Is zero based not for me?

I have been using YNAB for over a year now.  At first we really just used it to track our spending to see where things were actually going. We then set a realistic budget for ourselves and monthly goals for categories many of which fluctuate over a 12 month period. Late last year I moved 1 months income into a buffer account so that we could spend Januarys income in February etc. That brings us to now: side note we do not have debt outside of a Mortgage and we are really just trying to hold ourselves accountable to our overall yearly spend goal.

In January we "overspent" in some of our categories so I moved money from other categories to cover.  No problem.  But for my purposes this feels like it's impossible to really know where I am in a yearly sense in each category. When I am moving $40 from gas to cover a grocery overspend I feel like am loosing track of the fact that I have now underfunded gas by $40 looking into the future. 

I know that this software would previously allow you to carry a negative balance in a category (ie robbing from the future of that category)but it no longer does. I feel like this would solve my problem. But right now it just feels like endless tinkering to make it all work. 

Any help? Is this just the wrong software for me?  

Thank you for any help or feasible workarounds!

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  • I feel running a negative to kick the can down the road would be worse. I strive to reallocate from the least important category -- something I could give up. Therefore, I don't have to track "pay-backs" and the concept of being "behind" doesn't exist for the most part.

    Occasionally for major reallocations, I make it up in future months, again with the least important (and likely longer timelines) things getting short-changed moving forward.

    In other words, I wouldn't take from Gas if anything else could take the hit. If I wasn't able to live within my means that month, the reality is credit must be used.

    Like 5
  • YNAB is a lot more Now focused than it seems like you want. If your only focus is yearly, then that is a different focus. On the other hand, if you want to control your spending, you need to know where your money is now, and what you have now, to decide whether or not to make a purchase now.

    The longer term benefits result from that focus. When we started YNAB six years ago, we were in credit sink, with the HELOC maxed out and the CC's nearing max. Now we have no debt, including mortgage, and pay the CC's in full every month, and have a nice retirement nest egg.

    Consider what you want your goals to be, as priorities are the recurring theme of YNAB.

    Like 2
  • Running a negative category effectively pretends you have money you don't (elsewhere in the budget).  I feel it interferes with prioritization and leads to greater spending overall.

    I mean, without having to reallocate, money is clearly reserved for spending in some other -- lower priority -- category. Why wouldn't I spend it?  The impetus to slow spending (the negative balance) is elsewhere.

    In fact, it's in a category that was very recently demonstrated to be of very high priority (high enough to scrap the original plan). In my experience, I still spend on that original category AND the lower priority category.

    As always, YMMV.

    Like 1
  • I also have no debt other than my mortgage. Sure, you may sometimes go over a category and have to move from another but I'm sure you also have other categories that have a surplus. To me, it all balances out (duh, zero based 😉.)  As long as my overall budget funds continue to grow, I don't worry about it. I also track my net worth in YNAB and make sure that continues to grow over time.

    Besides, what alternative system do you think would be better? I personally don't want a system where I constantly owe funds to other categories. I've lived a life of scarcity in the past. I'm enjoying my life of abundance in the present. Oh, yeah, that previous life of scarcity was pre-YNAB. YNAB is what got me to where I am today and I don't see any reason to change it.

    Like 3
  • Hi, perhaps the issue is that with YNAB one thing you cannot do is see what you originally budgeted and then any adjustments that you made. The budgeted amount is always a rolling amount that does not differentiate. It sounds like that may be an issue for you because you might want to see that originally you budgeted $100, then you overspent that budget by $40 and added it from another category. YNAB does not allow you to see that. However, you can look at the average budgeted and it will give you the overall feel. 

    Perhaps you can have your original budget for the year on a separate excel to serve as your base comparison. Then you could look at the average spent and/or budgeted each month in YNAB to compare to the base to see if you are on track. You would be able to se the variations. Perhaps you are consistently over-budgeting in one category and under-budgeting in another. At the end of the day, you are still within your yearly goals of total spend but where the differences are could be different than you anticipated.

