YNAB You Need A Budget

[malisab]

I know I've read how others have certain categories that they have a maximum set as a 'cap'. I'm trying to do that with some categories now and I'm having a hard time getting started.

Anyone care to share? I'm interested in both which categories get caps and approx. how much you cap it at. If you're not comfortable with actual amounts, feel free to say how much in relative to something else (ie: "I cap groceries at 1.5 times my 'normal/expected' amount).

TIA

[Patzer]

I cap Groceries:Food at the most I would expect to spend for an expensive month with special occasions to buy for. As I've become better at controlling my grocery spending, my par budget for Groceries:Food has fallen from a peak of $175 to the current amount of $150, which might be overly generous; but the cap remains at $225. The idea is, if something happens for Thanksgiving or Christmas and I want to spend a lot for groceries in November or December as a result, the money is there. But there's no sense letting Groceries:Food build up to $500 or even $300 when I'm not going to spend that amount.

I put a cap on Recreation:Dining at $20 more than the monthly budget. That's there to allow me a higher spend if I've come in under budget in prior months, but not allow the category to build up money to blow when the money would be better used elsewhere.

Auto:Gas&Oil is a variable budget. I budget for 24 gallons of gasoline in 25 cent price increments. Right now, the budget is based on gas at $2.75 per gallon, so I'm budgeting $66 per month. The cap is double that. The rationale is that my average fill is 8 gallons, and I need to fill every 12 to 18 days. Some months I'll need to fill my tank three times, so I allow for 24 gallons. Because I don't need to fill the tank three times every month, this would allow dollars to build up in the Auto:Gas & Oil category. The buildup allows for infrequent purchases like oil and windshield washer fluid. The cap is generous because sometimes I'll need to fill my daughter's tank for about 12 gallons. She will reimburse me, but I don't want to go negative in the category due to timing. If the budget is full to the cap, I could handle 3 of my tanks and 2 of hers in a month, and by the next month she'd better be paying me back for her gas.

Auto:Service has a cap of $2000 and Medical:Doctors & Dentists has a cap of $1800. These are lumpy categories, and the caps represent estimates of how much is enough to handle a bad lump. Neither of these categories spend very much time sitting at the cap. Unexpected Expenses has a target of $2000; in happy times, it sits there at the target with no budget dollars and no expenditures for a long time. In less happy times, I throw that category at Murphy and budget as much as I can to build it back up to the target.

Medical:Drugs is capped at the sum of three months' worth of prescription copays. I don't need that cap to control the budget as much as I need it as a reorder reminder. If I run into the cap while doing my monthly budget, I need to check on what prescriptions I should be refilling. This is an issue because my daughter's health insurance has mandatory mail order for 90 days' worth of drugs, and I lose track more easily than I would with monthly refills.

Personal:Pets has a par budget of $30 and a cap of $300. The idea is to allow this category to cover a vet bill, but not allow it to store money that will never be spent on a pretty inexpensive cat. This is a small lumpy category, where $360 per year is probably a bit more than I need, but I may need to spend over half of that in a single month.

Patzer

[lautzu]

I put a cap on Recreation:Dining at $20 more than the monthly budget. That's there to allow me a higher spend if I've come in under budget in prior months, but not allow the category to build up money to blow when the money would be better used elsewhere.

This is the key for me: What allows me a bit of a cushion for when I need to spend a little more, but won't build up so much that it just becomes too much like "fun money" that I could put to work elsewhere. Maybe my dining category hits $200, but I don't really need to eat at the Ritz... (and by the way, it's never hit that... )

The one real exception I would have is for Home: Improvement & Maintenance. I'll let that build up as high as it wants to go, knowing that many projects can be expensive, and that when I spend it, it's something of an investment.

[Patzer]

The one real exception I would have is for Home: Improvement & Maintenance. I'll let that build up as high as it wants to go, knowing that many projects can be expensive, and that when I spend it, it's something of an investment.

I have many categories that I don't cap. Some of them are long term savings categories like Home Improvements or Car Replacement, where the point is to build a substantial balance before the money gets spent. Some are shorter term lumpy categories like Groceries:Nonfood, where I simply have never built up enough in the category to show that I need a cap. And some are categories that have no formal cap, but get the excess cleared out to zero after the bill is known. Things like this are Utilities:Gas & Electric (zeroed out at the end of April before building for the next heating season), Utilities:Water, and Utilities:Garbage (both billed every 3 months and slightly variable, zeroed out after each bill). Then there's Fun Money. It only gets $20 per month, and most months I don't spend that much; but I never cap it, because if I want something frivolous that costs $300 but I've built up $320, that's okay. The point of Fun Money is to put a longer term limit on frivolity, not a hard limit by month.

Patzer

[malisab]

Thanks to both of you. I've looked at all the categories in my Everyday Expenses major category and come up with my 'normal' amount budgeted monthly, a 'target' what it would be nice to have in them for fluctuations seasonally or by interest level, and a 'cap'. Some categories, all three are the same. Some step-up incrementally from normal to target to cap. Some are the ones that, as Todd said, I don't really want to cap or which have a drastically higher cap than target. That last group are the ones that, if/when I hit the target and am about to go beyond, I think I'll set a separate Rainy Day category, because at that point, that's what the money will be for. The Office/School supplies that has a $300 target that will allow us to prep for a new school year will eventually flow over to a Computer Replacement category. The House Repair/Maint category that would normally hold enough for a few weekend trips to the nursery or Home Depot will flow over to a category that will eventually get us new flooring etc.

I think when I initially set up my budget I saw these as Rainy Day categories and knew I couldn't really fund them until I paid off some stuff. I dealt with the random HD or Staples trip differently. I've paid off some stuff and can now fund the normal amounts for all the categories. But moving forward, I should be able to meet those targets and have a plan for larger than target amounts.

I see the progression, at least for me, from only funding the essentials and dealing with the oddballs en masse, to funding the larger group of essentials with at least [i]something[/] (who was it that posted on that yesterday or so...Maggie Magpie?), and moving toward having a target amount in them and starting to decide where to better stash the extra money for those purposes.

[lautzu]

I see the progression, at least for me, from only funding the essentials and dealing with the oddballs en masse, to funding the larger group of essentials with at least [i]something[/]

I'm in the same boat, malisa

[adajmk]

I am new to YNAB and have a question about capping out and/or wanting to reassign money that was placed in a category in previous months.

For example, assume that over the course of several months, I build up my Fun money category to $250. Then one day I realize I only want $50 in my Fun Money account and want to reassign the other $200. How do I reassign that $$? Is the best way to just enter negative $200 into that months budgeted amount for Fun Money?

[Patzer]

I am new to YNAB and have a question about capping out and/or wanting to reassign money that was placed in a category in previous months.

For example, assume that over the course of several months, I build up my Fun money category to $250. Then one day I realize I only want $50 in my Fun Money account and want to reassign the other $200. How do I reassign that $$? Is the best way to just enter negative $200 into that months budgeted amount for Fun Money?

Exactly. When you budget negative $200 to your overfunded Fun Money category, that creates $200 Available that you can budget to where you need the money more.

If you're working with smaller numbers, you might not actually see a negative budget number. For example, suppose you budget $30 per month to Fun Money, but you don't usually spend that much. If you notice this when there's $40 left in Fun Money at the end of the month, and you only want to let $50 build up, you simply budget $10 the next month instead of $30 and budget the other $20 wherever you need it most.

Patzer