Gold Harp (13ad987ff2d8) - The AoM equation looks at all money available in the budget, so yes, that does have the potential to effect your AoM number. The only way to make sure that the savings accounts aren't counted would be to move the accounts off budget (but realize how this might affect your budget categories).

Ultimately, I've chosen to keep my savings on budget, despite how it affects my AoM, because that money is split up between multiple categories and I've found having more specific savings categories is more motivating. Realistically, I've found AoM more useful when I was first starting and the number was low, and less useful over time as my savings has grown.

Michael We had a lengthy discussion on the topic (29 pages last I checked) on the old YNAB forum starting in January 2016. I don't think we ever  came to a consensus other than AOM isn't very useful.

The Toolkit has an "Age of Buffering" which is a projected burn-down rate of your existing funds, based on average spending over select-able look-back period.

But what we determined is that just about any simple metric that doesn't require user input has what we call a Rule 2 problem, the lumpy spending. And the larger the expenditure, the bigger the impact. But anything that uses spending as part of the equation is backward-looking rather than forward.

Just as an example, in September 2015 I bought a car in cash. My AOM dropped by 76 from the previous month and took a year to recover. I could just as easily have taken out a car loan (and would have if the numbers would have made it the better deal) and not had a drop in AOM at all. My AOM would almost certainly be higher than the 297 it's at now, maybe even close to a full year, but I'd still be about half-way through the loan.

In the end, the best indicator of your forward-looking success is the money in your categories that is essentially earmarked for getting ahead rather than keeping even (money budgeted in the future and categories that wouldn't get spent under normal circumstances), relative to your current nominal income.

But even that has its limits to usefulness when you are sending some of that money off-budget. Around the time nYNAB came out, I started a taxable investment account, and it has almost as much in it now as my Income Replacement category in my budget. And we have 3/5 of our 2018 IRA contributions already saved up and just waiting on earned income after January 1st to get sent off.

tl;dr There isn't a good one-size-fits-all metric that can be calculated from the data in YNAB that doesn't require user input, and user input can be flawed as well, which is its own issue.

nolesrule I'd still like to see the AOM as a candlestick graph, but still think it needs a way of being able to exclude categories from the base number (which would mean that it would retain value by introducing perceived scarcity) , but we had these ideas two years ago, so i'm not sure it's worth wasting any energy rehashing something that no-one @ ynab is going to listen to.

Interesting sidepoint is that the ToolKit extension exists in part because we had the discussion re AOM

Jen my age of money has disappeared from my budget.. what gives?

June how strange! We'd like to troubleshoot that for you personally -- please email us at help@ynab.com and we'll work on it!

Todd 

This tooltip is not accurate, and yet it declares an absolute.

It's not that it just isn't useful in a vacuum, but it doesn't have any consistent meaning. At least in your blog post, you mention the credit card effect, but it's not in the tooltip... which could easily be fixed by checking the budget for credit card activity when rendering the tooltip.

The other problem is that your published material keeps using 30 (or 60 with credit card use) as the target, and that's just not helpful. The tooltip says "Keep [it] above 30". Well, how high does it have to go so that in the course of my normal spending I can keep it above 30 (ignoring for a moment the fact that I'm currently at 297 days). Following Rule 2 means you are going to have a whole bunch of money saved up over time above your regular monthly spending amounts. Maybe you'll spend it next month, or in 3 months or in 6 months. Or maybe a year, 2 years, 5 years, 10 years. But it's going to be spent. And when it does, your AOM is going to drop. The longer the delay before spending (and usually with correlation the bigger the amount), the larger the drop.

Also, I can keep it my AOM higher in lots of ways that aren't necessarily the proper choice. Financing over time instead of paying in cash. Using credit cards... and not paying in full after using them (another type of financing). Just not paying off bills or debt.

So tell me, what would my AOM be if I spent all my Rule 2 funds down to zero? Because that would be a truly useful AOM number that would let me know if, under normal circumstances I would always have an AOM above 30 (or 60 with CCs).