    Like 2
      • Cheese429
      • Cheese429
      • 1 mth ago
      • Reported - view

      Navy Blue Pegasus  Thank you. You are capturing my concerns. I do think that I need to figure out a way to better document what "on track" looks like for various categories. 

      Like
      • dakinemaui
      • dakinemaui
      • 1 mth ago
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      Cheese429 Many people put the "nominal" value in the category name, or it's in the goal if you use those.

      On the flip side, ask yourself what you would do with that information? If you normally budget $100 and spend $120, the "overage" is obviously $20. You'd then bump up your nominal / on-track amount from $100 to $120, right? This is precisely the same answer as using the average spent without doing any math. 🙂

      There are numerous ways to look at it. The important thing, though, is when something does go up, something else must go down (for the plan to remain feasible without increasing income).

      Like 1
      • Cheese429
      • Cheese429
      • 1 mth ago
      • Reported - view

      dakinemaui  Thank you. I think I am coming along. I am not quite understanding your example. 

      dakinemaui said:
      Many people put the "nominal" value in the category name, or it's in the goal if you use those.

       I understand concepts like setting a realistic budget. If you are over spending every month then maybe you need to be more honest. Got it. 

      I understand that if you spend more in X the money has to come from Y. Got it. 

      What worries me when I play WAM is loosing track of the things that are longer term priorities. My fantasy of a negative balance carrying forward seems like it would be a visual reminder to slow down in certain truly discretionary categories. 

      If I am robbing"vacation" (longer term) in January to pay for overspending in "Shoes" (immediate) I am having trouble keeping track of the fact that I need to slow down on shoes and catch back up on vacation. 

      I am beginning to think I might need to take my goal setting to the next level. 

      Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • Reported - view

      Cheese429 

      Cheese429 said:
      f I am robbing"vacation" (longer term) in January to pay for overspending in "Shoes" (immediate) I am having trouble keeping track of the fact that I need to slow down on shoes and catch back up on vacation. 

      Your budget is a reflection of your priorities.  The fact that you don't have enough money in shoes should be a sign that you shouldn't be spending money on shoes based on your own priorities. Otherwise, the money's gotta come from somewhere, and that somewhere is, by definition, going to be less important than shoes.

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    • nolesrule priorities can change though

      personal example: just decided to start a new course. Berlin, other fun (robbed the fun money) and buying extra shares will have to wait.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
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      Powder Blue Pony Sure, priorities change and when they do you need to move money around in your budget to account for that.

      However, when someone wants to let a category go negative as a way to remind them they spent to much, it usually means they are not willing to acknowledge their priorities have changed. They want to maintain the money in what they think is the higher priority category even though it doesn't exist anymore. 

      So my advice to those folks is to not spend the money if it isn't in the category, because they are lying to themselves about their priorities and kicking the can down the road when they leave it negative.... and it creates the habit of not relying on your categories to make spending decisions, which leads to debt and overdrafted accounts.

      Like 3
    • nolesrule true.

      I suppose for me deciding about moving money or not came down to deciding on priorities. Still, while being convinced about the course, taking money from somewhere else hurts... which is logical. Most people have more whishes than resourses.

      what do you think of my temporary category with some notes on where some of the money came from? Witha goal attached. Because they are my next highest prioritiy.....

      Like
  • I too would like a negative balance in a category to roll over to the next months. For example, my electricity bill varies considerably throughout the year based upon the weather. I budget a monthly average for this bill, by looking at my annual total last year (plus a little to allow for rate increases) and dividing by 12 months. I would like to be able to tell if these expenses are averaging out as I expected. But that would only work if the negative balances, that show when it has been cold outside, roll over. It would be nice to see if I make up the difference in the summer by continuing to budget a monthly average for this category. Other categories I have that also show this kind of variability, that I want to plan an average expenditure for, are medical and dental expenses, clothes, gifts, etc. Why not allow this option of the negative carry-over? The positive amounts do carry over. Laura

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      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 1
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      Slate Blue Disk I do similar, but my category balance fluctuates between +X and 0. I know expenses are averaging out because the Average (Quickbudget or Expense Report) is as expected. That is really a separate consideration from implicitly stealing funds from another category without updating its contents.

