Still confused about "budgeted", "activity" and "available".
I've watched all the videos but I'm still confused about "budgeted", "activity" and "available". Can anyone explain it to me in a super easy way? Feeling dumb 😪
Let's start at the beginning, ignoring your screenshot for a moment.
"Budgeted" = this is how much you've added to the category since the start of the month. Note that you can add a negative amount to a category--in other words, you can take out of a category more than you've put in within a month. If you use the move money tool to move money around your budget, this may happen automatically, which some people find confusing. The key is, this column shows exactly what you've added that month. That's it.
"Activity" = this shows what has happened to that category this month. Each spending transaction will produce negative activity, inflows such as returns or reimbursements recorded directly to the category will produce positive activity. This number is added to "Budgeted." Note that most of the time, Activity will be negative. Recall your 6th grade math--adding a negative is subtraction. But since this number can be positive, and budgeted can be negative, it's more consistent to recognize that it's all a sum.
"Available" = this shows the sum of "Budgeted," "Activity," and whatever was available at the end of the previous month.
So if you have $100 left over last month, and you budget $100 and spend $50, producing a -$50 activity, the available will be:
$100 (last month) + $100 (budget column this month) + -$50 (activity column this month ) = $150.
For non-credit card categories, this math is very straightforward. It's just an envelope--something may have been in it last month, and this month, you put some money in, and maybe took some other money out, and now there's some left.
Now, let's think about the card payment categories. Just like any other category, you can also budget to the credit card payment category, and it will cause the available to go up. You can move money out of the credit card payment category, and it will cause the budgeted column to go down.
There are only two differences for the card categories, and they have to do with how transactions get into "available. YNAB moves money to the category as you do budgeted spending in other categories. This move affects the "available" column, as these movements happen as behind-the-scenes transactions. So if you spend $50 on groceries, groceries will show -$50 activity, and your card will show +$50 activity. That +$50 activity will cause the "available" in the card category to go up, just like it would in any other category.
Then, when you record a payment, which is a transfer between accounts, this is the only way to directly affect the "available" in that category. This will hit as a negative amount, reducing the "available" column.
The math on these columns is exactly the same as in any other category. The amount available to pay your card is the sum of available last month + budget + available. The only difference is that you don't spend from the credit card payment category directly. You affect the available through doing budgeted spending in other categories, and by making the transfer/payments to your card. The end result is an available that shows you, just like any other category, how much money in your budget is reserved for the specific purpose of paying your credit card. And just like any other category, if you choose to spend more than is there (in other words, make a payment that is larger than that amount), that category will show overspent.
If I may attempt to clarify WordTenor's clarifications;
“budget is how much you’ve added…”
“activity is what happened… .”
When adding numbers, and someone says something has “happened” to the equation, the most likely meaning is that something has been added or subtracted. And, as was notably pointed out, those of us who weren’t napping in 6th grade learned that “adding a negative is subtraction.” Ergo, making something “happen” in addition equals adding. Therefore the clarification was that
budget = adding (and)
activity = adding.
This, at best, is a tautology; but at worst it’s merely confusing.
I believe WordTenor was trying to say,
Budget = a spending goal (as in “an objective”); hoped for result expressed as a number
Activity = amount spent or saved (as in “I frittered away $50 on financial software”)
Available = Budget + Activity + whatever’s left from last month; aka “remainder” (for those who weren’t napping in first grade).
Someday I hope to actually understand what YNAB means by Budget, Goal and Available. You might find the answers at this site helpful: https://support.youneedabudget.com/t/q5rsln/credit-cards-budgeted-vs-activity-vs-available
If someone disagrees with you, or points out a error in logic, that might make it "Spam" in some circles. But I submit that the fact that my post returned 5 responses with 5 different definitions supports my assertion that these words are not well defined, and therefore cannot be succinctly taught. My apologies for offending anyone with this opinion.
Dear members of this forum. Thank you for your patience. As a neophyte, I am dazed and confused. I have watched all 18 Starting Your YNAB Budget videos and a half-hour YouTube video, which was like trying to sip from a fire hose. Also, there is as much information in the videos about the belief system than how to USE the system. They might consider HyperCard over the existing videos.