Todd Of course, after that rant, the truth is that what really irks me is that you guys decided to toss the #1 piece of functionality that the folks at YNAB ever invented and set you guys  apart from every single other money management/budgeting system.... "Income for <Next Month>". The old Rule 4 was a concrete. It was actionable. It was a SMART goal.  The new Rule 4 is passive and vague, and the implementation of removing walled months has introduced my other frustration... "Stealing from the Future". As I said in the other forum, the fact you guys actually allow a stealthy stealing from the future is spitting in the face of Rule 1.

nolesrule I have absolutely no disagreement that the Rule 2 scenario you describe is accurate. Save up to buy a car with cash, AOM goes up. Buy the car, AOM goes down. One hundred percent accurate. It's happened in my budget.

I think the reason I posted, though, is this: I find it useful when that happens. It tells me a story about my budget and my use of my money. I think there's probably a wide range among YNABers—and I especially didn't want the original poster to feel like he shouldn't feel good about what probably represents a real accomplishment in how he's managing his money.

We have active design discussions continually about feedback we get from long-time and new users alike, Rule 4 implementation included. I don't want to re-create a 29 page thread, but that doesn't mean we don't and won't continue that process. That may not be super-comforting since nothing has happened with this particular issue that I know a lot of people care about, but it's real.

Todd 

I'd prefer it if you didn't go quiet as there are a lot of things that only someone holding your position in the YNAB Company can explain.

How do I tell Michael that I'm happy that I don't have an Age of Money score and that I won't have one for comparison purposes anytime soon?

In January 2016, on the old forum, right after nYNAB's launch, I said:

As for the Age of Money metric, does it now correctly calculate an Age of Money score for those nYNAB users who perform 99% of all of their spending using a credit card? Or are those nYNAB users destined to see an Age of Money score of “???” for anywhere up to the next 10 months or so? If the metric can’t handle this scenario, then remove it from the main Budget user interface. It’s not ready for prime time and don’t pretend that it is.

YNAB Management had plenty of advance notice regarding the potential impact of this issue, yet they didn't deploy a fix for this issue until 1 June 2017 (Release Notes):

For new users, we won’t show your Age of Money number before it’s ready. If you miss the question marks we used to show as a teaser, please copy and save these question marks for later use: ???

So how should I respond to Michael ? Should I say to him that Rule 4 is actually redundant for those YNAB users who know how to manage a credit card properly?

Please advise.

Thanks

elsewhere I don't really see that being a big issue.

You explain that the AoM has limitations, one of them being that it only looks at money leaving and entering the budget. Since credit card transactions are spent using credit, the only credit card related transactions that affect the AoM are credit card payments. Yes, there are specific situations where the AoM figure isn't as accurate or may not work as well as it ideally could.

AoM is simply one metric that may or may not be useful. It's not a perfect number, and it isn't the only thing you should look at when trying to determine how healthy your finances are. It's useful for some people (especially those just starting out, who find trying to increase that number motivating while they are breaking the paycheck to paycheck cycle) and not for others like you.

I would argue that while the AoM number itself may not be useful to you directly, the overall concept -- don't spend more than you earn, and build savings over time -- is still applicable.

I should also point out that while the rule may be redundant for you, it may not be for him, even if he does use credit cards a lot. People get motivation from all sorts of silly things, and seeing a number increase over time is one of them. If he finds that number motivating, and it encourages him to keep going and continue improving his financial position, isn't that a good thing? Maybe we can celebrate the things that YNAB users are excited about, even if that number doesn't mean much to you personally?

EDIT: I do want to add that I don't mean these comments as a criticism of you personally. Based on the current state of how the AoM is calculated, it has limitations. People do need to be aware of the limitations, but at the same time, I'm not sure it's great to somewhat put down someone's achievements because of those limitations.

nolesrule Those additonal points are helpful, thanks. Now I'm going to go quiet so I won't keep talking over Michael and his original question. 🙊

Mayfly Without context, you cannot make that inference. It's also possible that there have been very few cash-based transactions and the OP is living on credit and not making payments.

nolesrule That's certainly possible.  I tend to want to give the OP the benefit of the doubt, though, and assume that he/she would not be on this particular forum raving about this accomplishment were he/she sorely neglecting the YNAB fundamentals.  I also feel comfortable inferring this from the statement about having some bumps in the road lately that had to be covered, so being a little less far along than previously.

