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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  • Way off topic from the original post, but I also keep 3-6 months (4.5 actually) on hand in case I lose my job.  I'm always looking for ways to yield a bit more than a generic savings account.  Here are some of the methods I employ:

    1.  Introductory offers to open Checking/Savings accounts.  I typically do this with Chase bank because they send either me or my wife a mailer once a year.  You are typically required to keep the account open for 6 months and have to do a couple silly tasks to qualify, but it typically earns us about $500/year for ~$20k held for those 6 months which is usually about 2.5% APY (non-compounding).  Of course, if I do an average of 2 offers like this per year, then I am actually earning 5%.  Regardless, it is still a cash account and earns better than a typical savings/checking account.
    2. Offers for high yield savings. Occasionally I'll run across a high yield offer of 1.9%+ and it'll be worth it drop the money in that account , but often there is a minimum duration required. 
    3. Short-term loan.   I've taken a risk and loaned money to a friend/family where it would have been challenging for the lender to get the cash (unrelated to poor credit).   

    Lately, I've been considering investing my emergency fund and taking the risk of no short term savings.  At this point, I believe that I could handle unemployment with a combination of my framily network, side jobs, credit cards, or other short-term loans (800+ credit score). Thoughts?

    Like
      • kevinf
      • kevinf
      • 9 mths ago
      • Reported - view

      gte037p If your e-fund money is in a no-risk vehicle that is at least pacing inflation/CPI, I would consider it already adequately invested. Even if you invested your e-fund in 100% stocks with a 10-year long bull market, you are likely going to only double your money in that 10 years. If your e-fund is $10,000 and you double it to $20,000 in 10 years, you've only made $10,000 profit. You could match that by getting a part-time/gig job that pays only $20/week, which is low-effort, zero risk, and guaranteed return.

      If you DON'T see a bull market, but in fact see a recession the day after you go all in on stocks with your e-fund, you could be down for a decade before seeing any return on your investment.

      So it seems like there probably isn't a lot of benefit to going all in, that money likely isn't really hurting you much by sitting at the ready. 

      Like
  • Just moved to nYNAB from YNAB4 this week since my bank no longer offers ofx file downloads. I am not pleased for exactly the reasons mentioned in this thread (when it's on topic). Sad to see the issues have remained active for so long. Likely will move to Mint or Personal Capital since it seems like all the unique features of YNAB have been deprecated. 

    Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 6 mths ago
      • Reported - view

      EclecticActor It's your choice of course but the subject issue can be easily achieved in nYNAB with a couple extra steps.

      Like
  • I have been using YNAB for a number of years going back to YNAB4 where there was the next month feature.

    YNAB is still a great product, but the one thing that set YNAB apart from every other budgetting tool was the next month spending.  I've tried numerous work arounds and still struggle to effectively manage 2 people receiving fortnightly pay checks and balancing that out with this month's spend and next month's spend.

    What disappoints me the most though reading this thread of a couple of years is the YNAB attitude of "it's better now".  It definitely is not.

    Based on some feedback that people couldn't budget a month ahead, they changed the way it worked, but all of those people that were budgeting a month ahead now have no simple solution.

    I'm with a few of the other people on here that you should be able to choose the budgeting approach you want to use.  Every single report, every saving goal is monthly, but you can't have a virtual monthly wall for income.  This is a huge issue in a practical sense and the tool is actually working against itself.

    The old rules were really simple, and they worked.

    The amended rules help some lower income people save, but they don't teach people the right habits...I'm still yet to find a way to manage my budget effectively.  Now I just spend and make it balance out so I'm using it more as a record of spend for reporting not budgeting due to the change of approach.

    The feature for month ahead budgeting really should be re-introduced as an option because it actually worked....now this is just a glorified spending/reporting tool like all the others.

