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.

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  • I don't think everyone agrees on the same definition, but the way I see it, if you can budget all of June (including True Expenses) before June begins, you're a month ahead.

    Like 4
  • 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.

    Like 1
  • 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. 

    Like 4
    • Magenta Foal Yeah, I think that's how I feel. I'm nearly fully a month ahead (in terms of end of month payment going towards next month), but never really feels like a month. So I think I'll take the long term goal of getting May's pay to go towards July 🙂

      Like 3
    • WordTenor
    • Can we agree that goals are dumb and immature? Sure.
    • WordTenor
    • 4 mths ago
    • 11
    • Reported - view

    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. 

    Like 11
    • WordTenor I mean, you did agree with my definition, so I'd have to work pretty hard to be offended. 😁

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 mths ago
      • Reported - view

      Matthew That you think "if you can budget all of June" and "if you don't need your pay in May" are the same definitions says a lot about just how far "Age your Money 30 days!" is from classic rule 4. 

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    • WordTenor Ah, okay, I see what you mean. Fair enough.

      Like 2
    • WordTenor Interesting! So in summary, what is your current approach to security? Just everything in an income replacement category?

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 mths ago
      • 9
      • Reported - view

      Slate Blue Cyborg I have lots of funds sitting around ready for problems. I confess I actually don't have a ton in income replacement in the budget because I have an incredibly secure job--I'm a (more or less) tenured professor at a big university in one of the big "you don't eliminate this department unless the university closes" kinds of programs. I do keep about 5 months of income sitting in a bond fund in my taxable investing account just in case something really blows up. I don't feel a need to keep that in cash, though, because if I leave my job it will be by my choice and I'll have time to plan. 

      But then beyond that, I have my deductibles for my insurance set aside. I budget 1.5% of my house value every year. I budget $50/mo for my car. I budget explicitly for the replacement of all my tech at the intervals I'd like to have that money available. I budget explicitly for vet emergencies and for emergency travel. I'm currently saving up for my next car (horizon 2025). Between all of these, I have about 8x my monthly average in my budget. My salary, however, like most people in higher ed, is paid one month at a time on the last business day of the month. I budget that money only one month in the future, which means that when I'm paid on Monday, May 31, I will budget and begin spending that money on Tuesday, June 1. I am a month ahead because of the way that my paycycle works, however, it does not provide me with any financial cushion, so I have other types of cushion in my budget. 

      The month ahead power comes from making decisions for an entire month of money all at once, and only once. The current program was trying to solve the problem of having people like me automatically have a cushion as well as a month ahead--I could, in theory, take my May 31 pay and budget it into July. However, what has been lost as a result is that people continue to budget piecemeal, and they don't understand how to decide when they are a month ahead as a result. A lot of powerful clarity is gained from month-at-a-go budgeting, and there are many people now who could experience that clarity but don't realize that's a goal/don't understand why it's valuable in the first place.
       

      Like 9
    • WordTenor thanks for that overview! Great insight. I think I need to reassess what I’ll do with any sort of buffer outside of a fund for emergencies :-)

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    • WordTenor Now that I am budgeting an extra month ahead, I am not aware of any extra effort or loss of clarity, than when I just budgeted into the following month. I am not sure what I am missing? 

      I followed the advice from the video below, which was really straight forward to understand and set up (although it did take some time to get there😀). Following this methodology makes total sense to me and has only added to my sense of financial security since I started using YNAB.  However,  I am really confused by comments on this forum saying that this methodology is wrong. Some of this negativity seems, to me, to be related to how the web YNAB does something different to how YNAB 4 did things. However, I have never used YNAB 4 so a lot of this reasoning just doesn’t resonate with me. 

      Like 1
      • Herman
      • herman
      • 4 mths ago
      • Reported - view

      WordTenor I think  Matthew  definition is exactly the same as yours and ynab 4.  Any money you receive in the current month is pushed ahead to next month.  Whether you budget that as you get it or hold it is personal preference.  If you are pushing all your income into the next month, you are a month ahead.  

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 mths ago
      • 8
      • Reported - view

      Magenta Foal I confess I haven't watched the video (I find Hannah grating but that's fully on me. Her videos are  too cutesy for me for something I consider deadly serious. But I know her style resonates with people, so great. If it works for some people, so be it. Making finances more accessible to more than just us PF nerds is always good). 

      But no, it's not just about grumpy-rumping. I used to be The. Biggest. nYNAB fan and was constantly getting into fights with people about how great the new software was and that it was just them being old stick in the muds about their way of doing things. But almost 6 years on (I started using nYNAB 4 months before it was officially soft released and 6 months before it was officially public released) I've learned that there really were a handful of things that YNAB 4 accidentally did better, and this is one of them. 

