Too Easy to Cover Shortages...
I've been loving YNAB for years now, but have had the fortune (somewhat a misfortune) of always being able to easily cover any shortages within from an often replenishing To Be Budgeted (TBB) category (between DW and myself between 5-8 paychecks per month). I understand that each dollar is given a job and when all of my current month budget amounts are allotted and excess income occurs, I plop it into a Deferred Income category (which was recommended by a fellow YNABer a while ago) for holding until the following month.
My challenge occurs when I maybe slide $23 dollars over on a $400 budget line and there is a recent income from a paycheck or other source that drops funds into the TBB category and I have hundreds of dollars sitting in the Deferred Income category. It is soooo easy to just say, oh well, I'll just pull that from TBB and call it good. I find I do this for two reasons; 1) It's easy and seems insignificant overall and 2) pulling from available balances in other expense categories throws off consistent tracking for those at the end of the month.
My question for folks here is how might you deal with this if/when it occurs for you. I can't be the only one here that struggles with this.
I don't see why pulling from other categories would throw off consistent tracking. You are reflecting reality.
For any number of reasons, you made a decision that auto repair was more important than home maintenance this month or that having dinner with your cousin who is only in town for 1 day and you haven't seen him in 5 years is more important than the house down payment. Those are perfectly valid decisions that you have every right to make. Ideally you want your budgeting decisions to reflect your values (you value being able to get to work so fixing the car is important. For many people, family is a high priority and if you haven't seen Cousin Joe in 5 years, it makes sense to prioritize that over adding $20 to the down payment category, especially when your target is 3 years in the future).
Spending isn't a straight trend line, it's lumpy, that's reality.
What about adding some more aggressive savings goals to mop up some of that excess that you're tempted to use for short-term spending?
For example, if you set a monthly funding goal for your retirement savings—or increase the one you have now—I suspect it'll be harder to steal from that category than from the catch-all "deferred income" category. Especially if you're promptly sending the money off to your retirement accounts.
Or wish farm it. In any case, I think the key is that it's easy to steal from an undifferentiated pile of money and harder to steal from a specific category.
I might suggest getting rid of the deferred income category. Why not actually assign those dollars to your specific categories in the next month? If you need to WAM, then you know exactly where you're taking it from. To be clear, there is nothing wrong with what you're doing. You're rolling with the punches. But if you feel you need to be more intentional with your WAM-ing, that may help.
Based on advice from this forum, I have found it really helpful to get a full month ahead so that I'm only budgeting once a month - it gives me a clearer picture of my needs / wants / goals, and has helped me be more intentional around savings. Under this approach, all money coming in during the month goes to a holding category (Next Month's Budget), and is then released at the end of the month when I go to budget for the new month. I far prefer this to budgeting multiple months ahead (because of stealing from the future, and also just appreciating the ability to focus on this as a monthly process).
Great responses so far...Thanks!
These are very helpful and I can certainly exercise some of these options. The answers have also prompted me to be a little more clear on a few points.
- Here is my end of month process for consideration and constructive criticism: After some pulling from TBB and a little WAM, many categories end up with a positive balance. These positive balances are then pushed into the Deferred Income category, leaving an overall $0 at the end of the month for all except accruing categories. Then I roll to the next month, release the Deferred Income into TBB and start budgeting for that month.
- Generally speaking, I almost always budget enough in total estimated expenses to cover total actual expenses and often with a little overall cushion. As such, my lazy-mind says why WAM across categories when some of those same funds will be left to roll over to the following month when you can just pull it from this morning's new paycheck TBB amount?
- Regarding tracking my point is not about reporting as much as being able to look at the screen and see at the end of the month how short or tall I was on the budgeting in those categories.
Generally speaking, I almost always budget enough in total estimated expenses to cover total actual expenses and often with a little overall cushion. As such, my lazy-mind says why WAM across categories when some of those same funds will be left to roll over to the following month when you can just pull it from this morning's new paycheck TBB amount?
I prefer to cover deficits from other categories therefore I never keep income in TBB until I'm ready to budget. (I budget next month with this month's income and keep all income in a Buffer category from which is used only for budgeting next month.) Now I'm not taking it from TBB and instead have to choose which category(s) to transfer from based on my priorities. If you're just taking it from TBB, then you're not prioritizing your spending.