    Like 1
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 1
      • Reported - view

      Ivory Crab You can create an Income For Next Month category and categorize inflows to it, exactly like it sounds like you did in YNAB4. At the end of the month, search for Income Next Month in the All Accounts register, select those transactions, re-categorize as To Be Budgeted, and budget next month's area.

      I certainly wish this capability were built-in, but 10 seconds once a month is hardly a showstopper.

      Like 1
    • dakinemaui 

      This doesn’t work.  It’s adds another level of unneeded complexity.  I find this pattern with all new software.  It comes out with a very simple idea and it works.  Then the company becomes successful on that simplicity and that success goes to their heads.  They get cocky and think they can now do what they want.  But what ends up happening every time is they get away from the vision that made them successful and the software suffers for it.  Owners think they can do no wrong and people will just deal with it.  YNAB is just another example of this.  I have gone back to YNAB 4 and will stay on it indefinitely if needed.

      Like 2
      • Ivory Crab
      • Ivory_Crab.16
      • 4 mths ago
      • 1
      • Reported - view

      dakinemaui thanks for the advice.

      Unfortunately the next month category doesn't really fix the issue, here's why:

      1. By using a custom category the income/expense report doesn't work.  All income is categorised as an expense and it isn't possible to set a custom category as income.
      2. By using a category called Next Month, this month I add the income, then next month I credit the cash from that month into available money, but then during the month I add more money back into the next month category so now I just have an expense category going up and down without really adding any value, and as per point 1, the income/expense reporting is broken.

      I don't mind spending an extra 10 seconds doing something, but if I'm doing it to overcome a product issue and if the workaround introduces more issues it's not really worth it.

      I did some tests earlier today and there is no simple way of implementing the old approach in a reliable way without having some functionality built into the tool to enable you to turn it on or off.

      The more I thought about how to solve the problem, the more I realised that this so called budgeting tool was actually mandating that I plan my expenses pay check to pay check rather than monthly from money I had already earned.  That in essence goes against everything this tool was developed for.

      I understand some people may feel different, if indeed they live pay to pay or if they keep setting up new budgets to overcome the shortfalls...but it does highlight a fairly big gap in the product and the rules it was built off.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 4 mths ago
      • 3
      • Reported - view

      Ivory Crab No, you’re not understanding how it works. This month’s funds are only in the custom category temporarily. Any time between your last paycheck and the end of the month, you release these funds back to To Be Budgeted. This has zero affect on the income/expense report. Income is income just like always. You can now budget all of next month. Rinse and repeat. Like I said, we’ve been doing this for years. We know what we’re talking about.

      Like 3
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 1
      • Reported - view

      Ivory Crab The workaround doesn't introduce additional issues. It is the YNAB4 workflow with a manual release. (The release was automated in YNAB4.)

      Reports are accurate once the month is complete. Headers (e.g., total Budgeted) are accurate.

      Like 1
      • ynaber2613
      • ynaber2613
      • 4 mths ago
      • Reported - view

      Ivory Crab I use the Income for Next Month (INM) with no problems at all.  I use a different and in my opinion simpler approach than dakinemaui  uses.  I categorize all income as TBB first (not INM) and then immediately move it to the INM holding category.  This method always keeps the report accurate as to when the income arrived.  I keep the INM category at the very top of the budget list to make TBB-INM transfers easier.  Below is the workflow I use.

      1)Send all income to TBB first then budget to INM.
      2)Any categories that you want to sweep empty at the end of the month should be WAMed to IMM during the current month.
      3) When new month starts, budget all categories which will leave TBB negative, cover - TBB with INM.

      If there is any income left in INM after step 3 I usually send that to savings.

       

      Edit: I also set a goal for INM to equal my monthly par budget so I know if it is funded enough to cover next month's budget.

      Like
      • Bruce
      • Software Engineer
      • Bruce
      • 3 mths ago
      • Reported - view

      ynaber2613 

      ynaber2613 said:
      3) When new month starts, budget all categories which will leave TBB negative, cover - TBB with INM.
      If there is any income left in INM after step 3 I usually send that to savings.

