Rule #1: Give Every Dollar a Job

I'm a new user of YNAB and need help getting started.

Rule #1: Give Every Dollar a Job

 

Let's say if I had $30k in my checking account, and my monthly spending when I budget everything is $4500.  My weekly pay is $1800 (~$7200/month income .) How do I go about and budget to give every dollar a job? Do I budget just 1 month or budget until I'm zero dollars (6+ months)? How do I handle the adjustment of budget when I overspend on something? Do I just add more $ from the buffer I have or do I move the $ from other categories?

Thanks!

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  • You are focusing on how to budget, and not on the actual jobs. What are the jobs for that money?

    Is all of it just for your monthly expenses? Is it intended to also cover non-monthly recurring expenses (e.g. auto insurance, vehicle registration, Amazon prime renewal, etc.)? Is some of it being saved for a specific purpose? Vacation? next car? Is any of it an emergency fund? Car repairs? House repairs? etc.

     

    Once you figure that out, the rest will come naturally.

    As for how far out to budget, I'm a fan of budgeting exactly one month ahead and no more, and putting the rest into income replacement and emergency funds (until those are at your targets). The reason is that anytime you need to make a change to a budgeted amount (say, for example, your cable bill goes up), you then have to do that in every forward month you've budgeted to, and also make corresponding adjustments elsewhere to account for the increased budget amount. It becomes tedious.

    The reason for one month? Because if you get paid more than once a month, I find it's easier to collect up all the money and then budget the entire month in one go, rather than budget every time new money comes in.

     

    The one thing you don't want to do is not give a job to every dollar, because when you have a pile of money sitting there with no purpose, it's human nature to mentally give it multiple purposes, and it never goes quite as far as you think it will.

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    • nolesrule  Thank you!  That clears it up. I'll try to keep it at 1 month ahead. I appreciate the detail response!

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  • Hey  Lavender Saxophone , I love nolesrule suggestion about budgeting a month at a time. That's helpful especially as you get started and you are really learning the YNAB Method

    As for the overspent amount, that's what Rule Three: Roll With the Punches is for. You can move money from your reserve or emergency fund and cover those expenses. And as you do so, you might find that you do this so often that you might need to reevaluate what's happening there. 

    1. Either you've set a rigid budget for that category that is unrealistic and you need to budget more. 

    2. Or you're drifting from your intentions and essentially robbing your future self! :) You're saying, "I need to spend this right now, because my future self doesn't need it." And maybe you'll realize that's not ok and begin to spend less in that category!

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