How to build a buffer

We are currently a one-income family, making it work thanks to student loans and YNAB. We've managed to pretty much freeze all of our credit card use, which feels great, and are still saving for an emergency fund. How on earth do people in these situations build a buffer? If I come out at the end of the month with $25 unspent I feel like we've won. The idea of living on last month's money seems like a dream, but so many people are doing it that I wonder if I'm missing something. Tips, tricks, ideas, lightbulbs for me?

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  • Upcoming tax refund? Are you compensated every 2 weeks? If so, try living off of 24 pay periods and using two pay periods to buffer. It takes some patience and tenacity.

    Reply Like 5
  • Moved to Discussions>Saving by April - YNAB Team - 10/26

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    • WordTenor
    • Arranged the menu, the venue, the seating.
    • WordTenor
    • 2 yrs ago
    • 12
    • Reported - view

    Send that $25 to do jobs next month. Then, when you squeeze out $25 the next month, December will have $50 budgeted before the month begins. It may be extremely slow but you'll find the pace and your motivation picks up as you begin months with more and more money already in place. 

    Reply Like 12
      • Matt
      • thinkmps
      • 2 yrs ago
      • 3
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      I would second the comment from Tanan Major (faac422e1003) , little by little you start each new month with more of the month already budgeted for.

      Reply Like 3
  • We're in a similar situation, I only work 2 days and we keep things rather tight with just the necessities. We use overtime, and any month there is a 5th Friday (we get paid every week) we try to chuck as much of that as possible towards savings and/or a buffer. Unfortunately we're planning on using Christmas bonuses the same until we reach some savings goals. We hope this stage is temporary, and eventually I'll stop working completely so we want to be as smart as possible with my paychecks.

    Reply Like 2
  • If your income and expenses are consistently pretty close to each other, it does take longer to get to a point where your age of money is higher.  As a previous poster noted, any windfalls that come your way can help you get a jump on aging your money - a tax refund, a cash gift, a bonus, a tag sale or selling via ebay. 

    My husband has always wanted to spend any work bonuses we get on something we wouldn't otherwise buy, but by rolling a bonus into our regular budget we were able to add to our "age of money" last spring - it gave us a jump, then we continued to increase it gradually.  

    Reply Like 3
  • First, budget for everything, monthly expenses, yearly expenses, every expense you know you'll must to pay: bills, car insurance, repairs, and purchases you cannot avoid like winter tires. If you have a laptop and must have it (for work, or studies), you will have to replace it eventually, so start budgeting for that too.
    But I guess my trick is to treat savings as expenses. I have three kinds of savings. One that has a purpose, like saving up for a new fridge or washing machine for the time it dies on me. One has savings for buying a new bike and going on vacation. These two are simple categories. The difference is that I have goals with dates set up for the first, and just a target amount for the second. These "savings" stay in the budget, and if something urgent comes up, I restructure the available funding. I try not to touch the first type, and drain the second type first (still don't have a dime scheduled to buy a new bike). I also have categories that reached their target amount, but by that time the item was not that interesting anymore. I think this is my best kind of win. A victory over the desire to own or buy stuff even when your budget says you have the money.
    The third type of savings is the key to success. This is the amount of money I want to save to survive loosing my job / buy a house / pay tuition when my now 10 year old goes to college. We decided on a monthly amount that we must save, even if that means no Christmas gifts, no new clothes, no gas money, no fast food, etc. Even if I may keep this amount on my regular bank account, I created a tracking account for it in YNAB. And I make a virtual transfer every time my monthly salary arrives. So for budgeting purposes, it's money that doesn't exist. And little by little it is growing. It might be $20. But it adds up.

    Reply Like 6
  • Ynab has a guide for this exact thing : How to age your money.  Ultimately, for a one-income family, it will take time to get there. If spending less isn't enough, it maybe time to look at how to increase the family income.