      There is a stark difference between budgeting piecemeal and budgeting a month at a time, even if both result in June being fully funded with May's money. The simple fact of knowing exactly when you are meant to stop is in itself a game-changer, especially for anyone whose pay varies even a little (which is often anyone--I have super consistent pay these days but I still get reimbursements, honoraria, etc.) It feels like it shouldn't matter--what's the difference between budgeting June out paycheck by paycheck, and budgeting June out when all of May's pay is collected? But it is night and day in terms of the clarity you feel with your budgeting decisions. When you feel clear about your budgeting decisions, in turn, it is harder to just "borrow" from another category. You know you did this quite purposefully. So it becomes easier to stay within the bounds of the budget. When it's easier to stay within the bounds of the budget, it's easier to send more money to savings or investing, feeling secure that you've made the right choices about your day-to-day spending.

      It's very hard to explain because it's a mental thing, not a budget thing. There was a thread not so long ago in which nolesrule  was explaining that many of us who have been at this a long while shortcut discussions because we've actually spent a long time thinking, engaging, and trying this stuff. So we don't feel the need to adjudicate it for long periods of time, especially for users who kind of show up once and go "But...why?" and then disappear. We used to have a tighter-knit community where it was easier to know that "Oh, person A is really wise; here's their journal with their whole journey, I can see I can trust them" and now it must by necessity be more "Look, trust me; this is the best way." So I get that. And yet, look, trust me, this is the best way. Lots of us have tried both ways and realized this is the better way. In YNAB 4, because of the constraints of the software, you were forced to have a  month of money gathered and make all your decisions with last month's money in a single bucket. And it turns out, that's the best way to do it. 

      Like 8
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 mths ago
      • Reported - view

      Herman 

      If you are pushing all your income into the next month, I agree, you are a month ahead. 

      Here is what Matthew said: 

      "If you can budget all of June (including True Expenses) before June begins, you're a month ahead." 

      Not the same thing.

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    • WordTenor I'm not aiming this at you in specific, just asking all the long time YNABers who subscribe to this idea.

      I tried this out for April and May, using the income for next month category. I'm filling in June as I get money in May. And I'm not finding the lack of clarity that, based on what people have said in this thread and elsewhere, I should be. It's the same number of dollars, going into the categories I've planned out, with plans in place to move the money as needed if less (or more!) comes in than expected.  

      I'll check back in when June rolls around, but right now, I'm finding more clarity in piecemeal budgeting.

      So what am I missing? What perspective am I not thinking about, that I should be? 

      What have you (specific you responding) learned from budgeting a month chunk at a time that you didn't know or missed from budgeting piecemeal chunks at a time?

      Like 1
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 4 mths ago
      • 7
      • Reported - view

      Fuzzball Meows If you know your income and you have a plan in place then there isn't much different in the actual activity because the entire thought process has been managed already and you're filling in the blanks. You're just wasting your time doing something in multiple sessions that could be done once, so at that point it's the difference between a time sink and a time saver. It takes me just a couple of clicks each month to set my budget and then some minor adjusting for a few categories with caps, because I've done it so many times.

      The problem is that a lot of people have not managed the thought process. There is less clarity in budgeting by paycheck, because you are still having to think about priorities on a paycheck by paycheck basis rather than looking at the whole picture all at once. You see your priorities a bit differently when you do this, and generally that change is for the better. They focus too much on bills and groceries and not enough on debt repayment or retirement, and those things need a more balanced weighting that can only be done when you aren't constantly focused on what needs to be budgeted next.

      Like 7
    • WordTenor Thank you for your excellent explanation of why you feel one should budget one month at a time. To be honest I am still not really feeling why budgeting this way gives me any more clarity than the one YNAB proposes, but I do recognise that you have put considerable thought into this over the years and you feel strongly that this is the right way to go. I also feel that the only way I can really appreciate this method is to actually try it out for myself. If I do then I will show up on these forums again and let you know how I get on😉

      Thank you for your attention 

      Like 1
    • Annieland
    • I was told there would be no math.
    • Annieland
    • 4 mths ago
    • 6
    • Reported - view

    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! 

    Like 6
  • 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. 

    Like 3
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 4 mths ago
      • 1
      • Reported - view

      Getting control That's exactly what it is.

      Like 1
    • Getting control Yeah, this is my current target now. Currently aiming to get to a stage where my pay from May is totally untouched until June.

      Like 1
    • Superbone 

      I think you are the one who suggested JL Collins to me.  I read ThecSimple Path to Wealth book and made some adjustments to my retirement account. Thanks for the suggestion. 

      Like 1
  • 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. 

    Like 2
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