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 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 .

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      • jenmas
      • jenmas
      • 8 days ago
      • 7
      • 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.

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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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      • RIP_MSMoney
      • FinTech Programmer
      • rip_ms_money
      • 8 days ago
      • 4
      • Reported - view

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

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

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  • 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.

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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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      • dakinemaui
      • dakinemaui
      • yesterday
      • 2
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      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.)

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