YNAB You Need A Budget

[mozzie61]

I don't think it makes things any more complicated than the red arrows. To me it's confusing that overspending and underspending are treated differently.

I think the confusion would depend on how many overspends or underspends your budget experiences.

Personally I follow the Patzer patented whack-a-mole method and actively manage our budget to avoid where possible overspends being carried over or having Rule 3 auto applied. We still have the occasional overspend left at the end of a month on which a "carry over" or "roll with the punch" decision has to be made using the red arrows, but these are usually a result of a conscious decision to allow the overspend to stand during the month. How I deal with the overspend from a red arrow perspective depends on the reason and amount of the overspend. As an example recently my wife wanted to treat herself to some pampering which was not allowed for in our budget, but she was happy to have $50 less fun money each pay day until it was paid off. We had sufficient funds to cover the expenditure, and it could have been covered up immediately with some judicious whack-a-moling, but the red arrow was used to carry over the overspend as we wanted to "feel" the impact on our budget. As each payment was made, effectively a $50 debit from my wife's fun money, the overspend reduced but continued to be carried forward (it extended over 2 months).

When it comes to underspends we generally experience more of those for two reasons. Firstly most rainy day categories are going to experience an underspend as we are budgeting an amount to these categories most months, but only spending in the month it comes due, or if Murphy pops up. Secondly we are trying to build our buffer and other than bonus income or getting an extra job the only place this can come from is if we "actively" underspend. Of course this is as much a challenge for us as controlling the overspends, but it's working OK so far.

What I envisage if this feature was introduced is a sea of green arrows on our budget screen which I would find more distracting than the occasional red arrow (correct me if I'm wrong). For me underspending is the name of the game as we try to pull ourselves out of a financial quagmire and learn to live within a budget, so the current default behaviour of rolling forward underspends to the following month is fine by me. As a pay day to pay day budgeter, which is a fortnightly (bi weekly) affair, the monthly budget screen is merely a delimiter and many overspend/underspend decisions are made before the month ends and categories adjusted accordingly. I can see the value for some YNABers and I may see this differently once we have a full buffer, but if the green arrow feature was implemented I'd prefer to see it as a user configurable on/off option.

[FluffyB]

Category balances carry forward because of Rule 2 (Save for a Rainy Day). Some expenses aren't monthly, and you need to save up for them over a period of several months. By budgeting a regular amount each month, you're building up a balance that will pay off the large expense without disrupting your finances. It's also helpful for variable expenses. If I significantly underspend in groceries one month, that's a good indication that I have a larger than average grocery trip coming up in the next month. Budgeting a regular amount and carrying forward underspends helps to even out those kinds of ups and downs.

I agree, but not all underspending follows these rules, just like not all overspending does. That's why I think we should have the choice of whether to "Save for a Rainy Day" (current behavior or right green arrow) or to "Roll With the Punches in Reverse", or as I call it "Punch Back" (down green arrow).

I want a green arrow too:
I underspent by 100$ on gas last month - that does NOT mean I intend to use 180$ on gas THIS month. It just becomes confusing - because the budget isn't right.
Please give me a green arrow. I want a nice and clean budget.

[blarg]

Most of my categories carry things from month to month. There'd be green arrows everywhere, and I do mean everywhere.

Why not just take the $100 out of the envelope and put it somewhere else?

[lautzu]

I want a green arrow too:
I underspent by 100$ on gas last month - that does NOT mean I intend to use 180$ on gas THIS month. It just becomes confusing - because the budget isn't right.
Please give me a green arrow. I want a nice and clean budget.

I don't want green arrows. The last thing I want is a more cluttered screen with different colored arrows all over the place.

It may have been said above, but I couldn't read every post in detail, but...think of YNAB like an old-fashioned envelope system. If you don't spend all the money, the money is still there - in the envelope. It's one of the basic, governing rules of the YNAB philosophy, and I'd be disappointed to see it change. I think it's cleaner the way it is.

[jam40jeff]

Then why not get rid of the red arrows as well?

[blarg]

Because overspending needs to be dealt with.

If it's underspending, you always have the option to take the money back out, but with overspending, you can't just magically create money to put in. That's the fundamental difference, and why there needs to be a special arrow to deal with it, where with underspending you just move the money where you want it. Suck it out of the category and put it in your debt payback/savings/vacation/whatever.

[jam40jeff]

Because overspending needs to be dealt with.

