YNAB You Need A Budget

[magpie]

I have just started to learn the YNAB software. My problem is that I feel as though I am not fully understanding how to make this work. I desperatly need a budget. However I am working with very little funds to begin with ($20) and have plenty of outstanding bills. My dh is paid weekly and I am paid biweekly. I can't live on the paycheck to paycheck cycle anymore. Please help!

[YYC27]

YNAB operates on a conservative approach where you can only allocate funds that you actually have in your hands. What this means is that, if you are operating without a buffer, you need to budget your money as it's received. This can be challenging from a cashflow perspective, especially if you're starting with very little.

What you should do is, every time you receive money, you budget it down to zero. Start with anything you need to pay out before your next paycheque comes in. After that, you need to take care of daily living expenses, rainy day funds, as well as some fun money. As you go, you want to build up category balances for your regular bills so that you're not constantly trying to time bills to paycheques.

Budgeting for the first while is going to be messy, and probably have very little resemblance to what most people think of when they think of a budget. Budgeting in this manner can make it difficult to see the big picture. For myself, I find it helpful to create a spreadsheet with an ideal budget. Start with a typical month[*] -- two of your paycheques, four of dh's. Add up all your monthly expenses. Bills, food, fun money, everything. Include prorated amounts for non-monthly bills, savings goals, estimates for repairs/emergencies, etc. You want your expenses to be lower than your income. The greater the difference, the faster you can break the paycheque-to-paycheque cycle. This spreadsheet isn't the be all / end all of budgeting, but it can serve as a guide while you're budgeting your weekly / bi-weekly paycheques.

There's a lot of people here that are happy to help get a new user started, so don't be afraid to ask all the questions you need.

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[*] Really, there's no such thing as a "typical" month. But what you're building is a guide for future planing; it's not set in stone. Ignoring the occasional three- / five-paycheque month helps ensure that you can recover from set-backs.

[jladyga]

Hi there, Magpie. My name is JLadyga and I'm a recovering "confused/overwhelmed newbie"...

"Hi JLadyga"

Anyway, you'll find that nearly everyone here is more than willing to help. And while your current financial situation may seem daunting, and you want to do something about it yesterday, know that there also plenty of us with your experience.

Before you get too heavily involved in entering transactions, adding too many accounts, and playing with the budget interface: my advice is to take some time to learn the program a little before jumping in. Watch ALL of the video tutorials. Twice. Read up on YNAB's features, it's philosophy and plan to attend the online webinars that are really, really good for beginners. It's an investment in time that I believe will yield solid ground to set your foot on. You'll find your questions are less of "how the heck do I start!?!?" and more "here's a weird situation I've come up against - any advice?"

I got too far ahead of myself and ended up realizing all of the silly little mistakes that could have been avoided had I simply read and absorbed all of the information out there.So I started from scratch - don't follow in my footsteps!

Best of luck!

[bookman413]

Make out a full month's budget on paper using your expected income for this month, using between 10 and 20 categories . You can use YNAB's suggested categories as a template.

This will give you the overall picture of your budget.

Then go into YNAB and budget that $20 bill you have towards only those categories you are going to spend the $20 on this week. Since you have the big picture straight on paper it will make it easier to realize you are really budgeting, even though you are starting with a very small amount of actual funds.

As you get more income, budget all that income to the categories it is immediately needed in.

After a while, you will build up a small buffer. It may take a few months but it will happen.