So you have your budgeting plan all worked out, you understand how and why to track your outflows, and you even have a good idea of how to adjust when required to keep yourself on course. Great! Now we will look at how to implement all that in YNAB to make the budgeting process go so much easier.

You access YNAB Pro's four main tabs through its navigation bar. You can view a screen shot of each window as they appear with a brand new budget by clicking on the links below:

• Register Tab: This is where you record your inflows and outflows as they happen. Since each entry is categorize there is no need to keep separate registers for each budget category.
• Budget Tab: This is where you record you create your categories (grouped under master categories), allocate funds to categories, and monitor category and master category balances.
• Scheduler Tab: This is where you can schedule routine inflows and outflows so you don't have to manually enter them into the register every time they occur.
• Reports Tab: This is where you can view reports on your outflows by category in pie chart and stacked bar chart format and view your current category balances in line chart format.

When you create a new budget in YNAB Pro the budget tab comes in pre-populated with default categories and master categories. By right-clicking on any category or master category you will see a pop-up menu that allows you to customize the organization of your budget:

This is when you want to create all of your categories and organize similar categories under master categories. YNAB Pro rolls up master category totals from every category underneath it. For example, if you organize your all of you housing related outflows under a “Housing” master category, you will then be able to see at a glance total budgeted, spent and balance amounts for all of the categories defined underneath it.

If you'd like, you can take a look at how Sally's Budget Tab turned out. Organize your own budget tab by deleting, adding, renaming, and moving budget items around as you see fit.

You use the Register tab to record your inflows and outflows as they happen. It works like your checkbook register, other than category balances are maintained on the Budget tab. As far as income inflows go, you have two predefined ways to categorize them: As either “Income : Supplemental” or “Income : Primary.”

Inflows categorized as supplemental income become available to budget as soon as you enter it. Inflows categorized as primary income is delayed from becoming available to budget until the following month. You will start using the primary income category when you are ready to start budgeting per YNAB's Rule #1. Until then, you will use the supplemental income category to make the inflow available to budget immediately.

Using Sally's first inflow cycle as an example, below is a screen snapshot showing how she entered in her checkbook balance and her November 2nd paycheck as supplemental income:

The total of these inflows instantly become “Available” to allocate to categories on the budget tab. See below for a screen snapshot of where the Available number is at and the pop-up window that is generated when you hover your mouse over that cell:

There are several figures in the pop-up window you should take note of, especially when they are anything other than $0.00. These figures are:

• Primary Income from (previous month): The total inflows that you entered into the register categorized as “Income : Primary” during the previous month.
• Supplemental Income from (current month): The total inflows that you entered into the register categorized as “Income : Supplemental” during the current month.
• Transfered Income from (current month): The total inflows that you entered into the register categorized as “Income : Transfer” during the current month. This is a special categorization reserved for future use when multiple account tracking capabilities are implemented in YNAB. Currently you shouldn't use this categorization to avoid issues with future releases.
• Overspending from (previous month): This is YNAB's Rule #4 in action. This will be the total of all negative budgeted category balances from the previous month.
• Total amount budgeted in (current month): This is the total amount budgeted for all categories in the current month.
• Available funds remaining to budget in (current month): This is how much you have left to allocate in the current month to reach a zero-based budget. When you follow a zero-balance budgeting method you are following YNAB's Rule #2.

In Sally's example, her Available is the total of her initial checkbook balance and her November 2nd paycheck ($295 + $722 = $1017) because she categorized both inflows as supplemental income.

Now that you have funds Available on the Budget tab, this is when you allocate funds to each of your categories according to your budgeting plan for that inflow cycle.

Below is a screen snapshot of Sally's Budget tab after she allocates funds to her “Art Lessons” category for November 2nd's inflow cycle:

Notice that the amount Available decreases by the $70 she budgeted to the “Art Lessons” category. As you can see in the pop-up window, the mathematics behind the result ($1,017 supplemental income minus $70 total budgeted equals $947 left Available) can always be reviewed at any time during the budgeting process.