If it's underspending, you always have the option to take the money back out, but with overspending, you can't just magically create money to put in. That's the fundamental difference, and why there needs to be a special arrow to deal with it, where with underspending you just move the money where you want it. Suck it out of the category and put it in your debt payback/savings/vacation/whatever.

But you are just "magically creating money" for the current month when you turn the red arrow to the right. You're just automatically lowering next month's budgeted amount to borrow for this month. And you're "magically creating money" by pulling it from the buffer when the arrow is pointing down. Both of these could be accomplished manually (by adjusting the budgeted amount upward or lowering the next month's budgeted amount) to achieve the same effect. However, for record-keeping, I like the red arrows. They remind me what I did to make up for the overspending while allowing me to keep my originally budgeted amount in place. I would like to do the same for underspending. Yes, I could do it manually as you state, but why not have the same shortcuts available as for an overspend?

If I overspend by $5 in one category, I can pull from the buffer. If I underspend in another by $5, I should be able to follow the same workflow to add back to the buffer to even things out for the month. An underspend is a negative overspend and vice versa. I don't believe it makes sense to have them behave differently.

[lautzu]

Because overspending needs to be dealt with.

If it's underspending, you always have the option to take the money back out, but with overspending, you can't just magically create money to put in. That's the fundamental difference, and why there needs to be a special arrow to deal with it, where with underspending you just move the money where you want it. Suck it out of the category and put it in your debt payback/savings/vacation/whatever.

Along with this above... Because in a given month I might have 3-6 red arrows, whereas I'd have another 50 green ones. 50 arrows = clutter.

[brown685]

I would prefer a simple category carry over cap that could be defined. Then when that cap is hit the money over the cap is put in the available to budget for next month.

This would accomplish the same thing as the green arrows, but leave the display relatively un-cluttered and allow for people who want to carry over rainy day funds, but want to limit the growth of those funds.

If you don't want that category to carry money over, then you set its cap to $0. If you are like me and want to limit a category to $500, then you cap it at $500 and let the program auto adjust the budget money.

The down side is that it would make budgeting future months more difficult

[lautzu]

I know the motivation is simplification, but it all feels too complicated to me to add green arrows, caps, and all those other things. I know some want something that requires less investment of time, something you in which can have more "autopilot" capabilities, but I really believe that no software system or trick can replace a clear understanding of your budget gained through regular interaction with it. To me, that is the simplest, most effective system.

Apologies, as always, for the soap box moment...

[jam40jeff]

I know the motivation is simplification, but it all feels too complicated to me to add green arrows, caps, and all those other things. I know some want something that requires less investment of time, something you in which can have more "autopilot" capabilities, but I really believe that no software system or trick can replace a clear understanding of your budget gained through regular interaction with it. To me, that is the simplest, most effective system.

Apologies, as always, for the soap box moment...

My motivation isn't simplification. The green arrow wouldn't cause less interaction with the program. You would have the same decision to make that you do now (and also that you have to make with the red arrow). It would just be more explicit (and be easier for record-keeping purposes when you look back) to see what you did with the overspend, rather than playing Whack-A-Mole and having the fact that you even did underspend disappear.

The red arrows clearly show in which categories I overspent and what I chose to do with the overspend money (pull from buffer or try to spend less the next month). However, there is no clear way to indicate what I did with underspent money. I have to manually adjust numbers if I want to increase my buffer and then lose the "underspend data". I can't then look back and see why my buffer increased.

I wouldn't have as much of a problem with the lack of green arrows if there were no red arrows. However, providing one without the other seems inconsistent to me.

[J.Mann]

From the introduction of the red arrows, I, too, thought it might be a good idea to make green arrows as well.

Since it would be one uniform procedure, and would allow users (often new users always want this functionality) to see if they underspent (in addition to the red arrows for overspending) in all their categories. It makes sense to me to have this feature, as it will solve the issue of seeing the changes in your budget amounts, etc. (Perhaps the ability to send to next month(default), send to buffer, or send to another category?)

Personally, I have a buffer, and most of my money builds up in my categories, so as of now I don't see any red arrows. I'm not sure I want to see a bunch of green arrows. Perhaps, make these green arrows some type of option? (Although, I don't think that I would actually mind them, as some may)

I think green arrows would be extremely *helpful* for new users. And something us old members who have never had before, would eventually get used to. (Just like I got used to my two-column register going away!)