       Sorry, I know this was 2 weeks ago.  I'm working my way back slowly after my vacation...  I have almost this exact same work flow, but I think this step 3 you have it backwards.  It's better to put all of INM into TBB first, and then budget to $0.00.  

      The reason I say this is, sometimes the money you got last month isn't quite enough to cover everything, and you might need to let slide a couple of savings goals temporarily.  When the TBB is set to everything available to begin with, it's easy to know when that point has been hit.  right when TBB hits $0.00, you know you're done.

      Like
      • ynaber2613
      • ynaber2613
      • 3 mths ago
      • Reported - view

      Bruce Your method is probably better if you are short of funds in INM for next months par budget.  

      I usually select all categories and use the quick budget button to fund all categories at once so I would leave TBB negative either way if INM was insficient (LOL).

      Like
      • Ivory Crab
      • Ivory_Crab.16
      • 3 mths ago
      • 1
      • Reported - view

      ynaber2613  Bruce

      Thanks for the feedback....I've ended up doing the following:

      First Month to get started

      1. Income goes to TBB
      2. Move same amount to category INM

      Second Month

      1. On the last day of the previous month or first day of next month I reduced INM to $0 budgetted therefore increasing my TBB by last months income
      2. I budgeted the month to $0
      3. When income comes in, it goes to TBB
      4. Move same amount to category INM which increases the balance back up to equal my income for the month

      Then I should be able to just repeat.  This way I can use the Future Budgets or this month.  The INM acts more like a float but it keeps all of the income/expense reporting working and all the other budgets remain accurate.

      The other thing I did which I didn't realise was available was get a third party bank sync to YNAB given I'm in Australia.  That makes things so much easier, previously having to do the import for transactions it was more difficult to manage because I spent most of my time doing CSV imports and categorisation where as now the transactions are imported daily, not just when I got around to it.  As a result I have more time to do budgetting now, not just acting like a robot importing transactions.

       

      Thanks again.

      Like 1
  • Steel Blue Dragon said:
    This doesn’t work.

     Yes it does. You can't tell a bunch of people that have been doing this for years now that it doesn't work.

    Steel Blue Dragon said:
    It’s adds another level of unneeded complexity.

     This is true. But like dak said, it adds an additional 10 seconds per month. It ain't that complex.

    Hey, I get it. I preferred the old built in Income for Next Month too. Hated that they took it away. I came in kicking and screaming too. But I finally chose to adapt since almost everything else is better. It's your choice to stick with YNAB 4. That's perfectly acceptable.

    Like
      • Herman
      • herman
      • 4 mths ago
      • Reported - view

      Superbone You know what else works?  Add the income to next month when you get it.  Finalize the specific budget category allocations once before the month starts.  And yes I know, stealing from the future but that is simple. 

      Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 4 mths ago
      • 1
      • Reported - view

      Herman Yes, I did know that. Whatever works for you. Like I said, it ain't that hard.

      Like 1
  • Ivory Crab said:
    1. When income comes in, it goes to TBB
    2. Move same amount to category INM which increases the balance back up to equal my income for the month

    Why not just make these 1 step? Directly categorize all income to INM. It saves a step and everything else is the same. 

    Like
  • Superbone said:
    Why not just make these 1 step? Directly categorize all income to INM. It saves a step and everything else is the same. 

     As you know if you send it to INM first it does not show up as income in the reports.  If you send it to INM first then you will have to go back and search those transactions and recategorize as TBB later to fix the reports.  I think it is a lot simpler to send to TBB them move to INM.  This keeps everything simple and clean.

    I keep INM at the top of my category list for this reason, it is the first selection using the move money tool from TBB to INM.

    Like
  • Superbone said:
    That is what you do to make the funds available to budget next month. You do that anyway.