Sally then continues to allocate funds according to her budgeting plan for November 2nd's inflow cycle until she either: #1, budgets all categories funded in that income cycle, or #2, runs out of money Available to budget with. If you did your cash flow plan correctly #2 shouldn't become a concern.

You could wind up with Available money still remaining as is the case with Sally's (almost) fully allocated budget. Because her checkbook balance was larger than the Rent shortfall for the first income cycle she has $22 remaining that she could budget to her Emergency Fund.

Once you've allocated all of your Available funds to a $0 balance you have fully updated your budget for that income cycle. At this point you haven't actually spent anything yet so your individual category balances will equal the amount budgeted.

You can also see these balances in bar chart format if by clicking on the Reports tab and selecting the “Current Balances” report type. You'll get the exact balance of each category if you hover the mouse over that category's bar. See Sally's Current Balances Report as an example.

Now that you have your Available funds established and have allocated it to all of the categories identified on your budgeting plan for that inflow cycle, your budget is all set up to start accepting outflows. This is when the tracking phase of your budgeting process starts. As you generate outflows you will enter them into the register with the appropriate categorization.

Below is a screen snapshot of Sally's Register tab showing her outflows through November 7th:

You can use the Memo field however you'd like, but in this example Sally uses it to show how the outflow was made (check, debit, cash, etc.) and a brief description where she found appropriate. Note the use of cash on a couple of the entries. Say for instance Sally made a $100 ATM withdrawal on November 4th and then used it for Tithing and for Restaurant and Mad Money purchases. The ATM withdrawal itself isn't reflected, only the use of the cash (an actual outflow of money from Sally's life) is entered into the register.

As you enter your outflows on the Register tab you can refer back to your Budget tab for current balances in each category. By hovering your mouse over the Spent column for a specific category you can also get an idea of what outflows made up that figure. You can also sort and filter your outflows on the Register tab to find specific details.

Below is a screen snapshot of Sally's Budget tab reflecting the updated balances for the categories she spent in (with the mouse hovering over the Groceries Spent column):

As long as Sally spends less than or equal to what she has budgeted in any given category then her individual category balances will remain positive (or blank when zero balance).

If she overspends in any category then she will have a red negative number for that specific category's balance. Negative balances cause YNAB's Rule #4 to be invoked, generating an Overspending number in next month's Available calculation. When just starting out it's probably best to avoid red numbers entirely by making budget adjustments. You will see how to adjust in YNAB later on.

Also, as you enter outflows into the Register tab you can see how they distribute out within various time frames by clicking on the Spending by Category option on the Report tab. See Sally's Spending By Category Report as an example.

Once the next inflow cycle comes you will enter your new income into the Register tab as supplemental income, which in turns increases your Budget tab's Available number by that same amount. You will then update your category budget numbers by increasing the amounts on your budgeting plan for that inflow cycle.

Using Sally's Grocery category as an example, she would increase her Grocery category budget from $100 to $200 on Nov 9th, from $200 to $300 on Nov 16th, and then from $300 to $400 on Nov 23rd as previously worked out on her budgeting plan. These increases to the Groceries category budget each inflow cycle will cover the additional Grocery outflows as the month goes by.

Once the end of month draws near, YNAB will roll over positive balances in individual categories to the next month. Using Sally's Auto Registration category as an example, she needs to save up $240 by October of next year so she budgets $20 to that category each month. Since she doesn't spend it in November it rolls over and adds to the $20 budgeted in December becoming $40, and so on and so forth through the months until it grows to $240 after an entire year to use to pay for her registration fees. This in a nutshell illustrates how YNAB's Rule #3, Saving for Rain, works.

Negative balances, however, are handled completely different. Per YNAB's Rule #4, Rolling with the Punches, negative balances in any specific category don't roll forward to negatively effect that category specifically. Instead, YNAB reduces the overall amount available for next month's budget so you can make the decision on how to re-allocate your budget on a big picture level to handle the overspending. The caveat is that you need enough wiggle room in positive balance categories to float the overspending until the next month rolls around.