[bookman413]

I understand what you're saying. I think I have just confused myself really.

I guess I just don't see the point in carrying over to the next month. I know I allocated $20 towards groceris but only spent 15. So I have 5 left towards groceries.

that carryover feather is so that you can build up a balance over time to cover large future irregular (old rule 3/new rule 2) expenses. For example, a $600 car repair that you don't need now but which might pop up sometime in the next year. But if you don't like it you can adjust your grocery budget manually back down so it all comes up to $50 in the new month.

Okay I guess the thing I'm having trouble at doing is seperating my budgeted money. Let me try to explain. I have my income I get every month. I have my fixed bills I have every month. I have my irregular expenses every month(groceries, car fuel, home repair, etc) I guess for me I all most need two seperate accounts. One for fixed bills, one for irregular expenses.


My biggest struggle is this. Do I set money aside in a seperate account for my irregular expenses. I have trouble seperating the two(budgeted vs irregular)

Very stupid I know. But I'm my own enemy.

It may be helpful to you to have fixed expense money in a separate account that you don't touch for any other purposes. That's an oldstyle way of making sure you don't accidentally blow the rent money on beer and chips. But actually, I think you will find that so long as you refer to your budget before spending, you can keep all of the money in one account. To make this work you have to get used to the idea of referring primarily to your budget category balances as what guides your spending instead of your bank account balances. (this is assuming, of course, that you have adequate cash in the bank to cover whatever you are buying!). so your checking account may have $5000 in it but you look at your budget and realize that during your food run for example you have only $72.12 left for groceries until the end of the month, and the other money is spoken for for other purposes and goals.

you can choose at that time to go over the grocery budget if you want, but you will do so with knowledge and a plan for which category the extra money you spent is going to be reallocated from.


This works best if you have a copy of the budget with you at all times/or in your wallet. What I do is carry a copy of my budget balances on my person in my wallet. I write the category and the balance remaining on an index card and always have that with me to refer to before buying things.

[bookman413]

I know the motivation is simplification, but it all feels too complicated to me to add green arrows, caps, and all those other things. I know some want something that requires less investment of time, something you in which can have more "autopilot" capabilities, but I really believe that no software system or trick can replace a clear understanding of your budget gained through regular interaction with it. To me, that is the simplest, most effective system.

Apologies, as always, for the soap box moment...

I'm with you on this one in general (although I haven't used the new version of YNAB so far). There is a limit to what I want software to attempt to do for me. I like to get right in there myself and get my fingers messy with lots of numbers. Even the idea of being able to specify a cap on a sinking fund is something I am more inclined to be comfortable doing with my eyes by just looking at the category balances and seeing if they are fully funded or not, each month when I work on my budget. It doesn't really take very long. It doesn't even take long the way I've been budgeting over the last couple of months, which is all in a 3 inch by 4 inch paper notebook with a pencil and a calculator.

Which,however, is not to say I am necessarily opposed to such fanciness for other people.

[bookman413]

I want a green arrow too:
I underspent by 100$ on gas last month - that does NOT mean I intend to use 180$ on gas THIS month. It just becomes confusing - because the budget isn't right.
Please give me a green arrow. I want a nice and clean budget.

I may be weird but this doesn't bother me. I go line by line down my budget at the beginning of the month and I know (by looking at the previous month, and also just because I know my budget allocations pretty much by heart) that my gas budget for the month is $80. (actually, that IS my gas budget for the month!) I wouldn't expect my budget to be so automated that it would be right without me going line by line through it every month. How could it be right? the computer and the software is just a machine, just a tool, it doesn't really know what's going on in my life or what my financial priorities are or anything. Life is too irregular to be able to program something so that it will just continue to work in the future without input from the user. The budget as implemented in YNAB is not a dead document but a highly interactive tool, and that's why it works so well.

So if I only spend $60 of my money on gas in the previous month, and $20 gets carried over and added to my new month's allocation of $80 resulting in the budget showing a balance of $100 for gas then I see that and adjust my newly budgeted amount to 60 and the total becomes my desired $80. If you get my drift. To me it makes sense to have the default behavior be carrying over extra balances. And having an arrow tell me I underspent is unnecessary. I know I underspent. By looking at the month previous and looking at the budgeted amount and the total spent amount.

I definitely feel like if I were using software that did a green arrow thing I would want to be able to configure it to turn off or on. Because it would drive me nuts.