Budget Using Only One Month's Income

Having used YNAB 4's "Income for this month" and "Income for next month", I feel like I'm at a loss since moving to nYNAB. 

I get paid on the 15th and 30th so in YNAB 4, I would put both of those paychecks in "Income for next month" then on the 1st, I can use that money to budget everything. Then during the month, if I'm moving money between categories, it was really easy to make sure I'm only spending last month's income by making sure "To Be Budgeted" is zero. If I'm under budget, it'll be positive and if I'm over budget, it'll be negative, all without affecting spending or categories for any other month.

With nYNAB, I find this workflow no longer works. I understand that it's trying to make your money more fluid by removing the monthly walls but I feel like I'm in less control than before.

For example, if I'm budgeting after my mid-month paycheck, "To Be Budgeted" now contains both last month's incoming as well as income which is slated for next month. This means I can't use it as an indicator of whether I'm over or under budget and makes it really easy to use money that's suppose to be for next month. 

In another words, I think of income as buckets. In YNAB 4, each month had its own bucket and that helps your control spending because the software makes it easy to only use a single bucket per month to fill your envelopes. 

In nYNAB, all of the income goes into a single bucket and with that, it makes it hard to only use one month's worth since there's no way to divide it up.

I understand that some people create their own "buffer" category where income goes but I feel like this just adds extra friction and a risk for errors.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 4
      • Reported - view

      I wouldn't prefer an all or nothing type toggle. I would prefer to be specific about which month I send income to. This is particularly important if you do Paycheck splits to track various payroll deductions. The deduction expense will be in the current month regardless of which month you send income to.

      And why should one-off income events be automagically forced into next month? That $10 birthday check from grandma that comes in once a year doesn't need to wait till next month.

      Reply Like 4
  • Very late to this party, but as a new YNABer, I inadvertently discovered the 'stealing from the future' issue the second day I used the program! When I first imported my accounts I had enough money to fund the current month, and after reading and listening to everything I could get my hands on about the "right" way to budget (aging my money), I decided that since I always pay my CC bills off in full every month and still had leftover money, I should start budgeting for next month because every dollar needs a job. So I budgeted next month with the excess funds, keeping track of what categories I had already budgeted for in May. The next day, I realized I forgot to budget something for this month, so I added a category and the appropriate amount I wanted to budget for it. I fully expected this month's TBB number to immediately turn red, which it did not! Confused as to why it hadn't, I contacted support and was told that it didn't turn red because it had taken money away from May to fund that new category in April. What???? Why would it do that? Without even asking me if I wanted to do that? Or at the very least, notified me of what it had done. What if I had wanted to simply move money from another category in April to fund it? This still makes no sense to me and really bothers me.

    After spending hours reading these forums, I see I'm not alone. I quickly thought  maybe YNAB is not for me, although I love the idea of the categories and moving things around, but maybe it was more for people who were starting out in debt. Granted, I have never formally budgeted for anything  in my entire life, (pls don't yell at me. Better late than never) but I'm also not in debt. My kids are grown, and I'm going thru an  amicable divorce, but my financial picture has changed drastically since we were together, and I realized that I needed to start a plan regarding my spending., which can get a little out of control at times. The fact that I can't natively budget for next month is driving me nuts. I don't want to see the positive TBB number in the current month, but due to this stealing from the future issue, I also don't want to start budgeting for next month, particularly since I won't be able to cover all of next month until my next paycheck arrives in a few days. I've been reading about setting up a category called Income for Next Month (or something similar) and dumping all the incoming money from this month into it. So here are my questions about that:

    1. is there some way to automate this so it automatically gets classified into the Next Month category or do I need to manually categorize each transaction as it appears? (I have direct deposit on almost everything and my accounts are linked to YNAB)

    2. If I do nothing with the money that accumulates in the Next Month category, won't it roll over to the next month?  Do I then move it all to the TBB category so I can parcel it out for that month at that point? And then have the new funds in May be diverted to Next Month's category again?

    3. Does doing this mess up reporting in any way? I want to start getting a handle on how much income i have coming in and when (using YNAB reporting if I can). If the money first comes in and is categorized as TBB in the current month and then once again when I move it over to TBB in the following month, will YNAB count that income twice? 

    Thanks for any help with this. I'm trying to wrap my head around the best way to set this up for me. Every time I think I have it figured out, I don't!

    Reply Like 1
      • jenmas
      • jenmas
      • 7 mths ago
      • 1
      • Reported - view

      KnitPurlKnit I have a category called "Income for Next Month". All of my paychecks are automatically categorized to that category via scheduled transaction (ie they don't run through TBB). When I am ready to budget for next month (basically when I receive my last paycheck of the month on the 22nd), I change the categories on those transactions from Income for Next Month to Inflow: TBB. That keeps reports clean and holds the money in reserve until I am done budgeting for the month (after years of YNABing, on the 22nd of the month, I'm going to at most be moving stuff from one category to another within the same month, not be creating new categories).

