Handling an annual budget item

Hi, 

I'm new to YNAB, so apologies if this is a simple one. We have several annual budget items, such as vacation, that we don't need monthly or even bi-monthly. Is it as simple as taking the annual budget and dividing by 12? Seems like that will throw off the actual budget to have a lot of money showing in the monthly budget that we know won't be spent then. Just wondering if there's another, better, way that people use.

Thoughts? Thanks!

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  • YNAB is an allocation budget, not a ledger budget. So yes, each month, in addition to setting aside money for things you’ll need that month, you’ll set aside money for things you know will need later like vacation and things you just think you may need later, like fixing siding on your house (not that I know anything about that/woke up to my handyman friend on a ladder outside my bedroom window)

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  • Thisnis the foundation of Rule 2. Make sure you learn about the YNAB method as you set up the software. There are webinars, videos, and reading materials—choose your best learning mode. 

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  • I set money aside every month for Christmas, birthdays, short trips to visit family, longer vacations, etc, as well as the stuff I have to pay every month and my annual bills like car registration, or stuff I know will happen eventually like car maintenance. My plan for each month's income has to cover immediate and future needs & wants.

    I put less-frequently used categories in a separate master category than the ones I spend from most often. It helps keep my budget categories organized as well as making it more clear which categories I feel comfortable taking money out of if some expense was more than planned (rule 3).

    Doing it this way (following Rule 2) means I don't have "budget busting" expenses anymore. I can prepare ahead of time & not have to go into debt.

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  • I would add: not having money accumulated in categories is what throws off the budget!

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  • What I did, (and I think I did it right!) was create a category for each annual expense or type of expense. Then in each of those categories I set a "target balance by date" goal. So for example, for my YNAB subscription, I'm estimating I will need $118 by January 2020 (that's Canadian conversion).  I entered that as my target balance and January 2020 as the target date. Now when I click on that category or hover over the available balance in the desktop app, it tells me I need to save $9.81 each month to stay on track for that goal. If I save at least that much, it will turn green; if I don't, it will stay yellow to show it needs attention. 

    It's going to feel so good when things like my annual water heater bill comes, or my piano tuner appears 'out of the blue' to remind me of the appointment I had scheduled last year and forgotten about, to have that money ready and waiting. :) :) I can't wait!

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  • Yes, that is exactly what you should do. 

     

    Use christmas for an example. You need $1200 by December. You enter that as a goal in YNAB. Each month you will budget $100 to that line. In January the category will say you have $100 available. In February that $100 will still be aging as available. Youwill budget another $100. Now you have $200 in that category. 

     

    This wont throw off your budget at all. 

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  • Thank you all very much! This was all very helpful. I'm actually taking a workshop today on the rules, to put in more perspective, but this all makes perfect sense to me. Thanks again!

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