New Year Is It A Time for A New Budget?
Good morning all,
I have been listening to the podcasts as I clean and work on my projects. Jesse in #154 talks about resetting/reviewing the budget for the new year. I was wondering how many do this.
I have never been big on the so calledNew Year Resolutions, but I do look back and reflect, making small changes. However, I can see the start of the new year as a good time to take a hard look at the budget and priorities.
So how do you handle the new year? Total new budget? A hard look, but keep the same budget? Is it just another month?
When I was doing traditional budgeting (non-YNAB method), I started a new Fiscal Year budget each time I got a raise which was yearly. I did this because I was proactively budgeting the expected income instead of waiting for the cash to be on hand. So if my current year income was X and my expenses was Y, I could start the new year with X+Z and then figure out if Z meant a lifestyle upgrade or pay down stuff, etc.
Since I've switched to YNAB, I've found that I don't need to do this at all. If I get a raise, then my Inflow-to be budgeted increases and that's all. Anything extra I budget into my savings bucket. This actually prevents me from proactively trying to spend more. I really like it.
I then can make some better choices about investments, etc.
I think the new year thing is completely arbitrary. People have a psychological need to start things a new but I think its silly just because the month value resets. If you've been doing a good job making changes all year round, then the year doesn't matter. But if it helps you make some new better changes then I say go for it.
I've been using the same budget since I started YNAB in April 2014.
It gets tweaked as priorities change, but I don't see the point in starting a new budget every year. More than half of the categories in our budget are not everyday/monthly, so it would just create more work having to repopulate them with carryover values from the previous budget.
I started a new budget after about 18 months of YNAB. Not so much for a clean start as that I knew more about what I wanted from my budget--I finally brought my retirement in as a tracking account and changed my category structure.
I actually made the move to the new budget the last week of December, though, because I didn't want all my current funds to skew my income for the new year. So I set it up with starting balances on Dec 24th, then started using it as a budget as of 1/1.
But I haven't felt the need to start over since, although I'm glad I did it once.
I've been using the same budget since August 2014 when I started YNAB. I've done one major category overhaul: when I first started my master categories were a mix of temporal (ie Daily, Monthly, Quarterly, and Annual) and functional. At some point (maybe when I moved back to the US in spring '15?), I opted to reorganize my categories into Functional master categories (Everyday, The Home, Vehicle/Transpo, Medical, Finances, Giving & Celebrating, etc).
Oh, and because I was being kinda willy-nilly on what I was saving up for in terms of my discretionary "I kinda want this thing" stuff, I did make a Wish List master that is more of a scratch pad of things I may want but nothing in there gets funded and as I decide that hey, yeah I do want it, I move it into the Wish Farm category to save up for it.
I also don't believe in New Year's Resolutions. If I want to make a change or start doing something, I do it now rather than wait for a random date.
When I started I didn't have a clue where to start so I simply jumped in. After about a year 4 was replaced and I moved over. Guess by that time I had a clue what I wanted my architecture to look like. Since then I've played with it some but not enough to need restart. I like having all the history. I like knowing that the "average" entries are based on some real data. Most importantly I'm enjoying the "available" amount increasing.
If you don't have your structure set up, by all means, start over until you get it. It can be freeing and help find your true goals.
I'm thinking about adjusting some of the amounts I've built up in a few categories. Would like to finally get started on a bond ladder and would have to find $2K in order to fund the one I want. Believe that is what I'm going to do to celebrate this New Year, start my bond ladder. And then every year from now on I hope to fund another one.
I am pretty happy with my structure, I have made little tweaks here and there since I started YNAB about 6 months ago.
I might use the New Year to review and plan there are several goals that I want to start funding. I don't go to parties and such and it seems a better option than popcorn and action movies.
I guess I technically created a new budget when I switched from YNAB4 to nYNAB - I think importing was totally broken so I just spent time (a lot of time) recreating my YNAB4 budget as faithfully as possible in nYNAB - but I think of myself as having the same budget since I started with YNAB4 in Aug 2015.
I like having the historical data you get with retaining a budget and I've never had a reason to need a fresh start so why bother going through the onerous process of recreating something that was already working pretty well?
That said, I have done several overhauls related category structure/organization. Early on I thought granularity would complicate budgeting, but I learned that -for me at least- a high level of granularity actually makes my budgeting SO MUCH EASIER. I have nearly 70 categories but the majority are set and forget except the 1-2 time per year I use the money for it's intended purpose.
In the past I've treated Jan as just another month, but I'm sure it's never a bad idea to use that time to look over the past year and see if adjustments would make things go more smoothly in 2018. I'm an unabashed budget tinkerer, so I tend to make small adjustments as I see issues (read: over spending) arise