      Like 1
      • Daily Impressions
      • YNABer since Jan 2020
      • daily_impressions
      • 1 mth ago
      • 6
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      Slate Blue Disk I just started using YNAB at the beginning of January and my electric bills are also high right now because it is winter.   I recommend you not have a negative balance on your electricity category now.  If you are in months now where the bill is higher than average, you will need budget for all of it since you actually have to pay all of it. As spring rolls around and the electric bills drop to below the average you will start building up surplus that will roll over to the next month.  By the time you hit winter next year, you should have enough surplus to cover the bills.

      Like 6
    • Slate Blue Disk This is reasonable thought process but the reality is that your electric company is going to withdraw the money, if you are expecting to budget an average, and haven't prefunded that average, then it would result in an over draft on your account. So the key to making this work is to pre-fund the seasons when things are lean.

      I just started doing this for this year, and I believe it's going to work out across the board. Once you have a full year of tracking in YNAB consistently, then you can go check the reports and look at average spending. I learned after we'd been in our house a year that the average we spend on our power bill is $150/month. So I budget $75 every pay check twice a month towards the power bill. That only works if you start funding it in the lower cost months, like spring, when you can actually let the average get ahead enough to keep it covered. So far this winter I've been able to manage... I think at the worst I'll have to come up with some funds for maybe 1 month when the bill will be higher than what I've added for the average, but come spring I'll be able to start over and that should build up enough for the winter when our bill goes up again.

      Like 1
  • You could shift your mindset from "hold ourselves accountable to our overall yearly spend goal" to a mindset where you are using your money to achieve something you truly value. Why do you care, really, if you yearly spend goal is reached or not? Why bother? Its a kind of barren / punitive goal to have.

    Paying off your mortgage 10 years early might be a goal to get exited about. Starting a family sooner. Moving to the mountains (or sea). Retire 10 years earlier. Travel the world. These sorts of life goals are worth exerting yourself for. But sticking to what you thought (in January) was an ok sort of spend for the year? Not really.

    Its actually a bit of a scary challenge to really think what will give one's life quality. If life has been scary hard just feeling safe can be an exciting goal. But once you have 'safe' under your belt, its time to look further. You can do more, aim further. But for what? Each of us different, of course. And YNABs prioritising and reprioritising as we fund, decide not to fund, or WAM, from categories really helps us to learn what truly matters to us (as opposed to what we thought would or should matter).

    (I was astonished, the first 6 months when I started out, that the iPad I believed I had wanted for a year or more still had not been given even a single $. I wanted other things (like the electrics money sitting waiting to be spent) far more. It was a revelation, and eventually, and without pain, the iPad category was deleted.)

    If annual accountability is all you truly care about Mint might be a better tool. But if you want to build a really quality life, have goals that excite you and work towards them, then the granular money and priority awareness that YNAB offers can take you there (and Mint almost certainly can't).

    Like 18
    • Cirrus  that is well written. Thanks.

      Finding out what is most important in my life is difficult enough. I am happy to discover budgetting actually helps with that. Like you describe with the iPad. I hadn’t expected that but like it a lot.

      Like 4
      • Cheese429
      • Cheese429
      • 1 mth ago
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      Cirrus 

      Cirrus said:
      Why do you care, really, if you yearly spend goal is reached or not? Why bother? Its a kind of barren / punitive goal to have.

       LOVE This!!! Couldn't agree more. We are on track to be able to choose early retirement and prioritize travel. "Holding ourselves accountable to our overall yearly spend goal." protects our real priorities. 

