename it Emergency Fund and keep going from here. In the future, if you ever look back at these early entries it will look like you have been saving toward your EF the whole time and then had to "use" it this month, but a simple note to yourself would remind you why you did what you did.

Personally, I like the idea of keeping it as a small Juggle category to balance minor overspending without having to worry about deciding which category to "rob" from and still avoid Rule 4, a "sloppy bookkeeping fund" to tap into before hitting the EF.

Sairey

[nskiddo21]

Hi and welcome. This forum is a wonderful place to bounce ideas and get answers to all your questions. I'm fairly new, but have been on the boards every day for 2 months. Hopefully I can help...

You always want to make sure you have your total buffer amount revolving from month-to-month. For example, say your buffer is $2000. Every month, you want that $2000 to revolve/roll to the next month. Never spend more than the buffer amount in any given month without replenishing it. If you spent $2200 in one month, make sure to replenish the extra $200 so that you have your full buffer for the next month.

Hope that helps.

N

Actually, that sorta confuses me, sorry!

Once you've saved up a buffer and deploy (or "reverse budget") it to fund the budget then it has fulfilled its purpose. Subsequent income will be classified as "Primary" and will start showing up in the following month's Available.

You can retire the category or rename it to keep track of your emergency fund, whatever makes the most sense to you. Just don't delete it or it'll cause havoc with the rest of the budget. I keep a juggling fund called "Buffer" just because I like the sound of it.

That, makes more sense to me. Thanks. I read the boards ALL weekend and my brain is fried, but i'm so excited to get home and enter what i spent today! -M

Wow, sorry. ***exit's stage left and lets the pros take over***

[domino]

Wow, sorry. ***exit's stage left and lets the pros take over***

Nicole, don't sweat it - there's usually more than on way to accomplish the same result. I think the best thing YNAB has going for it is its flexibility and we all have our favorite tricks to make it work for us. The knowledge base around here benefits from everyone's input so don't stop posting about how you're making it work for you.

[spooksmcgee]

I have not made my first budget yet and am just starting out. I live paycheck to paycheck, so I see the guide says to go ahead and start even if you don't have a buffer in place. I imagine though it will take me a year to create a 1 month salary buffer. Should I take 1 month salary from my savings account and use it as my buffer, and then just pay my savings account back? Or will the program be pretty much just as efficient if I start with no buffer at all?

[Sairey724Gamp]

If you'd like, you could read four pages of discussion on Why You Should Use Your Savings to Fund Your Buffer before you make your decision. (I wouldn't bother if I were you -- I'd just go ahead and do it).

Sairey

[spooksmcgee]

Thanks a lot, that is very useful. I'm tempted to do it, although my "savings" is not really a savings account, but a HELOC that I keep in savings for repairs to do on my house. I will use it all eventually, just not in the next few months, so my plan was to use it as a buffer, and then hopefully replace it before I needed to do work on my house (and if I couldn't replace it in time, I would just take the money out of my existing income and have to work on developing a buffer). So maybe I'll just work on creating a buffer.

[Maggie Magpie]

I started with a full buffer but did it differently then all this (I think, if I'm reading this correctly).

BUFFER ALREADY IN PLACE: Basically, my beginning balances I entered into the register as "income/supplemental". So, on March 1st, using the example of $3,000, my very first entry in my checking account register was "Income/Supplemental". Then, as each payroll arrived throughout March, I entered them as "Income/Primary".

NO BUFFER TO START: For those trying to build a buffer, wouldn't they simply enter all paychecks as a "split" entry between a small amount to "Income/Primary" and the larger amount to Supplemental income? Thus, the "Income/Primary" is part of the beginnings of their future buffer. hen, as the paychecks roll in month by month, the "income/primary" starts to get bigger and bigger as time goes by. Finally, the buffer is built and so all paychecks going forward become "Income/Primary".

Am I missing something? The previous posts here seem a little complex to me.....??