Teething problems aka am I doing this right?

I set up my YNAB account to help me try to save aggressively in light of news that I will take a 14% paycut from early next year and face likely unemployment from Spring 2020. Current saving goals are to continue contributing to a retirement stash as well as being  in a position to have 6 months of full salary saved by the time I lose my job. The retirement goal is non-negotiable, particularly as I haven't been in a position to save consistently in previous jobs (and will never be in a high-earning sector) so I have to keep putting a little away all the time. Covering a period of unemployment is also necessary - I will likely benefit from some unemployment benefit but I want to make sure that I can afford the mindspace to consider a career transition or other variables when that time comes around. My issue is less with funding these saving goals or my fixed or my major variable expenses (luckily I am debt-free) but with what YNAB calls true expenses. I've had my account for a few weeks and it feels like I think of more and more true expense categories all the time that cash needs to be continuously siphoned into. Each time I identify these (e.g. saving to buy a computer by the end of 2020 in spite of being unemployed for much of that year) I have to fiddle with the budget again and reduce the amounts I am setting aside on variable expenses. I started by feeling in control and, while I didn't have much cash to spread around, I felt like I had enough for my main quality of life things (sports, travel, being generous to others). Now it feels like these things are squeezed the more categories I add. So, is compromise normal? Will I get used to balancing aggressive non-negotiable savings, continuous siphoning to medium and long-term true expenses, and actually feeling day-to-day like I have enough? It's so tempting (and laughable) to just hope that by the end of 2020 I will just have a spare $1500 hanging around to cover a laptop and don't need to think about it now! Please tell me if you have experience to help me  get over this mental hurdle and whether I am being over-optimistic with trying to fund lots of true expense categories from the get-go alongside saving against a future drop in income.

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  • I think this is normal. I was really frustrated with my budget the first couple of months because it felt like a reflection of all the things I couldn't afford anymore - and felt even worse every time I remembered another "true expense" (like I don't change my phone every year and don't need a fancy one but eventually it will break down and need replacing too, etc...). I had to make a lot of calls about my values and priorities. To be honest, thinking about my "priorities" never really clicked (of course everything is important!!) until I read this artlcle which really helped me map what I want to save for, with what I can afford and why it's important to me (my "values" I guess). So I was able to drop big goals that I thought were non-negotiable and have mini-goals instead and still get the same satisfaction out of it. That helped me to feel less "squeezed" and like I could still afford the things that are important to me, whether it's the small fun bits or the big ones - surviving if I lose my job or being able to call the plumber if there's an emergency in the house.

    I also found not trying to fund all the true expenses categories at once helped me. So I only put a minimum in the laptop category and pet expenses, say, and focus on the home maintenance category for a while - once it reaches a nice round number (that makes it more difficult for me to frivolously take away from it for some reason) I can try to fund another category. Kind of like a debt snowball but for True Expenses/savings, maybe? Pay a minimum and focus on one, with the knowledge that you can "roll with the punches" if something comes up in a low funded true expenses. When I tried to fund them all at once as reasonably as I could afford I got really frustrated with the tiny increments month-to-month and ended up taking my budget much less seriously than I should (because "what difference will it make anyway"). There's a sentence in the forums that comes up often too, "You can afford anything but not everything" that I try to keep in mind.

    I also lowered some usual expenses I had, like charitable giving or additional pension contributions for a few months until I felt more stable on my feet - obviously also a personal call. I'm just starting to bring them up again now.

    Anyway these are the ways I trick myself I guess, I think it's great you're asking the question and as other people share their strategies you'll hopefully find way(s) that work for you 🙂 Best of luck and hang in there!! I'm only at it 6-7 months but have found the process incredibly valuable.

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    • Coral Hammerhead Thank you so much for taking the time to respond.  I've been reading your journal with interest too and found lots of good tips in there. I will mull over some of your suggestions - particularly about prioritising some of the expenses. So good to know I'm not the only one trying to get my head around this! I will keep at it, as you suggest!

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    • Orchid Yeti Oh, thank you! Maybe you should consider starting a journal as well, sometimes just getting all the thoughts out is helpful, and even more so when people pop up and share their own experiences in answer 🙂 I'd certainly like to read it since we seem to share similar struggles!

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  • Orchid Yeti  I can relate to what you say. 

    I love YNAB but I struggle with budgeting generally.  This is for several reasons, one of which is that I unexpectedly lost my job a couple of years ago and due to circumstances had to take one that has a much lower salary. 

    I can easily feel demotivated by looking at my take home pay each month and how far it needs to stretch.  At first, it felt impossible to fund True Expenses (and yes, more and more kept popping up to be funded).  I had also wanted to pay off more of my mortgage and increase retirement savings, and wondered how I could do this.