      Like 3
    • Cirrus I love this post!

      One of the least effective budgeting techniques I know of is trying to abide by the rule "Spend less just because." It's exhausting and it doesn't work. And that's why YNAB doesn't try to enforce that kind of rule.

      Instead, we always want to hear you asking, "Given the money and circumstances I have right now, what do I want to prioritize?" That's sustainable, because:

      • It allows you to focus on something positive and achievable, like paying down debt, getting to retirement, or saving for a vacation.
      • It's flexible enough not to break when circumstances change, which they always do.

      I think a lot of people come to YNAB hoping that it will wag a finger at them and say, "Stop overspending!" even though that didn't work the last three times. So it's natural to be skeptical when instead YNAB says, "I don't care what happened last month. You do you... but if you want to spend more than you put in a category, you have to be honest about where that money is coming from."

      To me, that was the aspect of the YNAB Method that seemed like it couldn't work... until I actually tried it.

      Like 11
  • Congratulations on building enough buffer to be a month ahead! 

    I used to think that carrying over overspending as negative balance would be useful. After six weeks of intense YNABing and my first month rollover,  my mindset has changed.

    If my gas budget was $100 and I spent $140, how would carrying over -$40 help?  Would I only spend $60 on gas next month? No.  Better to just move funding over right now from another category.  It can seem like tinkering, but it helps me prioritize.   I set up a "slush fund" and budget $200 at the start of the month to cover overspending in expenses like gas and groceries.  Once that is gone, I have to start taking money from other discrentionary categories - like "Dining out".  What I am willing to give up this month? 

    Here is my real life example:  Due to poor judgement on our part, we lost more money than we intended at a casino. This resulted in a huge overspend on our "Entertainment" budget.  Carrying over a -$500 balance to next month isn't going to help.  We have a Vacation category where we have been saving up and it currently has more the $500 available.  I'll move money from Vacation over to Entertainment to cover the overspend.  Just roll with it.  In the coming months we decide: take a cheaper vacation, or wait longer to replenish the vacation savings, or cut back on monthly Entertainment to funnel into Vacation savings, or find some other way to bring in extra income - like selling stuff we have laying around on craigslist.  What we will NOT do is take on debt.

    Zero-dollar budgeting is not an iron-clad contract for how much I can spent in each category - it is a plan that allows for adjustments as needed.  Every month you have a chance to examine your actual spending and make adjustments to your plan. You may decide to increase some categories which means you will need to decrease others so it maintain a zero-dollar to be budgeted.

    I spent the last 10+ years using Microsoft Money to track spending against a "budget".  Tracking software trained me to create monthly budgets and to carry forward overspending and examine how I was tracking to a yearly goal.  I think there was some vague idea that overspending a category one month means you will cut back the next and get back in line by the end of the year.  This never happened for me.

    Like 13
      • Cheese429
      • Cheese429
      • 1 mth ago
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      Daily Impressions I like your gas example. In my life right now we underspent on gas and I moved the surplus to cover a catergory we overspent on.  OK no problem. What I don't like is that I am loosing track of the fact that I just underfunded gas by $40 this month. Not a problem in this month but it will be in March when we have a road trip coming up.  My fantasy is that there would be some way to alert me that I need to do a little catch up. And tone down some more discretionary categories. As it stands right now I just go fund Gas the same amount I have my monthly goal set up but no where is it capturing that I am really kind of behind. 

      Like 1
    • Cheese429 You might want to explore longer term goals, with a funded-by date instead of just a monthly goal. There's more than one way to set goals, so the other option might help you achieve what you are looking for in a different way.

      Like 1
      • Daily Impressions
      • YNABer since Jan 2020
      • daily_impressions
      • 1 mth ago
      • Reported - view

      Cheese429 You should play around with time based goals and break out your road trip as a separate category.  Make the gas for the roadtrip part of that category - not your daily routine gas.  Then you can enter that you want $1000 by July 2020 (gas, food, lodging, etc..).  YNAB wil calculate how much you should fund each month and let you see how you are tracking to that goal.  You can be flexible and fund more or less - but you will see how close you are getting and YNAB will let you know if you are "on track" or "behind".

