YNAB You Need A Budget

[adajmk]

I have a couple of buffer questions.

My wife and I are getting a decent tax refund this year (thanks mostly to our new energy efficient HVAC unit - thank you stimulus bill!). We just started YNAB and are coming to grips with our loose spending habits. At this time we have no buffer built up nor do we have any cash in several of our unexpected rainy day funds (i.e. car maintenance, home repairs, emergency fund). Is it better to toss all of our refund towards the buffer or should we fund some of these rainy day funds as well?

Also, how much should we target for our buffer amount? I am on salary, but my wife is a part-time teacher and we lose her income for several months over the summer. While I don't think we can get to the buffer by this summer, I am just curious as to whether I should try to use my income alone as the buffer and the starting amount of our monthly budget. I am thinking that if we can try to live off just my income during the year it could force some additional discipline on us so that when we (predictably) lose her income every summer, we will be better prepared for it. Thoughts?

Jon

[Nutmegan]

Which you choose to fund is ultimately up to you. However, you may use as a guide what you know you have coming due. There are hard and fast, predictable things, like auto insurance in 6 months; Christmas in 9 (Yikes!); Property Taxes, etc. Those things you need to start planning for now and divide by the number of months until they are due ($1000 for Christmas, 9 mos away - $111/month).

There are other things that are (you'll hear the term) "lumpy" which you know you'll have, but you don't know how much and you don't know when. These you can use your best guess by past experience (i.e., if you spent $600 on your car maintenance last year, budget for $50/month this year).

I really like the idea of using your income alone for the monthly basics and using your wife's as "gravy". If you can swing it, move to that and use her paychecks for buffer/rainy day fund and a seperate emergency/contingency fund. They will build up quickly and/or you can start paying down debt, if any.

As to how much, again whatever you're comfortable with. Some work toward being able to pay all of their rainy day sub-categories out for a year. The idea is to not have to run to credit when the inevitable happens. As for the Contingency/Emergency Fund, most recommend at least 6 months of living expenses to support you though a job loss or medical emergency.

Welcome and have fun.