      Reply Like 1
    • jenmas I tried this using money that came in today. Rather than sending it directly to TBB, I had it categorized as Income for Next Month. Then I  looked at my April budget and it showed the money in the Available Column, but not in the Budgeted Column. Is that the way it's supposed to be? If I do it that, it doesn't show up as income this month in the report. When I move it over to TBB next month, does it then show up as income?

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      • mamster
      • mamster
      • 7 mths ago
      • Reported - view

      KnitPurlKnit The transaction won't show up as income until you recategorize it as Income: TBB at the time you're ready to budget next month.

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

      KnitPurlKnit The INM category is just a temporary holding place. Like any category, stashing money there shows the balance in the Available column. In order to budget it, you have to take it out of the category. There manner in which you do that should match how it went in:

      If you put it in via categorization in the transaction, you should edit the transaction to make it TBB -- typically at the end of the month (or even a few days into the month if you don't get around to it). SfTF is not an issue because th at money is needed "now".

      If you put it in via a budget entry, you should take it out with a budget entry. Some will delete the entry at the end of the current month, allowing it to flow forward. Again, at this point this is "now" money, not future money so SFTF isn't a concern.

      In either of these approaches, there is a danger with late posting transactions showing up in last month. Be very careful with any adjustments to last months budget -- SFTF is possible.

      To absolutely prevent SFTF, budget funds to INM, then negative budget that category *in the new months area* to move them to TBB (or use the Move Money Tool).

      Reports are based on the transaction date and category. They are temporarily incorrect if you use the first approach (categorize to INM) but are correct after releasing the funds (editing the transaction).

      These variants differ primarily in the amount of manual effort they require. I have quite a few income events, so I use the categorization approach. It also keeps the "Budgeted" header correct (focused on the current month).

      None of these approaches is perfect, so pick one to your the least pain for your particular situation.

      Reply Like 2
  • I try not to over-complicate things. When I have an income event, I categorize it as TBB, then I go and add that amount to the budgeted column of my "Income for Next Month" category. At the end of this month, I zero it out and let the money get sucked into the next month when the clock strikes midnight. Then I can flip to the next month, click "Budgeted Last Month" in the quick-budget options on the right hand side, and make any adjustments needed. That may mean removing some money from some categories if my TBB went red, or if there's still money in TBB, it'll get budgeted to "Income for Next Month" again, to patiently wait for the monthly turnover again.

    On point #3 above, no, the money doesn't get categorized more than once. The income event gets categorized once and then that money is allocated in the budget. It doesn't care if you allocate it to "guns n' butter," "widgets" or "income for next month", it's all the same to YNAB.

    Reply Like 3
  • I budget a full month ahead.  I'm not paycheck to paycheck.  All I do when I get paid is flip forward to the next month and if I feel like it at the time, I'll start filling my categories from the top down.  If I don't feel like it, I'll throw it in the next unbudgeted category and come back and deal with it later.  Yes, I'm aware this puts me at risk for "stealing from the future"  but I believe once you are aware the potential exists its not that big of a deal.  I'm generally taking a look at next months budget fairly regularly and I don't generally need to wam much until close to the end of the month. (I do believe it is a big deal that ynab needs to fix, just not for me individually)

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  • KnitPurlKnit said:
    I realized I forgot to budget something for this month, so I added a category and the appropriate amount I wanted to budget for it. I fully expected this month's TBB number to immediately turn red, which it did not!  ...B ecause it had taken money away from May to fund that new category in April... What if I had wanted to simply move money from another category in April to fund it? 

    A standard response you'll hear from defenders of this functionality is that, if you wanted to move money from another category in April, then you should have restricted yourself to using the "Move Money" dialog box rather than directly inputting an amount in the budgeted column.  The "Move Money" dialog neatly avoids the Stealing From the Future issue by ensuring funds are moved between categories within the same month.

    However, I find that workflow rather limiting and clumsy. I often want to move money between multiple categories and not just one-to-one. To me, it's faster, more intuitive, and requires less mental-math to temporarily over-budget (= cause TBB to go negative) and then make adjustments until TBB returns to $0. But this technique doesn't work when you have funds budgeted in the future. (And that's a big reason why I refuse to budget in the future.)

    TLDR; If you prefer to continue budgeting in the future, consider restricting yourself to the "Move Money" dialog to avoid SFTF bug. If you find that too limiting, then you should probably avoid budgeting in the future and adopt a category-oriented workaround.

