Have to agree 100% with @Patzer on this  one.  "Overspends don't exist in isolation."  I don't leave any category red. I either move the funds from another category or I don't spend. If I have -100 in one category and +100 in another, I know that I really have zero in both.  I'd rather see the zero in both. It keeps me from chronically overspending. It pulls me from the rosy future place where I always have all the funds I will ever need to do everything and it keeps me in the reality of here and now. I make better spending decisions as a result.

I've been trying to explain this concept to my sister for two years.  She always sees categories as separate silos of money. If she overspends in clothing, it should only affect clothing next month, whereas in reality overspending in clothing this month should/does affect every other category.  She keeps dipping into next month's money  (not yet received) this month with the justification that it's only $5, $10, $25 etc and she'll just spend less next month.  True, sometimes she does spend less in that category, but there always seems to be a category that is being overspent and that she leaves red to repay in the next month, and then she overdrafts her chequing account.  Every month.

Gray Drum (1d39fb44f280) How can YNAB handle it better? As Patzer said, the money has to come from somewhere. You can't spend money you don't have.

Well, you can, but that either results in overdraft or credit card debt. But YNAB can't stop you from spending money you don't have. Only you can do that.

YNAB is just a tool to help guide your decision making, and like any tool, it can only do what it is capable of. So if you have to spend it, then you have to make adjustments to your budget so that you don't fall behind. YNAB's "automatic" month rollover functionality should be seen as the last resort for dealing with it.

Your categories do not exist in isolation. Overspending in a category means your other categories don't have the amount of money in them that you think they do.

What would you have done if your next paycheck didn't arrive as expected? Payroll glitches can and do happen. If you've not experienced that, then it's only because you haven't experienced it yet.

Rather than wanting to adjust the way YNAB works, you should adjust your thinking to incorporate the limitations that YNAB imposes on your budget and understand what they mean.

Gray Drum (1d39fb44f280) If you understood, then you would know why it's not possible. The very first rule of the YNAB budgeting method is to Give Every Dollar a Job. That means not giving multiple jobs to your dollars, but the moment you have any overspent categories, that's exactly what you've done.

If YNAB allows you to carry over the overspending in a category from month to month, then that also means you can leave that overspending in the category from month to month until the end of time, and that is doing you no favors.

Furthermore, YNAB is an allocation budget system that is based on the principle of envelope budgeting. Each category represents an envelope. When using your envelopes, you can only spend the money that's in the envelope. You can't just spend more money you have in the envelope and drop in an IOU, which is what you are suggesting. The money has to come from somewhere.

Yes, it can be annoying to have to cover an overspend for a few days from another category and then replenish the robbed category once you get more income, but that's part of how YNAB is supposed to work for you.

Gray Drum (1d39fb44f280) 

I think you are focused on not exceeding a monthly value ever, and by carrying negatives and postiives forward, you will eventually only spend a particular average amount. I can understand that because I am wired the same way.  I initially embraced the YNAB approach rather reluctantly (um...kicking and screaming comes to mind) because I was convinced that too much category flexibility would lead to excessive spending in all my categories all the time, and chaos would ensue. However, I actually found the reverse to be true.  The elasticity of the categories -- where I could move the dollar from one category to the other to avoid negatives -- worked to keep me under the monthly sum of all categories.  My category averages at the end of 12 months came in under the amount I wanted to hold myself to in the beginning even without holding my budgeted amounts to the average.  So, I have learned to trust myself and the Whac-A-Mole approach to dealing with the fact that my spending does not come in exactly equal to the average I want so spend each month. 

Now, I also keep a super tight budget and often skim categories at the end of the month. This means my numbers are a little too rigid to allow much flexibility.  My solution was to create a small slush fund of between $50 and $100 that I can use to top up where/when needed.  I budget in whole numbers, a multiple of at least $5 with no cents.  On the last day of the month, just as I'm about to leave the month behind, I skim the categories so that the amount rolling over is a multiple of $5 with no cents.

