YNAB You Need A Budget

[maryea]

I just saved until I had the amount of our smallest check, then made a negative entry to put it into play. Then saved for the second check and did the same. Now working on the 3rd check (next to largest) and will do the same. The last one will probably take me a couple months. Just a simple way (to me) to do it and kept so much money from looking so available in the budget.
And even though I only have 2 checks worth of buffer so far, I'm lovin' it!!

eta: of course, once I had a check's worth put into play as my buffer, I then made that check in the scheduler "primary income."

[Sairey724Gamp]

...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. Then, 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".

I'm with Maggie.
I liked the increasing Primary Income approach WAY better than using the Buffer category at all.
I tracked progress each month by Primary/Total Usual Month's Income = % of full buffer.

Sairey

[esoltchr1275]

Thank you for posting all of this - it is very helpful. I am still very confused, however, on creating that buffer amount. How do you go about doing it? Is it basically taking notice of how much you spend in one month with all receipts and writing it down? If so - after you figure that out and start saving the money - where does it go - checking? savings? Sorry .....
Thanks in advance for helping unconfuse me!

[J.Mann]

Thank you for posting all of this - it is very helpful. I am still very confused, however, on creating that buffer amount. How do you go about doing it? Is it basically taking notice of how much you spend in one month with all receipts and writing it down? If so - after you figure that out and start saving the money - where does it go - checking? savings? Sorry .....
Thanks in advance for helping unconfuse me!

a "buffer" means that all your paychecks for THIS month collect and save in your checking and become available to spend NEXT month. It is one month's income.

[malisab]

where does it go - checking? savings? Sorry .....
Thanks in advance for helping unconfuse me!

You can keep it wherever you like. If it's beneficial to build your checking balance to avoid fees, you can keep it there. If you'll be too tempted to spend it or if you can get interest on it somewhere, move it somewhere else. If you're living 'close to the edge' just be sure to keep enough in active accounts to avoid overdrafts.

The key is that it's accumulating in the buffer category (assuming that you're going to use that name). YNAB doesn't care where the physical money is.

[esoltchr1275]

where does it go - checking? savings? Sorry .....
Thanks in advance for helping unconfuse me!

You can keep it wherever you like. If it's beneficial to build your checking balance to avoid fees, you can keep it there. If you'll be too tempted to spend it or if you can get interest on it somewhere, move it somewhere else. If you're living 'close to the edge' just be sure to keep enough in active accounts to avoid overdrafts.

The key is that it's accumulating in the buffer category (assuming that you're going to use that name). YNAB doesn't care where the physical money is.

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Okay .... so I think I understand how it works. I have to basically start with the first paycheck. I need to input that as supplemental income for THIS month and then zero everything out. Once I do that, I go into the register and input the actual data. The only question that still remains for me, however, is if it shows that I am in the negative.

[WairereRose]

If it shows in the negative then you have spent more than you have available to spend and it's time to start really looking hard at your expenses and see which if any can be left till the next pay comes in and dealt with then.

[hawkes]

Geez you would think after reading 5 pages of this thread that this would be... how does my daughter say it... "Easy peasy lemon squeezy" but for some reason I keep thinking I got it and then read a few more threads and then I'm back to where I started. Here's where I am at with this...

I can fund whatever amount is needed for my "buffer". The problem I am having is trying to determine what that amount should be. I am ready to transfer whatever is needed from ING to begin the budget on August 1st. In my mind, people seem to be confused with "buffer" amount versus what is actually in the checking account. Let's assume I am using one checking account. All of our income comes in to this checking account and all bills are paid via this account. Our income is every 2 weeks. Let's say that our monthly income averages around $6,200. I am thinking that I should transfer one month's worth of income so that on August 1st, I have at least $6,200 in the account. Since every dollar is assigned a job whether it is going to pay a bill, debt or add to savings in some way I figured that the "buffer" is really just our monthly income and not necessarily equal to our "expenses" in the traditional sense since it sounds like expenses here is defined as bills, debts and savings... again assigning every dollar a job.

