What exactly would be a month ahead?
My wife gets paid on the 15th of a month, and me around the 25th.
I’ve read most folks refer to being a month ahead as using this month’s money to budget for next month? So would it be fair to say I couldn’t fund next month fully without the pay on the 25th? That doesn’t feel like a month ahead in my head. Just technically, I wouldn’t be using the pay on anything in the current month.
I agree with Matthew , but I have also found benefit in getting 1.5 months ahead. Our paychecks are similar, but the second is the very end of the month.
I like being able to fund my next month budget at any point (usually the weekend before the 1st) after the 15th's paycheck, plus the advance notice if the income will be less than expected.
If I was only a month ahead in that May's money is all budgeted in June, I would have a very small window of time to budget before the 1st.
I get paid a few days before the end of the month and used to use this to fund the following month. However, although I was technically a month budget ahead, it didn’t feel right; it felt more like I was just a few days ahead.
What did work for me was to get another month ahead, so there is no question of whether I feel I am one month ahead or not anymore😀. It took a while, but it was definitely worth it for the extra peace of mind it and sense of control it gave. So for this month (May) is fully budgeted and so is June. When I get paid on May 27th this will all go to fund July’s budget.
Being a month ahead comes from YNAB 4. So while people may disagree, sorry Matthew, it was defined very clearly then and there actually is a right and wrong answer here. Since it is no longer truly a concept in nYNAB, it’s best to use the old definition. That definition is: do you need any income earned this month in this month. If no, you’re a month ahead. If yes, you’re not. Doesn’t matter what you can budget with your income, it matters that you can take all your income from month n and push it into month n+1.
This made some people unhappy because it means that technically, if you are paid a month at a time on the 31st and don’t use your income for one day, you are a month ahead. People rightly recognized that this is almost no financial cushion. So YNAB went to the other extreme and, IMO much to the software’s detriment and people’s confusion, created this free-flowing structure.
Depending on your pay structure, being a month ahead may create a small cushion, a large cushion, or no cushion at all. This doesn’t actually matter. Being a month ahead is a budgeting technique which allows you to make better decisions and not have to fiddle with the budget as often, not the primary means to have financial security. If your cushion is small, you need more reserve funds elsewhere. But you are a month ahead if you use all your pay earned this month, next month. It has nothing to do with what you are able to budget with that pay.
Money is fungible. Budgeting May’s pay in July is no different than budgeting May’s pay in June and having a larger income replacement fund. The only difference is that budgeting further out compounds the possible problems which can occur and requires you to fiddle with the budget more often. More work for no benefit is not how I like to roll but people get very angry I’ve found when you point out they’re using YNAB less efficiently than they could so if you want multiple months budgeted, you do you, and others of us will do easy and streamlined.
I find this thread so instructive, I've read it multiple times and am still trying to figure out where I fall in this continuum of thought. There's so much of using YNAB4 I don't even remember anymore, but of course I still remember the income for next month drop down. I remember when my husband worked for a University he got one payment at the end of the month, but I'm honestly too scared to load up YNAB4 and look at how we did it back then. It's a memory lane I just don't want to travel down :).
What's kind of interesting for us, and maybe not many of you, is a lot of our income is from "RSU" and ESPP stock payments. Since they're on 3 different schedules, with 6 income events a year, I have 3 categories for them and when they come in I calculate a 6th to release each month going forward. So at the beginning of May I can (and do) easily go into June and release the amount from those 3 categories and fill a bunch of routine categories, goals, and upcomings. Lately, that is able to cover around 80% of my categories, which is pretty cool. Then the meager paychecks go into INM to fill in the gaps for the next month. So I guess I don't really have "Month Ahead" clarity by YNAB4 or nYNAB proposed definitions. Still gives me a lot to think about though, so thanks all for that!
I put my paychecks in a HOLD FOR NEXT MONTH category. So on May 1, I moved all the funds from HOLD FOR NEXT MONTH into the to be budgeted. Then I budgeted for the entire month which includes monthly funding to all my freedom accounts for non-monthly bills. My May paychecks will go to the HOLD fund and will not be used until June 1 to fund the entire month. It took me almost a year to build my hold account up enough to be in this position. I feel like this is a month ahead.
I think there are two separate issues.
first: being able to budget a whole month out before the month starts changes the way you do the ynab day to day. This feels good and lifts all anxiety about bills in the coming month. Well worth doing this, in my opinion.
second: having a financial cushion. One month? Two? Three? Some people have a 6 month cushion (i think id really like that but sadly unlikely). And that raises questions around having a holiday / new car/ move house/pay off loan now or having a cushion first. The answer, of course, depends entirely on your own priorities.
Budgeting the whole month before/as it starts is a 1 month cushion; uncertainty starts at the start of the following month. But its more comfortable if all the $ for that following month is gathered well before; less comfortable if its just a day or 2 before.