
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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Hi Wei !
Welcome to the new YNAB! :)
Handling income is a little different than it was in YNAB 4. Instead of sending money to a certain month, we want you to move to that month and budget those funds where you need them. If you're already a month ahead, then when you receive your paycheck on the 15th you can move to the next month and start budgeting those funds there. When you receive your check on the 30th, you'd move to the next month and finish the budgeting there.
As long as you budget to zero, you can still use your To Be Budgeted to monitor changes (more specifically, the Budgeted in Future portion outlined next to it). Once your To Be Budgeted amount is at $0.00, budgeting more towards your current month takes from your future month - you can move forward to check your future months at any time and adjust as needed.
I hope that helps, but let me know if you still have questions! :)
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Wei said:
I feel like I'm in less control than before.Disclaimer:not yet a nYNAB user... wish I could be though.
As far as I can tell the holding category is the best option.
I wish 'walled months' was still a thing. Praying for a mea culpa... some day.
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Simple work around: create a budget category called "Money for Next Month". Put your two paychecks in there in the current month and when the 1st of the new month hits, release those funds back to TBB and budget. I prefer this because I like to budget the whole month at once, but it's actually way better on another front because by not pre-budgeting the month ahead, your TBB will actually go negative in the current month if you overspend, thereby making it easier to catch an overspent category.
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Faness at YNAB said:
everyone has their own preferences and I prefer manually adjusting my funds when I receive them rather than sending them to the future to be handled at a later dateWalled months doesn't prevent you from budgeting when you receive money.
Out of curiosity, how long did you use YNAB4, and what value over walled months does no walled months provide you?
I'm genuinely curious as I honestly don't 'get it'. Until someone beats me over the head with a 'no walled months bat', I really just don't get how it's better and how anyone can actually feel good about their budget (re: stealing from the future) without the walled months.
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Faness at YNAB said:
YNAB 4 gave dollars a general job of 'next month' while the new YNAB forces you to give them specific jobs (sans any work arounds).Leaving aside the whole walled months/no walled months discussion, I think the implication that a general job for funds is bad is problematic. YNAB materials have repeatedly stressed the idea of just learning to let your money sit is a good thing and that the job of "wait right there until I come up with a concrete plan" is a legitimate job for one's dollars. That's why I have a Loss of Income category for 6 months of minimum expenses (mortgage, utilities, food, COBRA, and the like) rather than budgeting those things out right now. And I'm saying this as someone who really likes a granular level of categories (I have about 70 right now), so I certainly respect the importance of specificity of jobs in the budget. But it's not always called for.
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Faness at YNAB said:
I'm also the type to work on (ie. Stare at) my budget when nothing has changed. 😅Believe me, I get that. I think a lot of us can identify with that.
But in our case Mrs. nolesrule is busy and doesn't have the time to deal with frequent decision making... and there have been times I've made some decisions on my own and she wasn't happy about it (she agreed with the decision, she didn't like I made the decision without her input), so I've stopped doing that.
What I have found with using Income for Next Month is that because we live below our means, we've come to a general agreement on what to do with all our money each month. And even with every category planned out, we still end up with leftover money from our take home pay as well as bits here and there from cash back rewards and bank account interest, as well as unused money in everyday categories.
So we have, in effect, a surplus each month (and in months where the wife gets 3 paychecks, it's a huge surplus). We use that surplus first to cover/cashflow anything unexpected, and then whatever is left at the end of the month-- and 99% of the time all of it is still left-- the money gets divided up based on a formula we agreed on.
If I were to go back to budgeting by paycheck, it would be harder to identify the surplus. I'd be having to make decisions on whether every single category is funded properly as each income event happens, and making decisions on how far out to budget.
Being able to see the surplus by budgeting monthly allows us to make other better financial decisions faster beyond just the short- and intermediate-term saving/spending, which is the zone where YNAB excels. It allowed us to quickly see that we could jack up our 401k deferrals to max out our contributions. Something we never did before Income for Next Month. And we now have a brokerage account with a higher value than our Income Replacement category.
I think when the income vs. spending is much tighter than what we have, it's even more important to be able to identify the monthly delta, and formulate a good financial plan to take advantage of it.
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nolesrule said:
What I have found with using Income for Next Month is that because we live below our means, we've come to a general agreement on what to do with all our money each month. And even with every category planned out, we still end up with leftover money from our take home pay as well as bits here and there from cash back rewards and bank account interest, as well as unused money in everyday categories.I think you hit the nail on the head with this. Faness at YNAB mentions filling the gaps, but my budget doesn't have gaps so I literally budget the same every month and then have to decide what to do with the leftovers.
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This discussion reminds me of the discussions we used to have with Jesse back in the YNAB 3 days. Users such as Joel and myself maintained that there was a huge bug that let the user create or destroy money by not budgeting to zero. Jesse maintained it wasn't a bug, because it wasn't an issue when the user followed the methodology correctly.