Am I on the right track here?

[Patzer]

Since every dollar is assigned a job whether it is going to pay a bill, debt or add to savings in some way I figured that the "buffer" is really just our monthly income and not necessarily equal to our "expenses" in the traditional sense since it sounds like expenses here is defined as bills, debts and savings... again assigning every dollar a job.

Am I on the right track here?

For people starting from the position of having a month's income sitting around in cash, that's the easy calculation. On an ongoing basis, your buffer will simply be the current month's income, deferred to become Available for budgeting next month.

The point of having a buffer be a minimal month's worth of expenses is useful for people who are starting out with less than a month's income in cash. If they can cut expenses for *one month only* to get through the month with the cash they have on hand, then the next month they can make the transition to living on last month's income.

Patzer

[YYC27]

If you're marking your paycheques as "primary" income, then your buffer is basically just whatever income you've earned this month. Next month, it will become the amount available to budget from.

As far as what to transfer on Aug 1? An amount equal to July's income would probably be the easiest, cashflow managment-wise. You would spend from that money in August, and any paycheques would stay in there to be used towards September.

The software itself doesn't really care where you keep the money, though. Personally, each payday, I look at what's coming due in the next two weeks and make a transfer between my chequing account and my savings accounts so I have just enough in chequing to cover that with a little left over (usually a transfer of excess to savings, but occasionally a transfer the other way). I like my dollars doing double-duty by earning a little interest while doing their job of waiting to be spent on their assigned job.

[hawkes]

OK so I was overanalyzing this. That makes it easy. Thanks gang.

[Sairey724Gamp]

OK so I was overanalyzing this.

Yes, just enter all your income as Primary and keep an eye on the bank balances to see when/how much you need to transfer.
And either delete or rename the Buffer category -- you'll never need it.

Sairey

[strider]

I just started with YNAB and am still confused about buffering, etc...

I have $30,000 in the bank. $10,000 is what my projected expenses will be for the Month of October.. I wanted to start this October so I put in all the accounts balances and dated them as Sept 30. Once I budgeted the 10,000, what do I do with with remaining $20,000? YNAB carries it over as available to budget for November. I get paid Oct 15 and Oct 31. Do I still need to do reverse budgeting and putting in a negative $20,000 so I start out with an exact $10,000 buffer for the month of October. Do I need to do the latter or just continue with what I am doing?

If I just leave the $20,000 as available for November, then once my paycheck comes in for Oct 15, and 30 then I will get around $42,000 as available for November. Is this what is suppose to happen?

Confused Newbie

[YYC27]

I just started with YNAB and am still confused about buffering, etc...

I have $30,000 in the bank. $10,000 is what my projected expenses will be for the Month of October.. I wanted to start this October so I put in all the accounts balances and dated them as Sept 30. Once I budgeted the 10,000, what do I do with with remaining $20,000? YNAB carries it over as available to budget for November. I get paid Oct 15 and Oct 31. Do I still need to do reverse budgeting and putting in a negative $20,000 so I start out with an exact $10,000 buffer for the month of October. Do I need to do the latter or just continue with what I am doing?

If I just leave the $20,000 as available for November, then once my paycheck comes in for Oct 15, and 30 then I will get around $42,000 as available for November. Is this what is suppose to happen?

Confused Newbie

Your opening balance should be budgeted down to zero. You may want to allocate it to an emergency fund, to various rainy day funds, towards accrued expenses, disney land, whatever.

[blarg]

You've got a pile of $30,000. You've got a bunch of envelopes. You need to divvy up the $30,000 into envelopes until you get down to $0. As you earn money throughout the month, you will apply it to next month where the process repeats on the 1st (but with a smaller pile to start with).

You probably want to put some of that towards savings goals like an Emergency Fund, or Car Repairs? It's up to you.