YNAB You Need A Budget

[barramundi10]

hi, my name is bara and I live in Australia. this is my second month using ynab.

Basically I would like some advise about to manage/spread my "savings" amoung various sub-catagories.

in other words i have a catagory titled "savings" and in it (sub-catogories) such as "contingency fund" , "vacation fund" , "first home deposit fund" , "new car fund" , "household items fund" , "new born baby fund" and "investment fund"

i just cant seem to decide on how much to address each catagory or if i should put a goal of how much id like to save for each and then work on building them up 1 at a time.

anyways i hope i can get some creative idea as im just at the point of scrapping them all and having 1 catagory

thanks

[jessiebird]

Hi, and welcome to the forums.

I don't know how you can best start allocating funds. I think it's a matter of personal preference if you want to give each category a bit each month or if you want to fund them one at a time. Even though it may feel a bit arbitrary, I would keep the funds separate. I'm not sure if you were being serious when you said you were thinking of putting all the money in one category, but if so, I think that might not be such a good idea because you won't know what's what. That does matter. If you save up $5,000 in one general category and put it all toward a new car, you won't have anything saved up for vacation or contingencies.

Now, I've only had my first sip of coffee but it's sort of coming to me now: I guess you should start funding ALL of those categories now because even if they are just token amounts, it indicates that you are planning for the future. You wouldn't want a fully funded vacation fund with no money saved up for household items, right? And money can be moved around at will, so if you find the perfect house but don't have enough in your house fund, you could pull from other categories as needed. But at least then you'd have to think about how important each of those categories is before spending the money.

[sarahs219]

such as "contingency fund" , "vacation fund" , "first home deposit fund" , "new car fund" , "household items fund" , "new born baby fund" and "investment fund"

The best advice I can give is to prioritize. Pull out a piece of paper. List each item, estimated time line and goal amount. Without a defined goal, you may not stay as focused. Once you have the list. Prioritize. If something is not for a few years, I'd focus more on the other items.

My husband and I just had this same conversation a few weeks ago. We have 6 goals we are working towards. We were putting a little towards each and felt like we were getting no where. Our goals are very similar to yours:
Medical Fund - $500 - ASAP
Dental Fund - $500 - ASAP
Vehicle Maintenance - $1,000 - ASAP
Emergency Fund - $6,000 - ASAP
House Downpayment - $15,000 - September 2012
Vacation - $4,000 - January 2013

Each paycheck any money leftover goes to the top of the list. Once that's full we jump to the next item. Also, if we spend money out of one category, for example we just had maintenance done on a vehicle so it has dipped below the goal. The extra money refills that cateogry until it reaches the goal again. Then we get back on the house downpayment. It's the exact same principle as Dave Ramsey's debt repayment except we get to keep the money!

We already had some funds allocated to each category. We basically took everything out of the categories in YNAB and started at the top of the list filling them in. We had enough to get each category through emergency fund full. So now we are focusing on the house downpayment. Every extra penny goes to that right now.

Going through this exercise helped us focus and realize that we actually had been making more progress than we thought. It helped us discuss what we each need to feel secure (him medical fund, me vehicle maintence). We learned that these two items were causing each of us anxiety b/c they were not fully funded. We decided we wanted to have a 2 month expenses only emergency fund in place before buying a house.

A couple other items that aren't on the list but are floating around for the future are a European Vacation (undefined goal and timeline), new baby fund (undefined goal and we just know it will happen after Europe). We'll add those to the list as they become more defined.

Sorry this is so long winded. I feel you though, we just had this same issue!

[Budget_Ninja]

hi, my name is bara and I live in Australia. this is my second month using ynab.

Basically I would like some advise about to manage/spread my "savings" amoung various sub-catagories.

in other words i have a catagory titled "savings" and in it (sub-catogories) such as "contingency fund" , "vacation fund" , "first home deposit fund" , "new car fund" , "household items fund" , "new born baby fund" and "investment fund"

i just cant seem to decide on how much to address each catagory or if i should put a goal of how much id like to save for each and then work on building them up 1 at a time.

anyways i hope i can get some creative idea as im just at the point of scrapping them all and having 1 catagory

thanks

Here is what I would do.

Figure out the approximate cost for all your financial goals and the approximate date you want to meet each goal. Divide the cost by the number of months your going to save for each. At this point you have a monthly cost. Rank/prioritize your goals and allocate funds down that list.

I think you'll find like we did, we wanted too much stuff too soon. We decided to take more of a snowball approach, choosing a top few goals to save for and focusing on them. The alternative was saving up for everything but pushing the dates we would obtain them out so far in the future it was discouraging.

[litterbug]

I think you'll find like we did, we wanted too much stuff too soon.

Oh yes, I know that one all too well.

If you're having trouble assigning these things priorities, think about that as you set target dates. Make a list and play with sorting it in different ways. Which things are most important to you? Which will give you the most satisfaction--that is, support the kind of life you want to live? My 2012-2013 ski pass represents a big part of who I am and what gives me the most joy. I also dropped $1000 on new ski boots, the best investment I've made since I bought my car.

At the same time, of course, I built rainy day funds, a buffer, and a mini e-fund, and am now turning to debt repayment, all of which represent the freedom to do even more to pursue my passions. Next will be figuring out how to optimize my retirement, which is only 17 years away. A small house near the entrance to Little Cottonwood Canyon? A travel trailer and four wheel drive vehicle to travel the Southwest highlands in the summer and ski resorts in the winter? A doctorate in political science? Who knows?

[cgavin]

It is great to actually come up with a savings account that would be geared toward the things that you like. That means that you could start that trip-to-the-maldives fund and be successful with it. It is all about doing something that you know the purpose of. And when that happens, you are surely going to stare at something that would very light and good to deal with. Just like how normal things should actually go.

[barramundi10]

Hi and thank you all for the tips and advise.

it sort of coming together now! from never setting a goal, to all of a sudden having numerous goals takes time to adjust I suppose.

I have separate sub catagories for each of my items.
I have listed a short term goal (6-18months) and what I would like/realistically can achieve and a long term goal (ongoing) which is what I would ideally like to have.

i.e contingency fund- my short term goal is to save $3000 and long term is 6 months salary.
now I need to prioritse how how I allocate each month.

My wife is pregnant with our first child and I know I will need to set funds for that therefore, that will be on the priority list.