     I don't have to go back to the account screen and search and recategorize anything.  I simply use the move money tool to move INM back to TBB.  Actually in my particular workflow I quick budget all categories next month leaving TBB negative and then use the move money tool to cover TBB with the funds sitting in INM but as Bruce  pointed out the better approach is to move INM to TBB first and then budget.  

    Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 mths ago
      • 1
      • Reported - view

      ynaber2613 Yeah, that’s how I used to do it. I just happen to like this way better. Less steps overall. Ultimately, you and I end up at the same place so we’re all good. I do the same as Bruce when budgeting next month.

      Like 1
      • ynaber2613
      • ynaber2613
      • 3 mths ago
      • Reported - view

      Superbone The other approach seems more complicated to me, my mind thinks simple (LOL).  In my workflow I probably should rename INM to NMB (Next Months Budget).

      Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 mths ago
      • 1
      • Reported - view

      ynaber2613 Mine is fully written out: Income for Next Month. I used to call it Buffer but I prefer the explicit name which also more closely matches previous YNAB nomenclature. They used to specify the month each month, e.g. Income for September. 

      Like 1
  • dakinemaui said:
    The advantage of going to INM first, IMHO, comes in because you don't have to make multiple budget entries throughout the month.
    When going to TBB first, there's also a greater risk of mixing income arriving on both sides of the month boundary.
    Ultimately, the differences are minor, but there are definitely reasons I prefer going direct to INM. That said, I think *budgeting* to INM is the better choice for anyone who still needs to use some of their income in the current month.

     1) Making multiple budget entries for income is no big deal.  If I have 2 paychecks to enter in one day I send them both to TBB and then use the move money tool to transfer to INM.  INM sits at the top of the budget list to facilitate that workflow.  We are retired so we only have a total of 4 paychecks each month anyway.

    2) In my case I will never have a problem with mixing income arriving on both sides of the month boundary, I only do manual entry for all transactions and always keep TBB at zero.

    3) The differences are indeed minor.  I don't quite understand the second point though that its better to send to INM first if you need the income for the current month.  Seems like it would be better to send to TBB and then send what's left after use to INM.

    Like
  • dakinemaui said:
    Agree. 🙂 Same thought, different phrasing.

     

    Superbone said:
    That's exactly what dak said for the second point . 🙂

     Totally missed that phraseology, I need to slow down and read LOL.

    Like 2
  • Count me among the ones who are migrating from YNAB4 to the new YNAB.  This is actually my second attempt.  I like what I see now compared to what I first experienced as a new adopter when the new version came out several years ago.

     

    While going through the boot camp this second time around - I realized that INM was missing.  Not cool.

     

    So I dug further.  I stumbled on to this discussion.  Wow!  Holy crap, I see that the INM discussion has been going one for a couple years now.  I didn't read through the complete thread and I'm still trying to pull my eyebrows down from the sky reading through some of the early conversation.

     

    Anyway - yup, I do miss the Income: This Month vs. Income: Next Month categories.  Budgeting this way is what got me debt-free years ago.  I'm embarrassed to say how much debt I was in.  That debt was virtually eliminated over time.  It took several years, but I did it.  I can thank the old YNAB4 for that.  I was a convert from Microsoft Money at the time.  Yes, I'm probably showing my age.  😉

     

    Perhaps someone already stated this earlier.  Like I said: didn't read through the entire two year (whew!) thread.  Using the budget template covered in the boot camp (Dave is doing an amazing job, by the way!) I changed the out-of-box categories to the Monthly/Non-Monthly/etc. he has in the training.  I followed along for a bit then took a break to experiment and look at next month's budget.  I realized I was about to slip into old habits - which will probably be addressed later in the boot camp - and decided to take immediate action so I don't resurrect bad habits.

     

    In other words - I started using the out-of-box "Stuff I forgot to budget for" subcategory and found myself reverting back to old and bad habits: I was pulling money from that for the current month instead of setting it aside for next month.