Faness Hello!  I have been a user of YNAB4 since Feb 2008.  I decided to take the plunge and change to the web version late last year, and for pretty much this sole reason (negative figure rollovers) I have been frustrated with it ever since.  There are LOTS of people discussing this both in and out of the forum, and surly there is actually a simple fix... Why not put a switch in the settings area, that allows you to opt in to rolling over negative figures?  By default you could leave it off to comply with the rule, but the user (your customer) has the ability to switch it on if thats how they would like to manage their budget.  You then cater for everyone and perhaps we would see a lot less posts in the internet that focus on this particular issue in YNAB.

After just over 10 years with YNAB, I have signed up to trial another budget app in the last two weeks to try them out.  It will cost more per month if I sign up after the trial, and while it doesnt have this facility right now, I can see that they have it high on their road map agenda to sort this soon.  From all the responses, it appears that you just will not entertain it.

Give people a choice to switch it on or off, and let them decide after you have advised them of the consequences.  Your customer is then a happy bunny as the product they pay for is working as they want it, and the issue goes away.

Mr Crispy Thank you for adding in that suggestion! Since launching the new YNAB, we've tried to steer away from toggling options for a number of reasons (both on the development side of things and for customer service purposes). We're looking at ways to improve, so that isn't to say there will never be any toggle features in YNAB, but there aren't any currently planned. 

You can still send this idea (or any others!) over to our development team by filling out the Feature Request form. That goes straight to them so that they can get a better view of exactly what users would like to see going forward. :)

Faness this is preventing me and several others I know that still use YNAB4 from switching over. Lots of features to love about new YNAB, but this just doesn't work for sophisticated budgeters. Yes I know that you can't "trust" an account balance when some budgets are negative, but we've managed to make it work happily for 5 years, and removing it now feels like putting kid gloves back on the product. Please help us pay you money!

Violet Hammerhead I know this is a huge change, but it's better aligned with the Four Rules. I've seen some users create workarounds (manually re-entering the overspending amount in the new month) to create this affect, but handling Reimbursements as outlined in the Help Doc is what we suggest. 

Faness I was googling looking for an answer to this specific issue, and just need to say: I recognize that it works with your Four Rules. I just, quite frankly, don't care. I need software that works for my family, and for the way my husband and I discuss and use money. 

Or, as an example: I spend 100$ on medication, will get 80$ back from my health insurance company in 3 weeks (aka: next month, and before my credit card bill is due). I budget 20$, which is the amount I actually need to spend. YES, it's 'over budget', in a very technical way, except that the insurance company will pay me before I need to pay my credit card company, and I don't WANT to manually adjust the amount I intend to put into savings TWICE to reflect less savings the month before I get reimbursed and then more the month after. I know it's happening, I know why it's happening, it's a conscious decision, and it works EVERYWHERE except in your software. And sure, I can work around it... in a really annoying way. I don't want to have to work around it. I just want it to WORK. 

Silver Hammerhead well said!

Hi Silver Hammerhead !

Since you're using a credit card, you could leave that category overspent and when you receive the reimbursement budget it directly towards your credit card category. That would prevent you from having to adjust the amounts in the previous month and cover the difference in the current month so that the amount for your full payment is available. Is the issue there that you don't want to see that overspending in the previous month?

Faness my problem is two-fold:

1) sometimes, my spouse and I agree on a budgeting "standard" (aka: spend less than this on average on clothing every month), and we need to see how much, on average, we've spent in the year. And sometimes we say, for example, "the kids need boots now and not in 3 days when the month rolls over" and we're 20$ short in this technical month but it is what it is. We want our average to be maintained, we want to spend 20$ less in the following month to make up that difference, and we don't want to put less in savings this month/more next month/adjust 3 different categories to track that. It's a huge hassle to adjust what is, in real life, a common understanding of money. (And in practice? We just adjust the budget upwards this month, downwards next month, and stop trusting the 'available to budget' amount at all because because that's what gets us what we need as a couple. Your solution just forces a built-in lack of trust for your system numbers). 

2) I need to know, yearly, what I spend on things like healthcare (specifically: its tax-deductible over a certain amount, and I dont want to calculate receipts for 4 hours to figure out if I qualify). The final number that I have actually spent, post-reimbursement, is what matters. I need the positives and negatives to roll along the year to give me a total I can use.

What I'm hearing is that your development team is not intending to change this, because you want to force people to use your "way" of talking about money, and that I'd be better off coding my own thing/trying to adapt Mint?