Okay, the steal from the future issue isn't as bad as the old YNAB 3 create/destroy money issue; but it's still pretty bad. The user can undo future budgeting he has done *without realizing what he has done*. In broad theory, YNAB (any flavor of YNAB) is supposed to be helping the user control his money. Anything that happens behind the scenes to materially change the budget picture without warning the user of what is being done is a huge honking problem.
The way it ought to have been designed:
- All income categorized as To Be Budgeted
- A special category exists, To Be Budgeted - Future. Money can go there if the user categorizes an inflow to this successor of Income for Next Month, or if the user *budgets* to this category
- To Be Budgeted stays in the current calendar month, clearly showing the user whether he has budgeted above, below, or to zero.
- When the user makes a *conscious decision* to budget some of TBB to TBB-Future, that money becomes TBB in the next month forward. It can then be budgeted in the next month forward, or rolled further forward by budgeting it to TBB-Future again.
- When the calendar rolls from January to February, TBB for January is automatically transferred to TBB for February. Absent the user consciously deciding to budget future months, this does not happen until the first of the month arrives. This is consistent with the nYNAB prohibition of future dated transactions; simply make the roll of TBB to next month a scheduled event rather than the future dated event reflected in the program right now. (Rant about the stupidity of not allowing future dated outflows omitted; I'm trying to work within the intellectual framework of nYNAB.)
Predicted results: Budgeting to zero becomes truly budgeting to zero. Budgeting in the future is allowed, but there is a wall preventing the current month from stealing amounts deliberately budgeted in future months. Whack-a-mole keeps the necessary characteristic of TBB showing how far from zero the budget is, and in which direction. Users are not forces to drag and drop money in the one-to-many or many-to-one budget adjustment scenarios.
Stealing from the future would be allowed, but it wouldn't happen automatically. The user would have to transfer fund from TBB-Future back to TBB, and presumably would then be aware of the consequences.
I have fixed the lack-of-walled-month and steal-from-the-future problems for my own budget with workarounds; but they are *workarounds*. My workarounds are just fine for someone with 10 years of YNAB experience including the Bad Old Days of figuring out budget theory while using YNAB Pro; they could be a bit much for new users who are just learning to budget.
As to pay frequency, right now my budget is paid 4 times a month: Pension arrives on the 1st, Social Security arrives on the 3rd Wednesday, interest is paid at end of month in several pieces, and transfer from investments to budget happens once a month whenever I do it. In YNAB 4, it's all Income for Next Month. In nYNAB, it's all run through a workaround to manually create the effect of Income for Next Month. I don't want to budget 4 times a month, and see no reason this should be necessary.
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Patzer said:
This discussion reminds me of the discussions we used to have with Jesse back in the YNAB 3 days. Users such as Joel and myself maintained that there was a huge bug that let the user create or destroy money by not budgeting to zero. Jesse maintained it wasn't a bug, because it wasn't an issue when the user followed the methodology correctly.Ah, the old not-budgeting-to-zero issue! What a treat it was that that was finally addressed in YNAB3 :)
Jesse Mecham , do you ever come through and personally review/consider/comment on these new YNAB forum posts, as you used to back in the old YNAB Pro days? Would love to hear you weigh in here on this topic, as I was always so impressed at your hands-on "in the trenches" approach to product feedback back in the day.
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Faness at YNAB said:
I think the biggest issue with future budgeting is trying to do it too soon. Funds shouldn't be budgeted towards next month until the current month is fully funded. When that's done, stealing from the future doesn't pose a threat. :)There's a fundamental problem with this statement, Faness at YNAB : one cannot be *certain* that the current month's spending is 100% fully funded until the very end of the month, because real life happens.
This is the entire reason Rule 3 exists, and what sets YNAB apart: the acknowledgement that no matter how perfectly we try to anticipate things, we can't possibly always get it right (as Jesse Mecham says, there's no such thing as a "normal" month!).
So given that reality, your statement implies that one shouldn't budget towards next month until the end of the current month (since that's the only time you can actually be certain the current month is fully funded) - which then conflicts with the new Rule 4, since that *encourages* budgeting ahead to future months.
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Patzer said:
To paraphrase Resistant Punch Roller , there's a fundamental problem with this statement. Before the month is over, you *don't know* that there will be no emergencies (or no additional emergencies) in the month. And right when that unanticipated emergency happens is a Bad Time for paying attention to lots of details that must be watched in different places. Your recommendation comes down to, "Don't budget February until January is over."Agree, but I wouldn't even characterize it as "emergencies." I typically make small tweaks to my budget up to the last day of the month to handle the normal (unanticipated) overspending that always seems to happen. It's Rule 3: Roll with the Punches.
