Budgeting for annual or one time expenses

I've been using YNAB for a few months now and it has really improved my ability to manage my money. However, I'm having a hard time figuring out how to use the software to account for one time expenses or annual expenses that don't necessarily need to go into my monthly budget. For example: I saved up for a certification exam I had to take for work, paid for it out of the budgeted amount, but now I no longer need the category. When I attempt to delete the category I have to categorize the transaction and it messes with my entire budget. How does everyone handle these kind of expenses? I hate to have an entry to every single annual expense or one time expense that I run into

13replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • If you don't need a category anymore, you should hide it. Only delete a category if you never assigned it to a transaction.

    For the annuals, it kind of depends on what it is. If you have a bunch of annual subscriptions, you could just have one category for subscriptions and make sure you are budgeting enough each month to the category so that when they come due, the money will be there. Just takes a little up-front math to figure out how much that monthly allocation should be.

    Reply Like 2
  • Annual Expenses are easier to deal with if you save up 1/12 of them each month. You could group them under an "Annual Expense" master category at the bottom of your budget if you don't want to scroll past them.

    One-off expenses that don't have any connections to existing categories could be put in a category used only for those types of things, & funded only when needed. I've found I can usually assign a category (parking gets assigned based on what I was doing when I had to pay for parking), or it's something that could happen again (Random Bank Fees, for example) and should have a category.

    Reply Like 2
  • I just hide it and it remains somewhere but not visible

    Reply Like
  • For one off categories, either hide them or repurpose them.

    For recurring non-monthly expenses, you should be budgeting the same amount each month so that when it is due you have the full amount saved up. Then you spend it and repeat the process. This will normalize your budget. and make it easy to see if you are living below your means.

    Reply Like 7
  • I’m a new user, have read this topic about handling one time expense, but I’m still unclear. I get the idea of budgeting 1/12 of an annual expense. But there are expenses  that don’t occur predictably. Auto repairs for example. I can  budget 1/12 of a guess of what annual repairs may be, but half the budget amount could be needed next month when I haven’t accrued enough. How do you handle a situation like that which I think of as budget busters?

    Reply Like
      • monkeyhanger
      • No animals were harmed
      • monkeyhanger.1
      • 5 mths ago
      • Reported - view

      Slate Blue Captain Just adding to MsTJ 's response.

      As you say, annual expenses are easy to work out at 1/12 of the annual expense with the obvious proviso that you may have to budget more initially until your budget gets established. If your contents insurance is due in July then you've only got three months including this one to get the funds together so you need to budget 1/3 in May, June and July and can then budget 1/12 after that. This extra requirement for funds can be difficult or impossible when you're getting started. For these known expenses I would budget exactly what is needed to these categories with less funds going to the further out annual expense categories or other categories in the short-term. This is where goals can help. If you set up a target category balance by date goal it will keep recalculating how much you need to put in the categories. Arranging the categories in date due order and/or putting the month due in the category title can help if you can't fund them all in full at the start. I use the Toolkit so that underfunded categories show in blue rather getting mixed into overspent on credit categories.

      For things like car repairs, I've also had to do a mix of what can afford to go in there v 1/12 of the average annual spend. If you've spare money up front, then you can front load them and set a cap when you get to the maximum amount you want in there. If you can't then you have to acknowledge when you start that you would struggle to cope without credit if all of these categories have an issue at once. It's why I find the individual categories better than a catch all 'emergency fund'.  After a few months, you will probably have enough money across these categories, that you could cover a spend in these categories by moving money around or WAMing it. This is why many of us say that WAMing is not necessarily a bad thing. The budget is your best guess of where you need the money and where your priorities lie. WAMing (before spending) is an acknowledgement that things have changed. 

      Reply Like
      • Randy Gamage
      • Web developer
      • Cadet_Blue_Mask.4
      • 3 mths ago
      • 1
      • Reported - view

      monkeyhanger Sorry, but can you please explain what "WAMing it" is???

      Reply Like 1
      • jenmas
      • jenmas
      • 3 mths ago
      • Reported - view

      Cadet Blue Mask  Acronym for Whack-A-Mole where you take money from Category A to address a need in Category B when an issue pops up.

      Reply Like
    • Slate Blue Captain 

      Like any category, take your best shot at guessing what you might need and when. 

      Adjust as needed by reallocating from elsewhere (if needed in the short term) or by increasing contributions (if you can push out the service).

      You obviously need oil changes, etc. Count on new tires every 30k miles (average), unless you have records on which to base a different number. (Snow tires probably only get 15k.) Check an auto site for when timing belt, etc. are needed and plan accordingly.

      These are only "budget busters" if you haven't put in the time (and money, unfortunately) to prepare.

      Reply Like
  • Hi @Slate Blue Captain,

    I would guess everyone here has a different answer to your questions.  I will start with how I deal with them, then recommend you take the appropriate classes, they really help.

    I have two separate category groups for the expenses you list.  

    I have one for annual expenses, which splits my known, upcoming costs, into 12 equal payments which I add to each month, resulting in having enough when the bill is due next.  I call this my "annual expenses" category group and list each one I have.  The categories gets kind of bulky but collapse it most of the time and only look at it when one of the items comes due, then reset for the following year.  Every month this category group is automatically funded with $xx.  

    For things like auto repairs, I figured out how much I have available to save, then how much I figure I might spend in a given year, then divide by 12 and budget that much monthly.   Over time, I hope to have enough in the individual categories when I have to do some spending here.  I call this category group my "true expenses" and break it down for most of my known upcoming expenses, things like vehicle repair, medical/personal, vet visits, home maintenance, gifts, that sort of things.  I know they are coming, I just don't know when or how much.  Every month I put $xx in here also.  

    So far, this has worked for me.  Hope you find something that works out for you also.

    Reply Like 1
  • Thanks to all who have posted--my sense is that none of these workarounds are quite satisfactory solutions.

    Is it not possible to set an annual allotment for "auto repairs," for instance, and then to draw down on that amount over the course of a year?

    Reply Like
    • Slate Gray Captain You can certainly allocate money to your Auto Repairs category up front, and spend it down over time. Is that an option?

      If you don't, that is where breaking down your True Expenses into manageable monthly chunks as described above, helps you plan ahead. Having even a portion of the money set aside when something comes up make it less of a budget buster!

      Life happens and if your category isn't fully funded before it's needed, you can always move money—because your budget is flexible.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 3 wk ago
      • 2
      • Reported - view

      Slate Gray Captain Budget the same amount to the category every month. If you need to spend more than is in the category, move money from another category, but just keep adding the same amount every month after that too.

      If you had been doing this from when you first started owning a car, your car repair category would have had sufficient money in it already.

      Reply Like 2
Like Follow
  • 3 wk agoLast active
  • 13Replies
  • 1409Views
  • 13 Following