Silver Hammerhead 

I definitely understand what you're saying.  But if you budget $20 more this month and $20 less next month, and spend $20 more than average this month and $20 less than average next month, you do end up with an annualized average that falls neatly into what you wanted to stick with monthly to begin with.  I rely on average spent and don't even look at average budgeted.

This is the beautiful math of averaging.  The rolling with the punches flexibility of adjusting on the fly feels a little uninhibited, but you soon discover that you must take that extra $20 from somewhere else, and that is what is holding the numbers together.

Before YNAB, I could easily overspend all my categories by $5-$20 with the plan to reduce the amount spent in the next month, and that resulted in a few really close calls on my account. After implementing the YNAB methodology and seeing how my spending fit in with all my other monthly spending versus by category only over many months, I began to exceed my savings targets every month. I wouldn't want to go back to the old way now.

Silver Hammerhead 

When reading your first point, this is what I understand that you mean:

Every month, your agreed upon amount (which equals a value less than or equal to the average you want to spend annually) is budgeted into the category.  Then you spend as you need to.  And occasionally, like when you need kid boots, you need to intentionally overspend that category, leaving it red (i.e. Overspent) by $20.  The following month, you want to be able to budget the same agreed upon amount, but have the category reflect that there is actually $20 less there than there would be if you had not intentionally overspent the previous month.  The end result being that when you look at the annual spending at the end of the year, your average is maintained.

What I understand that you would like from the software is for that carryover to remain so that you don't have to change how much you budget or transfer money from "saving" to "clothing" this month just to have to move it back from "clothing" to "saving" next month.  

I imagine that your budget is relatively well funded - that you're not in a place where any overbudget category could mean you miss the rent payment or have to eat ketchup soup - and that is masking what the underlying misunderstanding is.  Consider for a moment what an overbudget category really means: It means that you have given the same dollars (say the $20 you reference above) two jobs at the same time.  The first job you assigned explicitly: put this $20 (maybe as part of a larger sum) into savings.  And the second job was given implicitly: We only have $40 for boots, but they cost $60 and we need them.  So the money has been spent, and now reflects that the $20 MUST be covered from somewhere else.

So then you're faced with two choices:
A.) Apply Rule 3 yourself and move the money from savings to clothing, zeroing out the category but saving less this month than you planned.  Next month, you can then make the concious decision to spend less on clothing, leaving $20 for you to move to savings (again, Rule 3).  Or, it could be that next month the kids need snowpants (I have twins who seem to grind snowpants into dust each year), and you spend the full budget again, and so on.  Either way, that you spent the money right now has been accounted for, and your balances are honest.  Each dollar has exactly one job.

If this was a cash-based envelope budgeting system, with no credit, and you wanted to buy $60 of boots but you only have $40 in your "clothing" envelope, then you have to get that extra $20 from a different envelope, or no boots for you.

Or,

B.) Allow YNAB to apply Rule 3 for you.  This happens as the months roll over as a backstop.  Your dollars which are doing double-duty are all assigned to 1 job (the place where they were explicitly budgeted by you) and the remaning jobs (the overspending) are assigned first-crack at any new dollars that come in (by reducing TBB or making it negative).

If we're back to the cash-based envelope budgeting system, this is like giving yourself a loan from tomorrow's paycheck - riding the float - and when you go to put funds in the envelopes because you've been paid, past you is standing in line first to require you to pay back that loan.

The second point - healthcare - is actually a bit different.  I understand from your post that you'd like your total spending in that category to reflect negative (spends) and positive (reimbursements).  I have much the same requirement, and what I do is to categorize the deposits from insurance or FSA reimbursement as "Medical", just like I would the spending (instead of marking it as To Be Budgeted).  That way, the net difference in the category (what I have to add from my To Be Budgeted) at the end of the year reflects my total out-of-pocket health-care spending for the year.  I do the same thing for fees (my bank reimburses ATM Fees) and for a few other categories where I want to make sure that what I am spending is balanced exactly by reimbursements. (e.g. Work Travel).

And so I don't think the problem overall is that the software doesn't line up with any particular general real-life understanding about how money works.  I think it is more that the priority that you have (I don't want to adjust the amounts I budget into my categories) is different than the priority of YNAB (Give each dollar one AND ONLY ONE job).  