If you are budgeting on an inflow cycle basis, especially if you don't have many categories with positive balances to carry overspending somewhere else, you may need to adjust your budget sooner than waiting for next month to roll around. Even if you do have a few large savings funds growing in your budget you still might want to handle red numbers as you face them.

In the Budget Care and Feeding module you read how to handle three typical scenarios for adjusting a budget: Juggling, Infusing and Use of Credit. Let's take a look at how to implement them in YNAB.

Juggling
Juggling simply refers to moving money from an over-funded category to an under-funded category. Using Sally's example of needing to move $30 from her unspent Clothes category to Entertainment to cover a concert she wanted to attend, she would simply reduce her Clothes category budgeted amount by $30 to $20, thus increasing her Available number from $0 to $30. Then by increasing her Entertainment category budgeted amount by $30 to $80, her Available number would decrease by $30 to its previous value of $0. The net effect on her monthly totals is zero, and since she juggled funds around before an outflow was generated no red numbers were involved.

Where things may get a little dicey is figuring out how to clean up red numbers that were generated by recording an outflow that causes a negative balance in its respective category.

Below is a screen snapshot of what Sally's Budget tab looked like after she overspent her November 2nd's Grocery budget by $5:

Notice that by hovering over a category's Spent column you can see how YNAB determines that category's current balance. In the case of Sally's Grocery balance, since she spent $105, or $5 over what was originally budgeted, she now has a red -$5 balance to face. Because of the effect of YNAB's Rule #4, Rolling With the Punches, her next month's Available is also sporting a red -$5.

Not to worry too much though, Sally has an $8 balance in her Restaurant category that she could juggle out of without much hardship. She reduces her Restaurant amount budgeted by $5 to $15, thus decreasing that balance to $3 and increasing her Available from $0 to $5. She then increases her Grocery budget by $5 to $105, erasing both her current negative Grocery balance and YNAB's Rule #4 effect on the month's Available.

Once you understand how over-budgeted effects the current month's Available and how overspending effects the next month's Available you'll have a good idea on how to tweak your budget to resolve red numbers in either case.

Infusing
Infusing simply refers to adding additional income to budget more money with. Let's look at Sally's example of needing to borrow $82 from her dad to add to the $50 she already has in her Emergency Savings category cover her $132 flat tire expense.

Sally would enter the $82 into her register as supplemental income, thus increasing this month's available from $0 to $82. She would then increase her Emergency Fund budgeted amount from $50 to $132, thus reducing this month's Available back to $0. Now she has the money in the budget required to cover the emergency repair and life is good again.

Use of Credit
If you use credit cards for routine purchases with the intent of paying off the balance each month, then you should enter the outflows in the register on the dates the purchases were made. The category's balance will be reduced properly to reflect the outflows, but the actual cash flow will be delayed until you pay off the balance. Since all of your credit card purchases will be entered into the register at the time of purchase, you should not enter the credit card repayment check into the register.

The tricky part comes into play when you are carrying an existing credit card balance and have already budgeted a minimum payment. Using Sally's example of where she had to use her credit card with an existing balance to pay for her auto repair, she needs to show the emergency expense when it happened by entering it into the register. This will cause a negative balance because she only has $50 in her Emergency Fund. To zero out the effect of the outflow on her immediate cash flow, she would also enter $132 of supplemental income (drawing on future income to pay an expense right now) in the register and then allocate the $138 that becomes Available to the Emergency Fund.

She would also juggle the $50 balance she still has in her Emergency Fund into her Credit Card category to help pay down the additional balance caused by the expense. This way any additional increase in the minimum payment would be reduced by what she already had allocated for emergencies.

If you already have YNAB, hopefully by now you have a good idea on how to implement your budget and get the ball rolling. If you don't already have YNAB, hopefully you've been tempted enough to give it a try. Don't forget there's an Excel / Open Office version of YNAB too!

Also, there are several other features of YNAB Pro, such as bank statement importing, inflow and outflow scheduling, category budgeting suggestions / “Quick Budgeting”, and feature-rich print previewing and formatting that we didn't even touch. There is a wealth of additional information in the rest of the YNAB Wiki and the YNAB discussion forums for you to review at your leisure.