Too Easy to Cover Shortages...

Hey there!

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.

Thanks...Peace...Away...

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  • 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.

    Reply Like 5
  • 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.

    Reply Like 2
  • 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.

    Reply Like 1
      • monkeyhanger
      • No animals were harmed
      • monkeyhanger.1
      • 6 mths ago
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       I think the key is to be intentional. Making the decision that one category is more important than another BEFORE you spend the money is I think key.  Heatskitchen 's suggestion would make it really clear what you're stealing money from and then you can decide if it really is more important. Personally, I don't like budgeting in future months because of the risk of unwittingly stealing from the future but you can mitigate against that with Toolkit options. I know what I need to fund a regular month and I only budget each month once so I always know that stealing from next month's money is only kicking the can down the road. So I try and reflect reality and pull from other categories. As jenmas  said you're not affecting your expense tracking in reports.
       

      Reply Like 2
  • I don't. My budget doesn't control me; I control my budget. If I decide I'd rather have or do thing X, I can decide to wait a few more months to buy a new item of clothing, see a movie, get a haircut, or whatever other thing is low on my list of priorities.

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  • 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).  

    Reply Like 3
  • 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.

    1. 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.
    2. 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?
    3. 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.
    Reply Like
      • jenmas
      • jenmas
      • 6 mths ago
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      away2maine - well, if you are zero-ing out your categories, there is no short or tall. 😉

      Here is the thing, a budget is a plan based on the information you had at the time you made the plan (ie 1st of the month). Facts on the ground change (flat tire, illness which leads to canceling an event so no money spent). Things not going 100% to plan is normal so you shouldn't let yourself fall into a trap of "I didn't budget enough for this category so I failed". More informative metrics are going to be what is your average spend on this category and how did this month compare to that average.

      Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      away2maine Why are you using a deferred income category? Do you have irregular income and it's used for smoothing your budget? Or are you trying to get a month ahead and using leftover funds to do that?

      Because other than those 2 reasons, you should be finding something more constructive for that money... and that may help guide you to better use of your money overall.

      Reply Like 1
      • away2maine
      • away2maine
      • 6 mths ago
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      nolesrule It was a recommended approach to incorporate after the transition from YNAB4 since many didn't love the Age of Money language and approach verses the previous version.  In short, yes, it's about a snapshot to see what is building for next month.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      away2maine Oh, so you're using it as a replacement for YNAB4 Income for Next Month. So are you a month ahead without having to use the leftover funds?

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      • away2maine
      • away2maine
      • 6 mths ago
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      nolesrule The situation is complicated because I also handle my MIL's finances and incur those expenses in a given month, with the reimbursement for those expenses coming in the following month.  So, I can back-date the reimbursement check to clear those out after the fact, but still feel a need to allocate funds in the current month to cover them as they are incurred.  So, without handling MIL's expenses, yes.  With MIL's expenses, typically no. 

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      • nolesrule
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      • nolesrule
      • 6 mths ago
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      away2maine In that case, I'd probably open a separate checking account, move enough money into that to cover a month of mother in law's expenses, and get all of her stuff out of the budget/accounts entirely.

      Reply Like 4
      • VickiS
      • VickiS
      • 6 mths ago
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      nolesrule away2maine   I second this.  We are in a similar situation of helping MIL with various expenses and bills--but not fully EVERY expense at this point.    As the main Ynabber in our house, despite due diligence to track her funds through our budget, it became a major pain and possible (remote, but possible) point of contention with siblings.

      Her money is now in her own account and not in our budget.    I do have a MIL category in our personal budget, though, prefunded to a certain amount for the odd purchase/expense we handle on her behalf through our funds and for which we are reimbursed but this is rare..

      I've been very satisfied with this set-up for the past year.

      Reply Like 1
      • away2maine
      • away2maine
      • 6 mths ago
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      nolesrule VickiS I seem to like to make things complicated, but there is merit IMO.  We pay all of my MILs expenses from top to bottom and we pay most all of them via our points-earning credit card.  These points are the equivalent of free money in this case, so I'm hesitant to just leave that behind.  We then reimburse ourselves at the end of each month for that total and drop that into the matching category for her expenses.  So, I typically budget an estimated amount for her costs and at the beginning of the following month I backdate the reimbursement income from her to the covered month and then I release those previously budgeted amounts back into the TBB category for the next (which would then actually be current) month.

      Of course budgeting ahead for these expenses fills the requirement of giving each dollar a job, but it also then takes away from the "reality" of my 'personal' financial picture because it is fully an in-and-out category that I will bring to zero at the end of each month with a separate funding source.  If I don't actually budget for those reimbursement expenses and let those ride in the red, then the financial picture is more representative of my personal reality.  Know what I mean?

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      away2maine If you are going to insist on running it through your credit card, you're better off just incorporating it into your budget entirely rather than running it as reimbursements. Dealing with reimbursement management across months creates loads of extra problems in managing the budget that could be avoided entirely.

      Use the reimbursement money instead as income to budget for the next round of expenses. Or better yet, switch from reimbursement to having the money come in before you pay for the expenses, and use it to budget for the expenses.

      Reply Like 1
  • away2maine said:
    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.

    Reply Like 1
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