And that's ok, but it will mean that you either have some hassle, or you end up making your own system in a spreadsheet.  It's up to you to decide if the hassle / priority difference is greater than the amount of hassle involved with developing your own software.

Horatio Spifflewicket You totally have a point about the well-funded budget - honestly, my concern is mostly to stop us from spending out of hand on stuff we like (books for me, music gear for my partner, groceries...) and maintain our general goals. If we're in a state where we need to raise the clothing budget to cover snowsuits one month, we will, but... yeah. I didn't want the hassle. 

Question re: the medical spending. I see what you're saying about the positives and negatives 'balancing' but (realy-life issue) that means that my October budget is still showing as in the red, whereas my November budget (when the refund comes in) will look super overloaded. How do you manage that? (I'm thinking... either fudge the date of the refund, or decrease the November budget by the refund amount so it balances yearly...?)

Silver Hammerhead 
 

One thing it is important to remember is that the value in the budget category is not the spending.  So I tend not to look at a category as being "overly full" in any way, although I do go through occasionally and see if the little bits of change that are collecting are still in line with my priorities.  I'm very conservative about things that are necessary (like medical) so any budgeted-but-unspent funds there typically are invited to stay in case of an emergency :)

I do have a method that I like to apply when a category that would fall under immediate obligations (mortgage, utilities, food, etc.) or true expenses (medical, maintenence, clothing, etc.) goes red. First I try to decide if the expense that sent me overbudget was a "regular" (i.e. just sort of normal) expense or an "act-of-god" type expense (tree falls down in yard, kiddo needs emergency medical care, etc.).

If it is a regular expense, then I have to decide if it's worth making a change to how we allocate funds to accomodate (less $ for date night, more for medical) or if I should try to eliminate the expense.

If it is an act-of-god, then I do a couple of things (we'll assume medical for this discussion), in this order
1.) Take some dollars from the emergency fund category and give them the job of moving over to medical to cover the expense.
2.) Adjust the target-balance goal for the category so that the expense wouldn't have put me overbudget + an additional 10%.  This is in part because I don't want to have to worry later, and in part because I know that money just hanging out in a category is still earning me bank interest :)
3.) Then, when the reimbursement comes in, I take a look at the status of the medical category against that new goal.  Is it at the goal threshold? If no, then I leave it alone and make smaller contributions to discretionary categories like dining out until the emergency fund is back at it's target balance.  If yes, it is at the goal, then I shift any additional funds back to replenish the emergency fund.  That way, in the future, the cash will be there ready if I have another strange expense. (If you are imagining that I have a relatively large amount sitting in medical, you are correct. I hate emergencies, but acknowledge I can't prevent them all.)

And as long as the expenses are properly categorized and the reimbursements are also categorized as medical, when I look at the reporting at the end of the year, the net difference will still be my out of pocket expenses.

This is not a state of affairs that came about easily, though.  There was a long period when first starting out that EVERY expense pulled categories into the red and would deplete my emergency fund (which was small).  So there were a lot of "we're having rice!" moments in the beginning.  It's payed out over time, though, and now it's really just a bunch of tiny tweaks.  

My next goal is to start funding the future.  ("Stealing from the future" is another giant rabbit hole that people have strong opinions about.  My trick is to remember that money given jobs for next month is only my best estimate, and that I may have to pull some of it back to today if I have an emergency.  So it's not really "stealing" it's more "oops my plan was out of alignment with reality. Rule 3!")

At the end of the day, though, I think it is up to everyone in their own unique situations to decide what to do when they find that they've accidentally given one dollar two jobs.  (And it does happen to everyone, all the time, because when we first give those To Be Budgeted dollars jobs we're just making educated guesses as to what the future will hold).

Horatio Spifflewicket Whac-A-Mole. Moving money from one category to another; like the arcade game, sometimes one Whac creates another. 

Hi gmartin !

