Irregular (but regular) expenses
I've got some irregular regular 😄 expenses I'm not able to sort out with goals in an easy way. (Maybe I'm not thinking outside the box).
Let me explain:
Every trimester I've got one bill for water/renovation etc, let's say February, May, August, November. February and May is 30% higher than the following bills, because we pay for some services only the first half year. I would like to set aside money for those bills at a regular basis. I can sum all the bills, and divide by 4, but that would keep me undercovered the first 2 payments.
Should I budget in two categories for this? Or set up more the first half year (reducing from other categories), and then set up less the last half year (increasing in other categories)?
I'm pretty new to YNAB, so I'm sorry for stupid questions. I tried to establish a goal by Date - September 2019 to November 2019. That worked fine; my payment got divided by 3 - no worries. :) But then, when I wanted to set a new goal from December 2019 to February 2020, the previous goal disappeared... Oh no!
Is there a way to lay budgetgoalplans (try to look it up in the Dictionary!) ahead?
Thinking old school (i.e. before goals) then I would do the following:
(1) (annual total of 4 bills + 5% allowance for price increases*)/12 = regular ongoing monthly contribution of £x
(2) Does this give you enough for the next bill? If yes, you're set. If not, divide the next bill by the number of months to get there and make that your starting monthly contribution. (£y)
(3) In your case, you will also need to do this for the 2nd bill
(4) After that budget £x per month so that you have smoothed the costs out going forward.
This is no different in principle to having to budget more initially for some bills because you started for example 7 months out.
That's the basic idea, the next question is whether you use goals to achieve that or just put the numbers in the inspector so they're available.
Option 1: monthly contribution goal set at £y (if greater than £x) and then adjust this goal once the first bill is paid. You will get an orange pill in the month you pay the bill but orange pills just mean pay attention and not that there is anything inherently wrong.
Option 2: set a spending by date goal for the first bill. Once this has been paid set a new goal in the following month for goal 2 and then once that has been paid amend it to one of the annualised goals (your choice)
Option 3: ignore goals just write the amount you want to contribute each month in the category title.
With either option 1 or 2 you will have to set multiple goals but you can't set them all now. Set the best goal for the next bill and then adjust after that. Putting your calculation in the notes bit of the inspector would save you doing any numbers going forward.
There is, of course, an option 4 that you just continue to set a new goal every 3 months so you have lighter contributions in the cheaper quarters, however, I feel you get the real power of YNAB once you are at the point where you can smooth things out.
* the arbitrary 5% allowance for price increases is not necessary but I include it for some categories which are more prone to price fluctuations.
In the long run, budget the monthly average. But because this would cause you to be short in the first year of the cycle, you need to budget a higher amount until you get through the May bill.
It's not clear if you will budget to have the payments amount available at the end of the month before it's due or during the month it's due, so you may need to adjust below which assumes the last month being the month of the payment.
You already need the whole thing for November so let's assume that's covered. So budget (Feb + May)/6 through May so you'll have those amounts ready and waiting. Then after the May payment, switch to the calculated monthly average, which would be (Feb+May+August+Nov)/12. Once you have a year of payment data in YNAB you can always use the 12 month average spent going forward, though if the amounts will inflate over time, you will need to account for that.