     

    So - this is what I did, based so far on the boot camp I'm watching.  I'm currently catching up and in the middle of Unit 4.

    1. Created a Monthly category
    2. Placed the new Monthly category at the top of the budget template.
    3.  Created a "Save for Next Month" subcategory in Monthly.
    4. Moved the new Save for Next Month subcategory to the top of the Monthly list.

     

    Putting it here will hopefully make it really easy to set aside income from TBB for the future, encourage good habits, and use the new YNAB like YNAB4.

     

    I agree with what a few people have already said: many of the changes are getting me to stick around this time.  I would prefer not to switch back to YNAB4.  I was about to do so until I thought this through.

     

    Just wish something like that Save For Next Month category would have appeared in the template which the new YNAB creates when you first set up the account.  The Stuff I Forgot To Budget for brought back  bad habits.  No worries, though, because I'm definitely willing to adapt!!

    Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 mths ago
      • 2
      • Reported - view

      Leonel M It's a simple workaround once you get it going. Are you able to use all of this month's funds for next month? If so, you might think of setting up your recurring paychecks to go directly into INM. Then once you have all paychecks for the month, you can recategorize those paychecks as To Be Budgeted and then budget next month. The All Accounts screen makes this easy.

      Like 2
      • Leonel M
      • qmt1701
      • 3 mths ago
      • 1
      • Reported - view

      Superbone Thanks for the response!  Glad to see it because it validates what I'm thinking.  In classic YNAB I would enter income from my full-time job as next month and income from my part-time job as current month.  What you suggested was actually what I was going to to try.  So to answer your question - I'd say, yes and I choose not to (and am re-evaluating this in the new YNAB).  lol  Thanks again!!

      Like 1
      • Leonel M
      • qmt1701
      • 3 mths ago
      • 1
      • Reported - view

      Superbone Thanks also for the tip to use the All Accounts page this way!!

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 mths ago
      • 1
      • Reported - view

      Leonel M No problem. You can just search for your INM category and bulk change the Categorization to To Be Budgeted when you're ready to budget next month.

      Like 1
  • Wow, what an epic thread. Feel compelled to post and add my two cents and and also ask a couple questions from anyone in the community still working with or around this issue.

    I started using in 2011, or maybe 2012; it's been a while now. I was a really dedicated user and it helped me and my family move from living paycheque to paycheque to building a big investment portfolio. Classic success story. When they announced the move to nYNAB I was initially excited but when I actually tried the software was completely confused and frustrated. I stuck with YNAB4 as long as I could but knowing it wouldn't be indefinitely supported started eating away at me, and fell off the budgeting wagon hard, after more than 5 years of dedication. I tried numerous times to embrace nYNAB and it never stuck.

    Now I'm finally motivated to get it working, and have had to start from scratch anyway since it's been so long since we budgeted at all. That's been a bit of a blessing, I suppose. With the exception of learning that my (very large, mainstream) bank suddenly doesn't support direct import anyway, things were going smoothly until I came upon this issue.

    I'm pretty dumbfounded. Though maybe they don't frequent this thread, I'd love to hear from anyone who uses the nYNAB methodology successfully and doesn't find it cumbersome to budget every piece of income as it comes, or end up stealing from the future. Otherwise, are folks still just using the Income for Next month category workaround? I want to get off on the right foot here...

    Like
      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 2
      • Reported - view

      Andrew R I recommend the Income for Next Month category. It solves multiple problems and requires less than 10 seconds per month.

      Like 2
      • Silverose
      • silverose
      • 7 days ago
      • 1
      • Reported - view

      Andrew R My journey follows yours exactly. I was an early adopter of YNAB, and it's incredible toolset of telling our dollars where to go instead of seeing where they went helped us get out of a mountain of debt. When they released YNAB online, I tried it for a while, and really gave it my best shot, but my inability to plan for the following month caused me to cancel my subscription and give up.