Eventually, as those positive amounts carry over and you build a buffer, you'll have enough to cover those 55€ months when they happen. Until then, you should move money from your other categories to cover any overspending. :)

Hi Faness , thanks for your answer. Then, shouldn't I get money from next month in same category? 

gmartin If you budget more there, yes! I suggest creating a "Monthly Funding" Goal, and aim higher (if possible) than you usually need. Maybe $60?  That way your available amount will continue to grow, even when you make your monthly payments! 

gmartin 

I'm quoting nolesrule  's response to someone else in another thread about how to budget for variable utility expenses when getting started.  (It's a great explanation).  Hope it helps.

nolesrule said:
 How you handle cyclical utilities depends on when you start using YNAB. If you start during the low usage months, look at your past bills and just budget your 12 month average. By the time you get to the high months, you'll have the money sitting there to pay those higher bills. If you start in the high months, you should be budgeting the highest amount you paid in the last 12 months. Then once the bills drop below the average you budget the average. You can calculate your "overage" number... that's the sum of all above the average spending over the course of the previous 12 months.  At the end of a month, you can pull out any amount above the overage total. For the seasonal, you budget for it like a monthly expense. It's just that depending on when you start YNAB, you may need to budget more during the first annual cycle so that you have enough when you need it.

Coral Hail regardless of which transaction caused the category to be overspent, were any transactions this month in that category on a credit card? If so you will see that your credit card payment category doesn’t match your credit card balance and that is where the overspending is living. 

Hi Jed! Coral Hail 

What happens to overspending amounts depends on whether the overspending was with cash or credit.

• If cash, that amount will be deducted from To be Budgeted in the new month.
• If credit, the overspent amount will be represented as an increased balance on your credit card account.

YNAB understands credit can be paid back overtime, so overspending on a credit card isn't subtracted from your To Be Budgeted in the next month - that cash isn't gone until you pay the credit card bill. Whereas, with cash, the money has already left your account.

PS. Just for future reference, you can submit a Bug Report to have our development team investigate technical issues. :)

Faness OK, found it.  Thank you and jenmas . Yes, basically all spending is on a credit card, including this expense. Seems a little cryptic if I have to looking for it.  All of my cards are PIF and I set a goal  budgetting for the PIF balance and the only clue was that the goal went orange with the overspend. For PIF card users, I expect most of us have PIF on auto-draft and will PIF regardless of how we budgeted. It might be nice to allow for a PIF goal that dynamcly adjusts with spending vs beng tied to a static amount defined before spending. Not holding my breath given the lack of attention given to the far more important "income for next month" feature that was taken from us.

~Jed

Hi Jed! Coral Hail 

I'm glad you were able to find that! Would you mind sending over your suggestion for that PIF goal (or others) as a Feature Request? 

Our Design Team collects the information—every last bit of it—in a database. Just about every day, they go through all of it and code it, and analyze all this collected feedback to plan for what’s next  in YNAB!

Let us know if you have any other questions!

ben Any time you purchase things for the soccer team (or work, or anything else reimbursable), it's important to know how to handle tracking the reimbursement in YNAB so a section of our Help Docs is dedicated to it. Here's a quick summary in the meantime:

We highly recommend budgeting for the entire purchase and categorizing it to the appropriate category. This way, you know you're covered—just in case the reimbursement doesn't come for a while, or at all!

If the original purchase can't be covered right away, allow the category to temporarily have credit overspending. Temporary overspending is only recommended when the reimbursable expense occurred on a credit card because money hasn't been immediately removed from your bank.

When you receive the reimbursement, categorize it to the same category used for the expense. This will also help keep your reports happy since your spending will be offset by the amount of the reimbursement.

Once you've categorized the reimbursement, be sure to check the Available balance in the spending category—that's where the reimbursed money ended up! If you no longer need the money in that category, you can move it to another category.

If you choose to temporarily overspend, check the amount in your Credit Card Payment category after the reimbursement, too. If the purchase and reimbursement were in the same month, the reimbursed funds will move automatically back to the Credit Card Payment category. If the month has changed, they won't move automatically, so you'll need to move them to the Credit Card Payment category yourself.

Matthew 

An unwieldy process for something that used to be much simpler in YNAB 4.

I understand why the "red arrow" was removed, but this topic is raised often enough that I think there's room for improvement.

One of the best compromise suggestions I've seen (credit dakinemaui ) is to allow an implicit red arrow at a category-group level. I.e. allow me carry over a negative balance as long as the net- balance of the whole group is positive. Then I'd put my "Reimbursable Expense" and "Emergency Fund" categories in the same group, and I wouldn't need to do any of the busy-work described in that Help Doc.