      One thing that helped my mindset was to rearrange the categories.  Here is what I am currently using... Up to you have many categories to have under each one...

      - Fixed Monthly Bills (must pay monthly, generally a fixed amount. Mortgage, Electric, Cable, Gym Membership, etc.)

      - Monthly Expenses (must pay,  many small transaction over the month like gas, groceries, pet care)

      - Saved Up Expenses (must pay; not monthly, e.g. Property Taxes, Auto Maintenance.  Want surplus to roll over to build a fund)

      - Discretionary (option spending, many small transactions, e.g. Dining Out, Entertainment)

      - Saved Up Purchases (option spending, not monthly, things I should budget each month, want surplus to roll-over to build a fund. e.g. Vacation, Furniture)

      - Gifts (build up a fund here as well)

      Like
      • Cirrus
      • Living mobile and solo
      • miriamnz
      • 1 mth ago
      • 3
      • Reported - view

      Cheese429 If you have a road trip coming up and you need more gas to achieve that, give it a special category "Extra gas for road trip", and when the time comes move those dollar into your gas category to spend.

      Relying on $ being left over in Gas to build a surplus for a specific time and reason, is just hard work (oh, I have $40 left in the gas this month, I'll use that for.. oh no, I need to leave that alone because in 2 months I'm going on a road trip.)

      (If you use the category to save up for the road trip, but move the moey to the Gas category rather than  spending from this temporary category,  then you can safely delete the temporary category when you move the money out  into Gas.

      Like 3
      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 1
      • Reported - view

      Cirrus +1. Categories exist to protect money from accidental spending. The less thinking I have to do the better.

      Like 1
  • Daily Impressions said:
    Zero-dollar budgeting is not an iron-clad contract for how much I can spent in each category

    This. The budget is a plan based on whatever information you had at the time. As you know, plans have to change all the time due to circumstances beyond our control.

    When an extra guest shows up for Thanksgiving dinner, are you really going to stick to the original plan? Of course not. You adapt and set another plate -- i.e., adjust the plan with the new information in mind and press on. Finances are no different.

    Like 3
  • I move money between categories ALL THE TIME!  I love that YNAB encourages me to do this rather than making me feel bad that I had to move money around.  In the end I will still have graphs and data on what I spent as long as I move the money between different categories.  Which also means that, at the end of the year, I should probably use that data to set more realistic budget goals for the next year...

    If you just want to track spending and not modify your spending based on your budget than you might be better off using Mint.  Even though I play whack a mole a lot, I'm still doing it differently than pre-YNAB because I would have spent both categories and more without even looking at it until I got my credit card bill before.  I paid it off monthly, but it was definitely more stressful then than now.

    Like 3
  • You can use goals to achieve the same effect.  Set up a monthly savings goal or target balance or spend by goal.  When you've raided a category, it will show as orange, i.e. underfunded, until you repay the money.  If you use a yearly goal, it will put you back on track to get to your target. 

    It's not exactly the same, but it's quite close *and* your account balances will always match real life, rather than thinking you have more money than you do. 

    Take a deep dive with the Nick True video on goals (he has a great cheat sheet as well) and look at the materials on the YNAB website.  If you set up your goals right, you'll have what you're looking for.

    Only situation where it's less than optimal and I really miss the negative balances is for tracking reimbursements.  For those, I set up a tracking account showing who owes me what.

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      • Cheese429
      • Cheese429
      • 1 mth ago
      • Reported - view

      Tan Wildebeest Thank you for your suggestion. I think this might be a feasible solution for me.  I readily accept all the suggestions about changing priorities and being fluid, but I really would like more of a cue if I am underfunding for something.  If I set a monthly goal to fund Gas 100 and I only fund it 80 in January, will it require me to budget 120 to show as green for February?