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      • ClimbingOutOfDebt
      • I think I can I think I can
      • ClimbingOutOfdebt
      • 2 yrs ago
      • Reported - view

      Green Chef (baec6327c25b) It's an interesting question, and not as clear as I thought.  We already reduced our spending pretty significantly, but since this one-income thing is new, we're still trying to figure out if it isn't enough or if we aren't managing the shift as well as we hope to be in a few more months.

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    • Marisahowardkarp Is there any way for you to increase your income with a side job or some other means? That might help give you some breathing room. I'm single and only get paid 1x per month, it tough building a buffer but I have a 2nd flexible job and has helped me to be able to pick up extra money here and there.

      Also look for windfalls, are you expecting a tax return or do you get a bonus?

      Reply Like 1
  • When we built our buffer, we were a two income household, but we had $45k in debt we were trying to pay off too. We ended up using our tax refund, and then our "extra" paychecks... we both were on a 26 week pay schedule, so twice a year, we each got an "extra" deposit that wasn't considered in our budget. 

    Reply Like 3
  • Building the buffer can take a while. I'm single, so I guess it's a similar single-income household situation. I have been using YNAB for a long time but it took me a while to start actually following the rules and stop using it as a glorified expense tracker.

    Once I started to do that, I found that I could squeeze $5 from one category here and there and put it into my Buffer. I created a category in my budget called Buffer where I would move the little bits of money. As I got more disciplined with the process and with budgeting my money, I was able to put $20, $50 into the buffer over time. I also would add in any tax refund I got as well, even though some of it went towards paying off debts at that time.

    As I was budgeting each paycheck when it arrived, I would start to add money to the buffer right from the start as I would any of my other obligations. At the end of the process, if I had a few extra dollars (and I'm talking like $2-10, not hundreds!), I would move that to the buffer. Honestly, I would sometimes look at it and think what the heck I am even doing this for, this will take FOREVER at this rate. But I'd take a deep breath, and keep plugging away. Also as money starts to build up in other categories, you can also take a hard look at some of those and see if it makes sense to move some or all that money into the Buffer.

    Unfortunately, there's no magic to it, unless you get a huge raise, huge windfall, decrease expenses so much (temporarily) to reach the goal. It took me consistently following the process I described, $5 at a time to finally get the buffer in place - almost 2 years. It's been amazing to be ahead each month and pay bills at the top of the month and be done. I feel like I'm SO rich 😁

    I'd say it's worth it but it's not easy, especially when there's only one income to work with. I know that it's not quite the same when it's one person/one income versus a family/one income, but when it comes to the budget, it's all the same.

    Reply Like 10
    • ani1119 Question, so are you paying your next month's bills with your buffer or is that money you just don't touch, like a rainy day fund or something? I'm fairly new to YNAB yet so I'm still trying to get used to the concept of aging money and paying next month's bills with this month's(?) money? 

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      • jenmas
      • jenmas
      • 2 yrs ago
      • 5
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      Alice Blue Unicorn (18948d724f18) Here is how I built a temporal buffer back in 2014 when I started YNAB. I created a category called Buffer. I added money to it until the category total equaled what I needed to budget for a full month. For illustrative purposes let's say I reached that point when I received a paycheck on September 25. At that point I flipped over to my October budget and emptied out my Buffer category and then budgeted the full month of October. After I did that I hid the buffer category and never needed it. When I received paychecks on October 10th and 25th, I budgeted them in November and so on and so on.

      In this situation a buffer is completely separate from an emergency fund or loss of income fund  or what have you. I don't have an emergency fund category, instead I have a loss of income fund with about 6 months of expenses, a home repair category with a few thousand, a car repair category with a few thousand, and a medical category that has my annual out of pocket max on the first day of the plan year.

      Reply Like 5
      • ani1119
      • ani1119
      • 2 yrs ago
      • 1
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      Alice Blue Unicorn (18948d724f18) 

       

      I'll echo what  jenmas said about the buffer. Now that I have it up and running, at the start of the  new month, I send the money in my Buffer category up to the "To Be Budgeted" category at the top (I do this by simply entering -xxxx in the Budgeted field, which makes the amount show up in the To Be Budgeted). Since I started using YNAB in the older version, I modified the process I used there for new YNAB. - which is why I still use a Buffer category.  I then budget for all the categories: all my bills, my savings, my variable expenses (gas, groceries etc) until TBB is down to $0. Each paycheck I get then is added to the Buffer to get it ready to battle for the next month. Again, it took a while to get the buffer built up, so don't worry if you feel like it might never happen. Once the process clicks, you'll be amazed at the change in how you budget!