      I am now back as my husband and I want to again figure out where we can trim our spending, and after looking at all the alternatives, YNAB is still the best of the bunch, even with the un-baked-in option to deliberately plan next month's spending (so we can modify our behavior where needed). Will use the INM workaround, and remain as dumbfounded as you that YNAB would eliminate the very tool that set them apart. 

      Like 1
  • Andrew R said:
    I'm pretty dumbfounded. Though maybe they don't frequent this thread, I'd love to hear from anyone who uses the nYNAB methodology successfully and doesn't find it cumbersome to budget every piece of income as it comes, or end up stealing from the future. Otherwise, are folks still just using the Income for Next month category workaround? I want to get off on the right foot here...

    No, of course use the Income for Next Month category workaround. It's very simple. Just because YNAB took away one of their most powerful features from their native software doesn't mean you have to stop doing it. Also, use the Toolkit to warn you about SFTF. For PIF CCs, use checking accounts to make them behave as they did previous YNABs. There. You're pretty much back to YNAB 4.

    Like 2
      • Andrew R
      • ajr
      • 1 mth ago
      • Reported - view

      Superbone Appreciate that. But wait, not to take too much of a tangent but is the new credit card system really going to cause trouble as well if they're always paid in full?

      Like
      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 1 mth ago
      • 3
      • Reported - view

      Andrew R I say this as someone who likes and uses the nYNAB credit card function - there are a surprisingly large number of ways that the CC balance and CC payment available can get out of sync, and the causes are not always obvious or intuitive, even for an experienced YNABer. 

      Like 3
  • Andrew R said:
    But wait, not to take too much of a tangent but is the new credit card system really going to cause trouble as well if they're always paid in full?

    At best, the new credit card system adds redundant information & unnecessary clutter for a paid in full user. The balance of the auto-managed "Credit Card Payment" budget category should always-and-forever be equal to your credit card account balance.

    At worst, as noted by Vibrant , the auto-management might do the wrong thing and the values will expectedly diverge. If you don't notice this right away, you might make budgeting (and spending) decisions based on bad data. So you have to remain vigilant and "babysit" the payment category, and make manual corrections as needed. Not awesome.

    For those reasons, I highly recommend the workaround -- setting up your credit cards as "checking" account type in YNAB -- if you are a paid-in-full card user.

    Note that I'm adopting a strict definition of "paid-in-full" here: The entire outstanding balance of your credit card should be backed by cash at all times. In other words, you could pay the balance down to $0 at any time. In practice, you probably only make a payment once-per-month -- on the due date, for the statement balance -- but the full balance is always held in reserve in your budget.

    Like 2
  • bret said:
    Note that I'm adopting a strict definition of "paid-in-full" here: The entire outstanding balance of your credit card should be backed by cash at all times. In other words, you could pay the balance down to $0 at any time. In practice, you probably only make a payment once-per-month -- on the due date, for the statement balance -- but the full balance is always held in reserve in your budget.

     To elaborate on this point a bit,

    The auto-managed "Credit Card Payment" category is how YNAB represents money that is "held in reserve" for your credit card (when using the default credit card mechanics). Some people appreciate this explicit representation, even if they always intend to pay their card in full.

    If you setup your credit cards as "checking", then the outstanding balance on your card is simply subtracted from the funds available to your budget. The money is implicitly held in reserve. From a budgeting standpoint, the money is already gone.

    I have a same-as-cash attitude toward credit cards, so I consider the money gone the moment I use my credit card. I don't find it useful for that money to linger inside my budget (in a payment category). For me, it's analogous to mailing a check: It sometimes takes weeks for a check to be received and deposited, but I record the outflow immediately. I don't take advantage of the "float" with checks or with credit cards.*

    * Unless you count the fact that I continue to earn minor interest $ off the money while it lingers in my accounts for a few extra weeks.

    Like 2
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