I could be awfully, terribly wrong, but I feel pretty good about where I've landed.  😋

Also, to respond to the initial question:  My AoM right now is only 30 days.  Down a good bit from where I used to be due to taking less care over the past few months than I normally would, but just about right given my personal assessment of my financial situation.

Mayfly I'm sure you're right. Just pointing out the theoretical possibilities that often get overlooked.

nolesrule Who cares? AOM is meaningless after a certain point. For me if my AOM is over 150 days, then I probably have too much in cash. Time to move some to my investment accounts. Maybe after I retire, I'll keep a year or two of cash in online savings and CDs. But until then, I don't want it getting too high.

Superbone At what point does AOM go from meaningful to meaningless in a universally applicable manner? Assuming it's ever meaningful. 😉

We've had that too much cash discussion before, and the problem I keep coming back to is my "too much cash" mentality is at odds with my "give every dollar a job" mentality. I just have trouble reconciling those two thoughts.

43% of the money in my budget is essentially zero-day. 6-months expenses as income replacement, and additional reserves for home and car repair.

My job as an ecommerce architect is obviously tied to the strength of the economy, and I've been laid off twice in the last 4 years just because the companies I worked for got complacent in getting new business while the economy has been booming, so I'm not comfortable putting that income replacement money at risk. The only category in my budget besides those that isn't intended to be spent in under 5 years is the meager beginnings of my next Car Replacement, which will happen sometime in the next 8 to 13 years.

nolesrule I agree that is a diffent issue. It's also a matter of one's risk tolerance. I also didn't mean to imply that AOM is meaningful before that point but I can see where it might help at the beginning of one's budgeting journey where they see it change for the better over time. Still, it's not really actionable like the old Rule 4 in previous YNABs.

As far as "too much cash" versus give every dollar a job, I don't think they're at odds. Once every category is maxed, the job of extra cash for me is to invest it. So, that's its job. It is then no longer a concern of my budget.

Also, I personally have had the same job for 17 years (knock on wood) and I am less concerned about having all of my emergency funds liquid so I personally have half of mine invested in the stock market.

Superbone DING DING DING....congrats to the original poster, but after AOM is over a certain point (depends on your specific situation) start investing some of that cash.

We do invest the extra cash. In VTSAX and VTIAX.  But not money in the budget intended for savings .Savings in the budget isn't extra.

But it just feels like too much cash.

I was laid off in 2013 and 2015. And I expect the fate of my current employment is dependent on the company I work for continuing to maintain a specific client. So I cannot fathom investing my income replacement (Schroedinger's Category).

The other issue is I run the budget and the household finances and it's easier to manage should something happen to me.

But even I suffer from fear of missing out. Our investments have done well the last couple of years and it can be hard to ignore.

nolesrule Superbone Interesting discussion on "how much is too much," wish I'd seen it earlier.  I wrestled with this in transition to retirement, and now there's a lot less money in my budget than there was when I was working.  The major cause is that I eliminated my e-fund category, which was conceptually an income replacement fund for the possibility of layoff.  The part that didn't get used to fund income for the transition to ongoing retirement income flow got transferred to investments.

I agree that Age of Money is worthless in determining how much can be taken out of cash and put into investments.  Sending every dollar over and above fully funding all the budget jobs is a better answer, but begs the question of how you determine what budget jobs are necessary and what level constitutes fully funded. 

People who talk about investing also talk about how much should be in cash.  Various theories say to hole 3 years or 5 years expenses in cash.  I have my own take on that, but it probably belongs in my journal on the old forum.  Not immediately; I have another budget philosophy post percolating to the top before I get to that one.

Oh, and for what it's worth - Age of Money is currently 228 days in my budget.  That tells me that I have at least 228 days of history in the nYNAB budget, and that's about all it tells me.

ynaber2613 I did the same thing and was dismayed when my AoM went down.  Its working its way back up now, and truthfully it doesn't matter when I know I have the money there :)