    Reply Like 3
  • Thanks to all of you that took the time to explain how this works. After fooling around with it for a day or two, I think the best way for me to move forward is to not budget in the future and put this month’s income into a holding cagtegory which I will move over to TBB at the beginning of the next month. My only reservation about this approach is that my bank automatically receives a fair number of ebills every month, so I know quite a bit in advance how much, say, my electric bill is going to be the following month. I usually set up the payment for those bills as they come in, telling the bank to pay them on the day they’re due. When I did that this month, I then went to YNAB and entered those payments into the budget column for May, thinking to myself “oh I got this down pat”! Thats when I got smacked with  SFTF . Going forward, if I need to take money from one category to another in the current month, I’ll remember to use the ‘move money’.

    YNAB seemed so simple when I first looked at. But there are pitfalls easily encountered until you find your way around how the software thinks. All in all I think it’s going to work well for me once I find  the combinations that work for me.

    Thanks again. This seems like a great support community.

    Reply Like 4
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 3
      • Reported - view

      KnitPurlKnit Another tip - it's very helpful to strive to normalize your budget entries across time. Decouple the demand on your budget from the fluctuations in actual transaction amount. This was nearly as transformational to me as living on last months income.

      I budget the monthly average in variable categories (1/12 yearly total, computed near tax day) which builds up a surplus in the low months that is consumed in the high months.

      A consistent budget demand allows better planning throughout the budget. I don't have to scramble, cut anything else back, or even think about it at all when I get those huge summer electric bills.

      I do this for the various utilities, but also petrol, kids activities, and anything else that may significantly vary over the course of the year.

      This is really just applying Rule 2 (True Expenses concept) when you think about it. As is typical, you may have to budget more than "nominal" when starting out, depending on the timing. The simple rule is to budget the average, but cover any eminent overspending once you know the billed amount.

      Reply Like 3
  • dakinemaui said:
    I budget the monthly average in variable categories (1/12 yearly total, computed near tax day) which builds up a surplus in the low months that is consumed in the high months.

     Light bulb moment! This is an awesome concept. Thank you for passing it along. It will probably take some work on my part to gather up all of last year's bills for each category but well worth the effort. Once computed, I can assign the goal to each month, knowing the funds will always be there regardless of the amount of the monthly bill.

    Reply Like 2
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 7 mths ago
      • 1
      • Reported - view

      KnitPurlKnit dakinemaui

      For some things, I will add about 10% divided over time to help cover any increases in cost or over usage.  That way, if the cost of that category item goes up I'm not left (as) flatfooted.  Any surplus when the bill or purchase comes around will decrease my 1/12th monthly target for the year after.  Taking inflation into account is also important for long term sinking funds as well.  If I'm saving up for new windows, I'd rather have a bit too much saved than have the cost be 15% more than I'd estimated 5 years ago because I used 2014 prices to determine my goal.

      Reply Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Technicolor Cheetah I do that by using running 12 month averages and then bumping them up. After awhile it normalizes but gives you room for inflation.

      For expenses that fluctuate seasonally, I calculate my budget amount as the average amount spent in the previous 12 months, and round up to the next $5 increment. Additionally, I have put a cap on the category equal to the 12 month average  + the sum of any amounts during those 12 months above the average. I also round up that total.

      The caveat to this is when you are starting in YNAB with these seasonal categories. Gas prices are higher in summer than winter, and often people drive more. If you only have electricity, then you will see highest usage in the coldest and warmest months. But, for example, if you use natural gas for heat but electric cooling, your gas bills will be highest in winter, lowest in summer, and vice versa for electricity. If you start funding in YNAB during a low cycle and budget the average, you will have enough at the peak. But if you start during the peak, you'll need to fund at peak levels and not average levels until usage declines or you won't have enough in the category.

      I use a spreadsheet to do the calculation and update monthly when the bill comes in. For gas/electricity, it goes back to when we moved into this house. For car fuel/transit (Mrs. nolesrule often takes the train), I have records going back to when we started using YNAB 5 years ago. It's pretty easy to do in a spreadsheet. You just need the following columns.

      A = MM YYYY
      B = Actual spent
      C = Average of last 12 months = AVERAGE(range B for current cell and previous 11)
      D = Budget Amount = CEILING(B thisrow,5) Or use whatever number to round up in the second parameter

      E = Category cap
      F = Budget month for D and E values =  EOMONTH(A this row, 1) (formatted to MM YYYY)

      Category cap is the tough one and I use the following formula

      =CEILING(SUMIF(range B for current cell + previous 11 cell,">"&C this row)-(COUNTIF((range B for current cell + previous 11 cell,">"&C this row)-1)*(C this row),5)

      What this does is sums up all amounts spent in the last 12 months only in months over the 12-month average and subtracts the 12 month average * number of months above average - 1 (in order to add back in one month's average amount) .... then rounds up to the next $5.

      I am considering combining natural gas and electricity because they are cyclically opposite, which would make for one relatively smoother category. It would result in a smaller budgeted amount but a higher cap.