      Reply Like 1
  • Cadet Blue Yeti (64033523e151) said:
    I have been using YNAB for a long time but it took me a while to start actually following the rules and stop using it as a glorified expense tracker

     I agree in general with what you said and specifically wanted to call out this comment. I went through the same evolution before I fully understood and started to gain from the budgeting process.

    Reply Like 4
      • JRoosh32
      • JRoosh32
      • 1 yr ago
      • 2
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      Matt I started well and then moved to using YNAB as a glorified tracker too. But I sure noticed the difference once I started using it properly!

      Reply Like 2
    • King
    • Obsidiank
    • 2 yrs ago
    • 1
    • Reported - view

    I don't think you're missing anything.  If you follow the rules, inflow > outflow then you'll build buffer.  Slowly but surely. 

    The problem is your first sentence.  As a single income is your inflow and outflow so close that one mistake blows out your buffer?  If so, the only tip I can suggest is that you need to not be single income or the income needs to be higher.  You can only cut expenses so much.  Second jobs, side hustles. 

    I got a my gf using YNAB for about 4 months now.  Here outflow with student loans is almost always greater than her inflow.  Her debt just keeps growing and her expenses are at a minimum.   But she won't get a second job or try to do anything that will generate more income.  I have two side hustles that bring in an extra 20K each year.  

    If you've exhausted your expense cutting, I really suggest trying to figure out more income.  

    Reply Like 1
  • Marisahowardkarp There is some great wisdom in this thread! Chipping away at that buffer can take some serious time and commitment, but if it's the priority, you'll definitely make it happen!

    If you ever have 30 minutes to spare, you'll find some more practical tips and tricks in our Break the Paycheck to Paycheck Cycle workshop!

    Reply Like 3
  • Any room to remove anything from your budget at all?  Even for the short term?

    I started a from-home side gig that allowed me to work when the kids were in bed.  The extra income went to the debt I was working on or to my 911 fund.  

    Reply Like 1
    • Michael
    • I desire to inspire.
    • echomike782
    • 2 yrs ago
    • 1
    • Reported - view

    Have a yard/garage sale. They're a lot of work, but might give you a boost when you need it! We managed to make $600 in one day (not including the prep work).

    Reply Like 1
    • puddlejumper24
    • Construction Office Assistant/Artist
    • Purple_Yeti_2deb5a392c7
    • 1 yr ago
    • 2
    • Reported - view

    I'm married with two young teen stepkids, but our income is similarly tight because my husband is establishing himself in commission-based sales (real estate). Things are tiiiiiiight. 

    My DH is on board with YNAB and budgets, but sometimes he gets spend happy with the kids. Sometimes I get spend happy, because I am the one running this budget thing, and think I deserve a "treat." I was getting frustrated with "Rolling with the Punches" and robbing the light bill to cover up our oops moments. (We really are that broke...) So I came up with a little trick to hold back some money. 

    I leave an amount in "To Be Budgeted." Yes, I realize this is not Budgeting to Zero. But for some reason, my brain doesn't readily register that money when I'm scrolling through the budget. It doesn't seem to register with my husband either...he doesn't feel confident enough with the software to move money. He just records transactions. Ultimately, I may have to move some of that money to pay for school project supplies or Friday night pizza, but I've found I feel less frustrated with that little bit of money that is not ear-marked. If, by luck, there is money leftover, I put it in the Buffer. 

    Another tip...pick a bill and start adding a little extra money to that category. It might start off with just the water bill, but wouldn't it be great to be able to pay one bill without worry or waiting for money to come in? Similar to the Debt Snowball, getting a small win with one bill makes you want to keep going!

    Reply Like 2
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