Rule 2 after Year 1

Hey 
Well- after a transformative almost year with YNAB, I’m ready to tackle rule 2. 

I’m trying to figure out what types of categories will be strong, appropriate for our lives and informative when looking back at the collected data. 

The standard categories in this section are ok but I’m looking for something more . 
This evening under true expenses I came up with : 
Didn’t see that coming 
Valuable surprise 

These are places we want to spend our money- and I’m trying to get a sense of what this category will cost annually . 

Honestly- I thought rule one was the most important followed by rule 3 

But for now - embracing true expenses seems to be a way to get control of a black hole that we, on the one hand value snd on the other hand would like to navigate better. 

Do you guys have examples of category names that you have found  useful regarding rule 2 spending ? 

To summarize- and sorry for the long winded note - for us there is always a category of

“Wow this is something we should purchase and life is short” 

I’m trying to figure out how to set aside money- and in truth how much each month - to create this flexibility . 

Thanks for reading my treatise. 
Happy to hear any thoughts 

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    Da Baker said:
    The standard categories in this section are ok but I’m looking for something more .  This evening under true expenses I came up with : 
    Didn’t see that coming 
    Valuable surprise 


    These are places we want to spend our money- and I’m trying to get a sense of what this category will cost annually .

     I think a good starting point to a discussion would be for you to tell us more specifically what these mean to you. You are writing in generic concepts, but in order to establish a goal that can be achievable you need to be specific. Unless you have a plan with somewhat certain known costs, you cannot calculate a monthly value needed to save.

    For me, True Expenses are simply anything that is non-monthly. From the mundane of various bills, to sinking funds for home, car and medical needs, to life cycle events, new car cars, vacations, to IRA contributions, taxes. 

    If it's something you need or want to spend money on, you need to figure out how much you need and when you will need it by. Divide the total by the number of months and that becomes your monthly target. if it fits in your budget, you are good. if not, then you need to re-evaluate costs or timelines or both.

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  • I don’t have fancy names for my trip expenses. I just call them what they are: home maintenance/repair, vehicle maintenance/repair, car insurance, medical out of pocket max, Christmas, birthday/other presents, loss of income, charity, tithe, other giving (different from charity because it isn’t tax deductible, investing, IRA contributions, umbrella insurance, vacations, tax prep, and a few others. All of these are important to me and need to be funded. The only one I don’t fund monthly is the medical OOP but that’s only because I have it fully funded for this year and next. The two repair categories are only funded to a cap. 

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  • After the first year of YNAB, I had a great idea of what my True Expenses cost annually because I created a new True Expenses category each time I ran into one.  I don't think I could operate effectively with just two categories.  Maybe that's not what you're suggesting here.  I can't quite tell.

    In no particular order:

    New Car, Long Term Home Repair, Christmas, Technology Replacement, Annual Subscriptions (9 items), Volleyball, Clothing, HOA, Car Registration, Trash and Recycling, Taxes, Musical Instrument Maintenance, TSA Precheck, Conferences and Certifications, Auto Maintenance...

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  • I think, as nolesrule mentioned, you are thinking about the true expenses differently from how many others do.

    For me, true expenses are those that come up at irregular intervals, that wouldn't nicely fit into other categories (or into how I fund those categories).

    So as others have mentioned, car maintenance and replacement, subscriptions, gifting, etc.

    I do still have the Stuff I Forgot To Budget For category, for things I actually forgot about, for things I didn't think to budget for (your "wow this is something we should purchase"), and for "well, I remembered to budget for this, but this is way more expensive than I was expecting."

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  • Da Baker I'll echo what others have said here about True Expenses: being specific is key! ;) 

    It sounds like you're trying to plan for unpredictable expenses you know you'll need to fund by creating big bucket categories, is that right? You might check out this quick video about the difference between predictable and unpredictable true expenses to get a sense of how to handle both types of True Expenses.

    My suggestion? You might create a grouping of categories now that include all of those predictable expenses that don't happen every month that you know about now. Create targets in those categories to save for them incrementally every month. This might be car expenses, home maintenance, gifts/holidays, vacations, taxes, medical or vet bills, etc.

    Then, create an extra category where you can set money aside monthly for surprises that you didn't think to plan for. When you notice a surprise that you know is likely to happen again in the future, create a new specific category for it in the True Expenses group, set a target and start saving for it incrementally in the future. :)

    This Helpdoc on True Expenses might help you get started with planning ahead for your True Expenses. Let us know how you choose to move forward! :)

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  • If you open a new budget and look at the generic True Expense categories you can get a feel for the type of things they are. Like the others have said it is mostly stuff that doesn't get paid every month but it does get paid sometime and normally with a known date, but it can also include known expenses without a known date, like replacing your house roof. There is only one "Suprise!" type category which is "Things I forgot to Budget For" and the reality is that as your budget matures you should find you don't really need that category.

    My own budget is very detailed when it comes to known future expenses with a definite or even approximate date, for example I have a category for my car battery, my car tires, general maintenance, registration, road taxes, and I even put $1.00 / month away to pay for a driver licence renewal in 8 years! I don't bother too much with known expenses that don't have a date, I don't have a new car category even though I know I will have to buy a new car sometime. I will probably just finance it and service the debt rather than save for it in advance.

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