Month Ahead vs Emergency Fund

Hey everyone,

Looking for some advice.  I'm currently trying to get a month ahead in my budget while also saving for an emergency fund.  I put away about $200/month for the emergency fund and I'm about 60% of the way to my goal, but struggling to get a month ahead in the rest of my budget.  Should I take a break from saving for my emergency fund until I can get myself one month ahead in my budget, or should I stick it out and keep doing what I'm doing?

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  • Depends on your income arrival time. If you're paid multiple times per month, I'd prioritize getting ahead. In fact, I'd reallocate the EF to facilitate it. You can always reallocate back to an EF if necessary, but until then, that money is making things easier and providing clarity by budgeting on a cycle aligned with your expense recurrence cycle.

    The amount of savings required to be able to push all income into next month varies from person to person, but it's almost always less than people think.

    Like 3
  • I think having an emergency fund is more important.  At least $1000 for now.   Aging your money 30  days takes awhile.  It could take up to a year .

      • jenmas
      • jenmas
      • 2 mths ago
      • 9
      • Reported - view

      Orange Cyborg Please be aware that aging money to 30 days is absolutely not the same thing as getting a month ahead. Getting a month ahead means that you are able to fully fund July with income received in June. AOM of 30 is merely a statistic about the average of your last 10 cash-based transactions.

      Like 9
  • I used to prioritize savings and never seemed to get a month ahead on budgeting.  I decided to transfer enough savings to buffer one month of budget and that was a game changer for me.  It seems like filling all categories at the beginning of the month from the buffer has increased my attention to budgeted spending and the savings has now increased as well.  I would work on getting a month ahead on the budget first.

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      • RIP_MSMoney
      • FinTech Programmer
      • rip_ms_money
      • 2 mths ago
      • 4
      • Reported - view

      ynaber2613 i fully agree. We had a similar experience when we started ynab. One month ahead was a game changer.

      Like 4
    • ynaber2613 I did the same thing and it's really simplified my budgeting, as I only have to do it once a month. 

      Like 3
  • My standard advice is save up a $1000 EF. After that, Month Ahead vs EF, Month Ahead always wins out. First of all, Month Ahead is powerful, secondly, it can be raided in an ahem..., emergency, and then built back up again.

    Like 4
  • Hope you don't mind if I add a related, I think, question. My question regards sinking funds, for those "emergencies" that should be planned for like a pet getting sick or needing to replace a broken cell phone.


    The questions are should I ignore these funds until I am budgeted a month ahead? And does budgeting a month ahead mean all your categories are budgeted a month ahead, including these sinking funds?

      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 2
      • Reported - view

      KrypticPhish Opinions vary on this one. Personally, I'd prioritize being able to push all income into next month, but then again I have bi-weekly income where being ahead is much more useful. My take is the money that's just sitting there for such emergencies is doing nothing until you need it. I'd rather it do something useful until then -- like make my budgeting process far easier and significantly clearer. IF, and I repeat, IF, I actually needed to reallocate from those future categories for an emergency, then so be it. Cross that bridge at that point. 

      So yes, I'd skip budgeting toward those emergency categories until all income can be pushed. I would not, however, skip budgeting for the known/known obligations (amounts/timelines) like non-monthly bills, Christmas, birthdays, etc.

      "Budgeting a month ahead" simply means that none of your income is budgeted in the current month. When you get a check in July, you either temporarily put it in a holding category until the end of the month (my preference) or scroll over to August and budget it there to various categories (including a New Cell Phone category, etc.)

      Like 2
  • Get that emergency fund built first. You will not believe the feeling having 1k knocked back will give you. then as you go, build up the monthly.

    Kudos on what you are doing


  • @dakinemaui  how do you use a "holding category"?

    • Green Flute The mechanics I would recommend vary depending on whether you need any of the money from September paychecks in the September budget or not. The following may seem like a lot of words, but in practice it's easier done than said. 😉

      I don't need September money in the Sept. budget, so I automatically categorize income to the holding category (scheduled transactions or Payee categorization rules). This keeps it out of the way until I have accumulated the entire month's worth of funding.

      At the end of the month, you can release it from the holding category by recategorizing as TBB (Search for the holding category, select all, Edit | Categorize As... | Inflow:To Be Budgeted. Takes less than 10 seconds.)

      Switch over to the new month's area and the money for the entire month is in TBB, waiting to be distributed (budgeted). Many use goals to make this a one-click affair.


      If you still need some of the Sept. paycheck in Sept's budget, then I recommend you put any money you don't need in Sept. (i.e., money meant for Oct.) into the holding category with a budget entry (rather than directly categorizing the transaction). This makes it a little easier to add to it (e.g., if you have leftovers later in the month) or pull back (e.g., if you were a little too optimistic about allocations elsewhere). At the end of the month, switch to next month's area first, and move those funds into TBB in the new month. (This results in a negative budget entry.) Budget TBB to $0 as normal, as far as it goes. Similar with any additional checks.

      At some point, you will again have money in TBB that can go toward the holding category (and next month), and the process repeats: Move money you don't need that month into the holding category. Either use the Move Money tool by clicking on TBB or use the inline calculator to add to the existing negative budget entry. 

      You will know you are making progress if by the end of the month you have added enough to make that budget entry positive. (Some people will instead release funds by deleting the budget entry in the previous month, but that approach loses the progress indication which I feel is beneficial.)

      Like 1
    • dakinemaui THANK YOU so much for taking the time to explain this approach. I have been struggling ever since YNAB switched over to the new platform to figure out the best practice way to designate income from this month for next month. This makes sense and excited to try it moving forward from here! 

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