I want to stop raiding my savings
I've been doing YNAB for a while but have never made it work yet. I was watching the Whiteboard videos (hilarious and helpful! btw) and realized cuz it's cuz our family and I never wanted to look at my real expenses. I never budgeted for dental or medical, or car repairs. Cuz it was too anxiety provoking.
I'd 'm allergic to debt, and so don't have any. BUT I'm also in a new family financial situation where my husband and I have separated finances, and I might be on my own. Here's the deal. I have a nice chunk in savings, marked (do not touch) and find myself doing the same thing our family has done... when I don't have enough, I just raid savings.
I want to stop this forever!
I just did a Fresh Start and took a real look at my monthlies, and budgeted for all the stuff I'm scared of. I actually have a LOT of categories with green for the next month, so that's good, but what I am bringing in is monthly about what I'm spending and that's hair raising. I'm also self-employed and revenue is really unpredictable
So that's a lot said, BUT short story is if there's a bigger unexpected expense, I want to make sure not to raid my savings. Any tips?
It all boils down to 2 options: earn more or spend less. How you approach either of these options may vary, but in the end that's all there is. Spend less consists of taking a long hard look at all of your monthly expenses - can you get a cheaper cell phone plan? How about doing some research for cheaper car insurance? Sell things you no longer use. Keep an eye on the thermostat. Shop for groceries more thoughtfully - use everything you buy, bulk up meals with less expensive items like beans, buy store brand.
Bring in more - well, what can you do to improve your business? Are you invoicing regularly and as aggressively as possible? Are you enforcing penalties for late payment? Can you pick up a part-time gig - delivery driving, online tutoring, secret shopping, etc.
If you have an unexpected expense that you haven't had a chance to budget for, all you can do is add debt or raid your savings, so you need to better position yourself to cover things like car repair, medical out of pocket costs, home maintenance, etc.
1. Be specific with your savings --A category called "savings" is too vague to really comprehend.
2. Check category balances, and move money IN ADVANCE of overspending.
It hurts more when it's "Mexico Vacation Summer 2019" -- and you're not likely to rob it to go out to eat the 12th time this month.
Karryn Green said:
if there's a bigger unexpected expense, I want to make sure not to raid my savings
You can never count on that. You should, however, only raid LOWER PRIORITY categories. That might be something you currently consider "savings" or it might not -- another reason to break it up into more concrete, smaller piles, so you can assess on a priority basis.
Unpredictable revenue is often handled with a Deferred Income (DI) category. Target your budget at your average salary. Put anything in excess of that into the DI category. When you bring in less than the average, release the difference from the DI category, so the rest of your budget doesn't have to change.
Then hope you have surplus months before the lean ones!
If the DI category is empty, you MAY have to draw on other categories. Note, I didn't say "draw on savings", because in YNAB, EVERYTHING is savings. Might only be saved for 2 days or it might be 2 years, but as soon as it's in a category, it's saved.