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.
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
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
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)Reply
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
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
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
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