      For a percentage, instead of CEILING, you can multiply by 1.x).

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view

      nolesrule I look at the cap from a drawdown view. The pessimestic case is if all the "high" months came due in sequence (though perhaps fairly realistic for some utilities). The average is taken care of by the budget entry each month, so the sum of the "overages" across 12 months is the required cap. Evaluate whether a category exceeds its cap after you've paid the current month's bill for simplicity.

      For example, my summer water bills typically exceed the average. If those bills are $100, $200, and $50 above the average, the cap is $350. If I'm sniffing around for money to reallocate, anything over $350 is fair game to take from that category.

      I believe the final value is equivalent to yours (your "extra" month is handled by checking it after paying the bill), but certainly very similar if not. I don't bother with a spreadsheet, but instead just look at the Expense report, add up all the few "high" months on a calculator, and subtract off the average * the # of high months.

      Definitely agree with bumping up the budget entries slightly from the average for inflation or life-style creep.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      dakinemaui It's the same math. I just do it for the start of next month rather than the end of this month, so the cap is overage + budget.

      I use a spreadsheet because it just means typing in 1 number in a new row and it's all calculated out. I update each month to more accurately account for fluctuations in the underlying rates without having to actually pay attention to them. Right now I just round up the numbers to the next $5 increment, but I might switch to using 5% with a round up factor (I like clean numbers). In that case I'd use  CEILING(Calculated  Amount *  (1 + pct increase),5)

      And yes, I know it's what you do. I got the idea from you, and just applied in my own way to match how I want to manage my budget. For capped categories, I like to calculate my start of month with cap. So it keeps it homogeneous with my Monthly Funding to a cap categories . 😉

      Reply Like
  • I have to say I'm with nolesrule on this one. I completely bought into the principle of living on last month's income, with YNAB4 made it very easy to track. The irony is that I learned that principle from YNAB. I still credit YNAB for teaching me this, and am genuinely appreciative, but I am also puzzled why YNAB would walk away from this very approach. Yes it is subjective, but you have a lot of customers on this thread saying the same thing. Seems like it would make sense to listen. 

    YNAB online is still better than any tool I have found, so I continue to use it. In the meantime I have adopted the workaround of creating a category named "Available next month" where I stash income until the end of the current month. But that workaround seems to render the standard YNAB stats at top of the budget screen meaniningless.  (Income in [last month], Funds for [this month], Overspent in [last month], and Budgeted in [this month] all seem to be meaningless when using this workaround.  

    Reply Like 3
      • jenmas
      • jenmas
      • 4 mths ago
      • 4
      • Reported - view

      Cornflower Blue Boa One way to fix that is when your paycheck comes in, categorize it directly as Available Next Month rather than as Inflow:TBB. Then when all the income has come in, change the category to Inflow:TBB. So yes, during the month the header info will be wonky, but once you are ready to budget, it will be more accurate.

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

      jenmas If you go that route, does it mess with other reports?

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      • jenmas
      • jenmas
      • 2 mths ago
      • 1
      • Reported - view

      RIP_MSMoney Nope because I change the category back to Inflow:TBB after all the money has landed. I mean I guess if I looked at October reports today it would be off because my Oct 7 pay is currently categorized as Available Next Month but by the end of the month I'll change it back to Inflow:TBB and there's no real reason to look at the October reports until the end of the month.

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view
      jenmas said:
      during the month the header info will be wonky

      On a pedantic note, I'd make the case the header is actually correct during the month. Prior to release (i.e., recategorization to TBB), Funds for October does not contain the new money that is meant to be used in Nov. The header will be incorrect after the release because then Funds For October will then contain money budgeted in Oct and received in Oct. (The latter, of course, is budgeted in Nov.)

      FWIW, I tend to ignore most of the header, paying attention only to TBB & BIF in the current month -- both of which should be $0 unless I've just released next month's money -- and Overspending in next month's area.

      Reply Like
      • jenmas
      • jenmas
      • 2 mths ago
      • Reported - view

      dakinemaui I figured out what I think is weird in the header. In September it says Funds for September = X. X is equal to Budgeted in September plus Budgeted in Future (ie October). Also X is equal to about twice my take home pay (which makes sense because the funds budgeted in Sep plus funds budgeted in Oct). So right now Funds for Oct is equal to what the Sept header says for BIF. And when I get paid on the 22nd and budget for November, the Funds for Oct will shoot up. So it's really just a useless number that I ignore.

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

      jenmas Right. Funds For <month> is correct during most of that month. After transactions get into TBB, FFM will be forever... wonky. 😋 An inescapable consequence of the flow-forward logic.

      Odd thought: what is the noun form of something that you ignore? It's not "ignorance", but that's all I can come up with off the top of my head! WordTenor thoughts?

      Reply Like
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