
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.
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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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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?
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I'm not sure all this makes a difference as you can play with the names to suit what motivates. I started with the goal of $1K emergency fund and the category is still called that. I have continued adding to that category with the aim of building it up to one month's expenses (now over $5K).
Once I have achieved a full month of pay I will re-label it 'buffer' and use it as a holding category. On the last day of the month allocate all those dollars to the following month.
From that point I will just start another 'emergency' category of $1K. I am getting very excited about being finally buffered after many years (I may be using YNAB4 terminology here) and I really don't think it will take long to save that final $1K now that all my true expenses are well funded.
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Green Python said:
Once I have achieved a full month of pay I will re-label it 'buffer' and use it as a holding category.Just wanted to point out that if you are also budgeting some funds directly to next months area, then you don't need to save an entire month of pay in that category. It only has to cover the budget entries made in the *current* month's area. (Early outflows next month will already be covered by directly budgeting ahead.)
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For whatever reason, it never occurred to me to RECATEGORIZE the income transactions. What a wonderful solution to reconcile old Rule 4. After it's said and done, the holding category will always be 0 when looking back at budgets or reports, the income will still be income.
Still such a shame that the old rules, that made perfect sense, got so messed up with the web version.
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I have read this a few times and am somehow just missing something! I've been trying to figure out the month ahead and just filling goals under the next month when possible, but the organization of it doesn't sit right with me, i cant seem to get a good view on where I am, I also have a decent amount of cash in my EF and my money says its aged 80 days or something but i assume that's just because of my savings account. If I'm understanding this correctly, I should take cash from my EF to fully fund all the budget for next month, but then when I get paid and my budget for this month and next month is covered, then what? I do the same for the next month in line? I get paid 2x/month, it just seems odd with each paycheck i need to go find a month that's isn't fully funded and it could be income that needs to be spread across 2 months? I think I'm lost somewhere in the details if anyone has any advice!
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Forest Green Commander said:
leave the extra money in Februarys TBB next month categoryDon't leave anything in TBB or the Income Next Month category. Rule 1 is to make a plan for ALL your money. (The INM "job" was merely a plan of "Sit tight until I have all the dollars.")
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Forest Green Commander said:
I do happen to overspend somewhere it makes the most sense to move from categories with leftovers to cover the overspending or have it come out of the INM category, right?If I overspend, I check my budget and decide on the *lowest* priority category to pull from cover the overage. INM is probably the highest priority category in my budget outside of, like, rent and electricity.
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Forest Green Commander said:
I'm trying to get away from moving money from my EF category to cover overspending since the it messes with my goalTo put it a different way, pulling from the INM category potentially messes with ALL your goals.
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dakinemaui said:
Spending goal is supposed to "top up" your category, but irritatingly, it makes you wait until the month actually changes in the real world.It's weird, ever notice when you have a spending goal further out than a month, it adjusts in real-time, but if it's a Monthly spending goal, it doesn't? I wonder why they can code it to work in the arguably more complicated scenario, and what is basically "Amount Spent Last Month" is indeterminable til the 1st.
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I do something and I think I know what I'm doing, but after reading ALL of the above, I am confused. I am happily confused because it is January 15th and January, February and March are all fully budgeted (including monthly amounts to True Expenses and Quality of Life goals) and I have money in the NMI category ready to budget for April. We have been using YNAB since 2012 so it is definitely working for us. We are officially retiring and moving to another state near the end of 2021. We will have about 6 - 8 weeks without income so that is why I wanted to budget two months ahead and STAY that way all of 2021.
I just may not be doing it quite like any of you. Isn't it funny how the explanations can sound so complicated but yet it seems so easy when your fingers are actually making the changes in YNAB? Details, details, details!