As if on cue, I just received a marketing email from Jesse Mecham where he shares this wisdom:
I've been budgeting every single month since 2003 and I'll tell you the months where we didn't overspend:
...
That's right. Not a one.
There are basically three components to spending:
- Plan what you want to spend.
- Spend.
- Adjust your plan.
There's the rub. In accordance with Rule 3, I need to make adjustments to my budget all the time, so my budget is never really complete. I need a way of doing that without accidentally tapping into funds that I want to reserve for the future. The new YNAB makes that a lot more difficult.
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I, too am a YNAB4 user from the past and was very active on the forum. I decided to try nYNAB for 2018. This is my first month rolling over. I just can't get my head around how to do it, no matter how much I read.
Faness at YNAB please don't think this thread is just a bunch of old YNAB4 fogies who don't want to change. As was said above, we are noticing a serious bug (SFTF) and loss of functionality (Income for Next Month). nYNAB users shouldn't need an audit trail, buffer workarounds, or second-guessing what amount YNAB has decided to adjust without letting us know.
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I also want to add support for the idea of thinking about income in buckets/months. We (me and my fiancée) are payed at the 25th of each month and update our budget about weekly (not because the income has changed, but to re-prioritize and "roll with the punches"). January's paycheck goes to fund February. As there is less than a week of overlap "stealing from the future" is not a big problem for us.
However, the "fluid months" style just doesn't make very much sense to us. We don't really use YNAB to avoid "living paycheck to paycheck" or "budgeting for the future". We use YNAB as a way to distribute our income according to our priorities. We put money into the categories as appropriate. Some categories will grow from month to month (e.g. goal-oriented savings such as for vacation or an emergency fund), but we never actually use the "Next month" button and explicitly budget money in the next month. We'd rather put that extra money in an off-budget investment account and assume that future income will fill cover for the future expenses. That also clearly forces us to solve any overspending or other minor unforeseen expenses within the budget for that month.
The behavior I just described relies on the fact that we have a sound financial situation, stable jobs and predictable paychecks. Obviously emergencies or job loss can happen to us as well, but I feel putting money into the Rent category of next month and the month after that doesn't really protect us from that – an emergency fund and long-term savings do.
While I could possibly see the value budgeting for future months if I had very irregular income and was in a tight financial situation, it just doesn't make any sense to micro manage the future for us.
Perhaps that's what this is all about? YNAB needing two modes for "my finances are on fire and I need help to survive" and "I've got stable finances but want to think about how I spend my money"?
That's my two cents (or "öre" as they are called in Sweden). :-)
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First let me say that I think the best option is to make TBB "global" - and by that I mean, there should be some indicator in this month whether you are "stealing from the future." This seems like the most straightforward thing that will work for most situations. I get paid once per month & I'm not buffered (yet) so income for next month was never useful for me even when I used YNAB4. However, in YNAB4 and now in nYNAB, I do use a deferred income category. I'm on a tenth month salary so I need to save money to cover expenses for those two months when I don't get paid. I don't currently budget that in the future b/c I'm worried about "stealing from the future" so deferred income category it is. I think a "deferred income" option (i,e, "income for some future month") option would be better than income for next month, I think. I want to "hold" that money until July when I don't get paid. I'm sure there are other people who get paid quarterly or whatever, so a more generic "income for the future" would work for them too. I wouldn't need that "income for the future" option & would happily budget it in the future month if the TBB would warn me if I'm taking money from the future. [I'm glad I don't have multiple income streams/checks - I can't imagine changing budgeting amounts every time a new paycheck came in - that would drive me bonkers. The budget template makes it easier for the current month, but I would find it tedious for the future months.]
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This is my first time posting here but I really wanted to give my perspective as a brand new YNAB user who never tried any previous version of the software.
I came to YNAB after years of using Quicken. I was really just looking for a cloud-based Quicken replacement, but once I started digging into the tutorials and classes, I recognized that YNAB could do so much more for my financial well-being than Quicken ever did. I was in love with it, but I had one big stumbling block. Budgeting in increments of less than a month just did not work for me.
My billing cycles are monthly, I think in terms of spending or saving $x/month in my categories, but our income arrives in multiple irregular installments throughout the month. I needed a way to set aside that income as it arrived, so that we could budget it all in one session at the beginning of each month. Trying to do it the way YNAB seems to want was driving me crazy. 😵
I was not going to continue with YNAB past my trial, until I found the workaround of categorizing income directly to an Income for Next Month category, and then recategorizing it back to TBB at the end of the month to allow it flow into next month's budget. This works well for me even though it makes the current month's reports incorrect.