    I've been using YNAB for a year and would say that I still find finances a challenge, and True Expenses in particular.  I keep having things crop up that I don't have enough for yet in that True Expense category so I have to raid other ones. 

    Having said that, I do have funds in the other ones to raid, and I start building them all up again, and in a slightly skewy way this has meant that my True Expenses categories are covering my true expenses, just with a lot of moving things around.  I've been able to cover unexpected costs including dental work, new [modest] phone when the old one stopped working, and home repairs.  At each point, I hadn't yet saved enough in the relevant category (eg dental, replacement phone) but I'd saved enough over all the True Expenses categories that I didn't need immediately and could use.  And I've still been able to manage the expected annual expenses like the YNAB subscription and boiler service.

    On top of that, over the last year I've managed to increase my pension contribution, pay off a bit extra on the mortgage and budget for some non-essential but important-to-me things like an art course and train fares to see friends.

    Most importantly, I've done all this and kept up with regular bills and expenses without touching my long term savings.  Before that, they were getting gradually eroded.  Since the day I started using YNAB, the amount in my long-term savings has stayed put.

    In my case, it isn't neat and pretty.  I would prefer to have nice, tidy, True Expenses categories all filled up and each one ready to go when I need them.  Instead, it's a mess of guesswork, moving things around and scraping together what I can.  I also have to be very frugal when it comes to things like groceries, socialising and giving.  But I'm muddling through, and YNAB has helped me greatly improve my financial situation.

    I don't think the most important thing is to do it right, I think the most important thing is to do it at all.  Something is always better than nothing, and it might be enough. 

    I'd suggest you put what you can into your True Expenses and other categories, then see if you can revise down anything variable like groceries and entertainment.  Then see if you can revise them down again.  😊  Maybe the YNAB workshops on cutting spending could help too?

    Also, maybe see if you can increase your income in any way.  I didn't think I had any possibilities to do this, but I've managed it a little - seeing the budget in YNAB is a great motivator to get creative with income generation.  

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    • Pikayo Thank you for your thoughtful reply! Yes, I agree - the most important thing is to be something and to try not to get disillusioned by it. I know the knock-on effect is that I will be more cautious about small outlays and that more generally careful with where my money is going, whether it is pretty or not! I know it's a learning curve, so thanks for reminding me that that's ok.

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  • Feel like I have hit another bump. Here  is my dilemma. I take sport classes and have budgeted an amount of money per month which, calculated over my average yearly expenditure, should cover what I want to spend (i.e. what I want to do and what I can afford). As I pay per class rather than being a member of a gym I have to buy a 'class pass'. My teacher has a discount period twice a year, in August and January. The budget right now covered the cost of the 10 class pass, but if I buy the 20 class pass (as opposed to buying one reduced 10 class pass now and a full price 10 class pass in, say, November) I save $40. So I bought the 20 class pass... but now, of course, I have pushed my budgeted amount for this category into the red.

    In theory this is easy to resolve by simply not budgeting money into this category next month or at some other month in the future, but it brings up the general problem I have  of trying to pace my expenditure to my income. I 'have' the money in my account (although it is allocated to savings/other true expenses) so I am not pushing my account into the red and I would have spent the money on these classes in the future in any case, so the category expenditure is 'budgeted' for over the year, but not right now in this month. Does this count as skimming money off my future self, or is it a savvy way to reduce the cost on an expenditure? The same question can be asked of other things - bulk buying and temporarily pushing up your food bill, buying an item now as it's on sale rather than waiting a month - so how do you deal with these things? 

    Overall one of the hardest things for me to get used to with YNAB is getting accustomed to establishing a cash flow within my true expenses categories. I am fine with saving bit by bit towards a long time abstract goal (20$ every month for subscription costs, say) and I know that if I stick with allocating $100 every month to sport that this time next year the money will be there in that category to afford the 20-class-pass without hesitation (as there will be months when I don't spend and so bulk up the category) but I am interested in how other users handled this in the first few months of using YNAB, before everything began to flow smoothly and before the categories/spend averaged out. In my set-up I focused more on getting my categories filled on the basis of my average spends rather than anticipating short-term costs. I have heard of people having a 'things I forgot to budget for' category (for me I think I would use that as an excuse to spend off-budget money so have resisted setting one up), but I am regretting not putting together a sort of 'start-up float' for these first few months to help me through the hurdles. Thoughts?

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      Orchid Yeti First of all, I wanted to say that you absolutely did the right thing buying the 20 class pass.  Ultimately, the goal is to save money, and you just saved $40.  Part of budgeting philosophy is that you do need to have some liquid funds to take advantage of good deals when you can, as in your example of bulk buying.  As I go along, I get better and better at predicting my true expenses and predicting the real budget I will need. You're doing great!

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