      Like
    • Cheese429 There are different ways/goals that will reflect differently.  Best way to figure it out is to watch the Nick True video, check out the Budget Template and other goals posts on YNAB website, and then play around with it.

      Like
  • Depending on how long you've been using YNAB consistently on one budget, you can also start exploring your reports. You can view categories over certain time spans to figure out what your averages are without having to do any math. That can help with the appropriate funding, though of course, if you haven't built up any extra in a category and you have a bigger month (like a higher power bill) you'll have to pull the additional funds from somewhere. Working with the reports really shifted how I was budgeting and has made a big difference for me in being able to appropriately fund my categories and not need to WAM nearly as much, which keeps the extra averages right where they need to be for the next month that I need them.

    Like 2
  • Cheese429 said:
    What worries me when I play WAM is loosing track of the things that are longer term priorities

    You should WAM from lower priority things. If that happens to be a True Expense due sometime further out, you'll have time to make it up. (This no doubt figured into your decision to pick on this category.)

    Cheese429 said:
    My fantasy of a negative balance carrying forward seems like it would be a visual reminder to slow down in certain truly discretionary categories.

    The problem is the "visual reminder" is not in the discretionary category. It's in the category that was important enough to ignore the spending guidance and implicitly rob some other category. That's what "covering the overspending" does -- it takes money away from a lower priority category. The fact the Available is then lower is the signal to spend less in that lower priority category moving forward.

    Cheese429 said:
    If I am robbing"vacation" (longer term) in January to pay for overspending in "Shoes" (immediate) I am having trouble keeping track of the fact that I need to slow down on shoes and catch back up on vacation. 

    So in order to catch up, you'll have to budget more, and Goals will auto-calculate the larger contribution amount. This leaves less from your income to budget elsewhere, and Shoes (now being less important since you just got a pair) will naturally not get as much. The smaller Available amount slows down that spending.

    Alternatively, you can plan to scale back Vacation so the contributions remain what they were originally. (This allows Shoes to get the funding it needs so it's ready for the next pair down the road.)

    Bottom line: allocate funds when they arrive from highest priority to lowest. When reallocating, try to reallocate from lower priority discretionary categories that won't require a larger contribution later.

    Like 3
  • If I am robbing"vacation" (longer term) in January to pay for overspending in "Shoes" (immediate) I am having trouble keeping track of the fact that I need to slow down on shoes and catch back up on vacation. 

    I can relate to this; it's something I struggled with early on with YNAB.

    Part of the solution is to be more rigorous about Rule-3. Consult your budget before you spend instead of trying to resolve overspending after-the-fact. When you wait until after, stealing from "vacation" might be your only viable option. Consulting the budget first gives you the opportunity to rethink your spending and decide whether it's really worth it.

    But if that's not enough to change your behavior, you could also try moving your long-term savings somewhere less accessible. Retirement and college savings accounts have hefty tax penalties to discourage early withdrawals, so you're probably already accustomed to the idea of those kinds of savings being "off limits". Perhaps you can put your "vacation" money into a CD account, or some similar off-budget / out-of-sight location so you're less tempted to raid it -- once the money goes in, there's no "tack-backsies!"

    Like 2
  • Cheese429 said:
    If I am robbing"vacation" (longer term) in January to pay for overspending in "Shoes" (immediate) I am having trouble keeping track of the fact that I need to slow down on shoes and catch back up on vacation. 

     You don't have to slow down on "shoes" i fyou don't want to (or can't).  You can slow down on any category to replenish "vacation".  i.e. reduce the budgeted amount so it can be redirected to vacation.  As bret says - look at your available amounts in YNAB on a regular basis to see where you stand to help guide spending behavior - not your bank account balance.  And enter transactions frequently to be sure those available amounts are up to date.  When you get into this habit you'll have a good sense of how much you have for a category.

    Like 2
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