According to the collective wisdom of this forum, in order to input data into the YNAB software, it is best to understand these four concepts: Budgeted, Goal, Activity and Available. That’s because, unlike other software, these four data points are highly interactive, and changing one will change another.
“Budgeted” is a plan; how much you set aside for a category (rent, groceries) for each month. The budget always ties to your total cash on hand — the cash in your accounts. If the total pot of money you have on hand exceeds or doesn’t meet the amount budgeted, eg., if you spend less or more on groceries in a month than budgeted, this amount can be re-budgeted (re-applied, re-assigned) to another category. Summarily, “Budgeted” is how much you add — how much you intend to spend — to a category this month.
- Note: I find this definition: “Budgeted is simply the movement of money… ” to be confusing, not because it is wrong, but because “movement of money” is too close to the definition of Activity.
The “Goal” function on YNAB exists to remind you what you wanted to budget when you get your money; a recommendation/reminder to budget a calculated amount of money in a category.
- Note: From an operational standpoint (actual use) Goal seems to be a mysterious word-choice for “Enter Budget Here.” Perhaps it has functions I have yet to discover. But at my stage, I simply can’t confirm that Goal can “recommend” what I should budget, nor act as a reminder, which, to my mind, is a calendar notification. These could all be true.
“Activity” is the amount put into or taken out via transactions; how much you spent (or got refunded); the movement of money via transactions with the current month. Summarily, activity is how much money moved in and out of a category during a month.
“Available” could be called “Reserved.” It is the total (or accumulation) that is currently reserved (a.k.a., "saved") toward a particular Budget line (your purpose). Available = remainder of money from last month ± activity ± budgeted. Summarily, Available is what’s left, the remainder, at the end of the month.
- Note: I find this definition: “the amount of money which has wound up with a particular job… ” to also be confusing. Again, not because it is wrong, but because the word “job” has well-established financial meaning, but not in this context; i.e., it does not tie back to any existing concept.
Again, thank you for you patience and tutelage!
Beige Sloth said:
“Budgeted” is how much you add — how much you intend to spend — to a category this month.
It absolutely is how much you added during the planning process. It may or may not be how much you intend to spend this month. Frequently it's not, and these are known as True Expense categories. The idea is that money for outflows occurring less often than monthly (e.g., the yearly Amazon Prime membership fee) can be accumulated over multiple months leading up to the due date.
Beige Sloth said:
I find this definition: “Budgeted is simply the movement of money… ” to be confusing, not because it is wrong, but because “movement of money” is too close to the definition of Activity.
If you think of categories containing dollars, it makes complete sense to think of moving them from one category to another. If you click on the Available amount in any green category, the tool that is then displayed is the "Move Money" tool.
Think of cash in paper envelopes (envelopes correspond to categories):
- Budgeting: Take cash out of one envelope and move it to another. You still have all your cash.
- Transaction: If you take cash out of one envelope and give it to a store, a transaction is the record of that money leaving (in this case) your possession. The total amount of cash you hold changes.
Beige Sloth said:
I simply can’t confirm that Goal can “recommend” what I should budget, nor act as a reminder
As an example, if you create a monthly funding goal of $20, YNAB will turn that category yellow -- as a reminder -- until you add $20 to it with a budget entry. You can also click in that budget cell and click the Underfunded button on the right and YNAB will budget the amount defined in the goal for you.
Perhaps for the time being, forget about Goals. They save a little typing and give you a visual indication that you had planned to add $X to it, but you can use YNAB effectively without ever using Goals.
Beige Sloth said:
Also, there is as much information in the videos about the belief system than how to USE the system.
The reason for this is that the belief system, which you'll hear called "the method," is the framework for the software which was built. Without understanding the method, the software can seem a confusing mess; if you understand the method, why the software behaves as it does makes much more sense. I feel from you that's what you're experiencing.
The reason the word "job" is in my explanations is because it comes from the YNAB method. Rule 1 is called "Give Every Dollar a Job." Meaning, put it into a category according to its purpose. We usually call those purposes "jobs," coming out of that material, as shown here:
You say you've watched all the videos, but have you tried taking one of the webinars? Often, an in-person 20-minute class, watching someone work in real time, with others asking questions in real time, can help you reach the "a ha" moment much more quickly. Here is the link for those: https://www.youneedabudget.com/free-workshops/