Quick question about Overfunded Need for Spending goals

  • Scott
  • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
  • Scottgoeshiking
  • 1 mth ago
  • 7 replies
  • 81

I have a Need for Spending goal for auto insurance that should reflect the consistent monthly payment. Recently my insurance has been "refunding" a portion of the cost due to COVID, resulting in overbudgeting in that category. If I transfer that overbudget to another category for the month, the Need for Spending category turns yellow even though there is no additional spend planned for the category.

1. Does it make sense to transfer unused budget mid-month to another category?

2. Should I care that a Need for Spending goal is underfunded? The guidance I've seen suggests underfunded is bad, but in this case I've actually funded the right amount for the month, it's just a different amount than the normal recurring amount I have the goal set to.

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    • Rhino
    • Rhinowithatrunk
    • 1 mth ago
    • 1
    • Reported - view

    1.  If you need the unused budget for something else, transfer it out and don't worry about it! (Rule 3)  If you don't need it for something else just yet, just leave it and you will have to budget less to fund the category next month.

    2. No you shouldn't care.  It's rule 3 again.   The assumption is that you made a conscious choice to:

    a) not fund the category in the first place for a good reason (i.e lack of funds/ don't need it to be funded right this minute)

    b) needed the money elsewhere and moved it

    I usually end up with a couple of yellow categories towards the end of the month as I move money around to roll with the punches.

     

    One alternative you have is not to use the Needed for spending goal, but to set up the Auto insurance as a recurring payment.   Once the date for the payment is passed I don't think the goal will turn yellow if you move left-over money out of the category.

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      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 1 mth ago
      • Reported - view

      Rhino Thanks! I do also have the auto payment as a recurring payment. It made sense both to set a goal for the amount I expected to spend, and also set up a recurring transaction anticipating when the money would be spent. In hindsight though, maybe it doesn't make sense to do both?

      I'm still a little fuzzy on recurring transactions.. in theory they seem great and I've set them up for all my recurring expenses, but more often than not, I have a recurring transaction that lands before the actual charge and ends up sitting in my "to be approved" for days until the transaction occurs and syncs. Often the dollar amounts differ slightly too so I have to manually match the transactions.

      Anyway, it makes more sense to me to set a budgeting goal. That way, I know to allocate the "right" amount into the budget category automatically. Otherwise, I think I'd need to look at my upcoming transactions for the month to plan the category, or go back and compare to the previous month. Both ways seem like more work.

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  • Hello, Scott !

    When it comes down to it, a goal is a reminder. An underfunded goal isn't bad! In this case, it just means circumstances changed.

    I think there's always a tension with goals between being clear enough to actually remind you to do what you said you wanted to do, but also flexible enough to let you change your mind easily. We tend to err on the side of clarity over flexibility with goals, I think, and this is a case where I would do exactly what you're thinking: move the money and ignore the yellow number.

    Like 1
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 1 mth ago
      • Reported - view

      Matthew Thanks, that makes sense too. Since the category is always budgeted the same each month, it really doesn't make much difference if I move the extra budget or wait until the next month with it rolling over. Either way, other categories will benefit, it's just a matter of timing.

      It happens that I work with a particular breed of budgeting and cost analysis in my job, and in that world a budget is an annual process that gets set in stone once approved, and then there can be monthly or quarterly forecasts that use the budget as a baseline to make more accurate short term predictions. Either way, once a month is underway, there's no concept of updating the budget or forecast mid-flight. You either end up over or under budget and then use that information to inform future forecasts or budgets. With YNAB, "locking" a monthly budget doesn't seem to be a thing, and it's a little weird adjusting to it. In my world, being under budget is just as bad as being over budget, and both happen all the time. With YNAB, it feels like spending below the budgeted amount is ok, while spending more than the budget is a big sin that should be corrected within the month if possible. I guess that reflects the reality that most personal budgeters are living within weeks or even days of zeroing out their bank accounts, while corporations generally aren't.

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  • Scott said:
    I'd need to look at my upcoming transactions for the month to plan the category

    A scheduled transaction has an associated implicit goal in the month of the outflow. Hitting Underfunded will fill in the amount the category is short of the scheduled amount. Works well for monthly bills that you don't need to normalize.

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      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 1 mth ago
      • 1
      • Reported - view

      dakinemaui Thanks, that's great to know. I'll test it out. Maybe I don't need so many goals after all!

      Like 1
      • Bruce
      • Software Engineer
      • Bruce
      • 1 mth ago
      • 1
      • Reported - view

      Scott And it works that if you have a smaller goal (say $30.00) and a scheduled transaction for $45, the underfunded will take the $45.  But if your scheduled transaction was $15, then underfunded would go with the larger goal of $30.

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