With this workaround I am able to budget in a way that feels natural for me and enables me to make good decisions by looking at the whole month in my monthly budgeting session. It saves a lot of time too. I don't understand why this workflow isn't baked into the program -- as I said, I gather that it was a thing in YNAB4, but I never experienced that. I'm just sharing how YNAB didn't click for me until I found out how to hold my income for next month.
I would love it the Design Time could make this a native feature and not so workaround-y.
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(@faness_ynab)
Late to the party here but my 2 cents as a new user and for requirements gathering. I'd love to be able to get my check for next month (4th Monday of every month). I would then love to be able to take that check and spend it ONLY in next month budgeting. If I wanted to I'd love to take down walls but if I just wanted to budget it for ONLY next month I want that option. Later on I might want to even go 2 months ahead (if I am really ahead of the game). When I go back to this month I don't want to see my categories messed up financially (eg should not reflect next month's dollars). All this could be handled by more option buttons/user settings in a config.
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Holy smokes! I knew I couldn’t be the only one confused on this. I spent hours trying to figure out what was happening. I could have sworn my wife and I budgeted ALL our available income on the 1st. On the 16th I opened the app and it said we had money to be budgeted. Huh, what? How? We budgeted it all already.
When I realized it was from my check the day before, I went budgeted it all in the future month because I figured that must be how nYNAB wants it to work. Fine.
Later, my weekly automatic credit card payment overpaid my card (fine my me). At this point nYNAB said I had budgeted too much so I added more to the credit card budget... and it let me steal money from the future without realizing it. I’m an experienced budgeter and it took far too long to realize what occurred and why.
You guys are losing people to this “feature”. You’re helping people overspend the current month rather than save for the future.
I have been preaching and teaching YNAB4 consistently for years. I had budgeting classs with three of my sisters in the past two weeks! I bought the book just to let people borrow to try to get them to use YNAB. I love YNAB, but I can’t recommend nYNAB until this is fixed.
I’m a software guy, so I get that this isn’t a “bug.” But when you have this many people using your budgeting software in a way that’s causing them to spend more and save less by stealing from the future, there’s a problem and you should address it in the software.
I’m going to try using the workaround of adding an “Income for Next Month” category but until this is addressed I can’t recommend nYNAB for any more of my friends or family.
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I've been a YNAB user for 10 years -- it truly changed my life when I first started using it. I was so comfortable with YNAB4 I held out on switching over to the newest version until I could no longer manage the inconvenience of not have an app that works any longer (my app stopped syncing with YNAB4 about 6 months ago and I wasn't able to fix it myself).
To say that I'm confused and disappointed in the changes would be a really big understatement. After 10 years of 'budget next month' and 'live a month ahead' ideology, I seriously cannot wrap my brain around this new version. Wonderfully, my husband got a new job and with the increase in income we've decided to now upgrade to this version - however, the combination of the dramatic change in income and using this new YNAB is just way too much to wrap my brain around - I've watched as many videos as I can tolerate, and have been sitting with a calculator half the morning try to figure out where the heck some of the numbers at the top of the budget this month vs next month come from and how I can budget ahead.
Perhaps YNAB just isn't right for me now that I'm no longer living paycheck-to-paycheck - I just can't imagine how budgeting ahead a few months is a bad thing (considering that each month, including this one, we are putting ample money in savings), and I really don't understand how creating 'monthly funding goals' through a 'budget template' is any different than just putting the darn number in the budgeted box for the income I'm 99% sure will be coming in two weeks from now and would like to responsibly plan ahead for.
I am very close to abandoning this and switching to Mint -- but it leads me to ask if anyone can point me in the direction of videos or trainings on here specifically for long-time YNAB users helping us make the leap between the 'old' way and the 'new' way. It's a last-ditch effort before YNAB loses me for good.
Thanks!
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Thanks everyone -- generally speaking, is it ok if I post a few more 'adjustment' questions here (ie adjusting from 4 to the new version!) or do I need to find the individual forums where they'd apply?
It would help if I could post them in a lump in one place, I have screenshots and such, and nolesrule I'm thinking based on your user name you may be a helpful person to ask ;)
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Another long time customer here just now trying to switch. The fact that you've received so much feedback and haven't offered a solution leaves me dumbfounded. Budgeting one month ahead was something you beat into your customers for years, and now it's gone? It was so much of the YNAB brand that it was the one thing I would always mention when telling someone about the software, and I would tell them how easy it makes budgeting once they can get one month ahead. After going through everything and deciding to move to nYNAB, I'm pretty bummed about this... Back to Classic I guess, is there a mailing list or something I can be put on for when this product is fixed and I can give you money?
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Just sat down to reconcile my budget for end of month and AGAIN ran into this nightmare. I thought I was over it, but just got angry all over again. It should not be this hard to use this product. (I find it especially annoying that this comment is considered ANSWERED). Faness ? Taytay Does anyone actually care? I know I'm only giving you $5 a month, but help me out here. . .