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. 

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

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.

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.

MsTJ It's always interesting to hear how people do their budgets differently.  I'm working on building up my true expenses categories now, after raiding them a bit too much in a debt payoff sprint at the end of last year.  And I ran into the problem the OP mentioned, I had to fix something on my car in Jan and I didn't have enough saved, doh!  My fault.  I still had a $1k emergency fund so I figured I could always fix it with $ from there if this issue came up, but boy does it feel better working on building up those categories, even if it's slowing down my debt payoff a little.

PhysicsGal We must be on the same track. Last year I made a lot of progress on my debt pay off but in January something came up I didn't have enough to cover.  This year, 2020, my goal is fund my true expenses better.  Guess it will be a mix of debt reduction and saving for true expenses going forward.  Paying off debt (for me it's mortgage debt) is nice, but having enough for true expenses is even nicer.  

MsTJ I was (and still am but just less aggressively) paying off a HEL I had to take to payoff my ex during a nasty divorce.  But I've slowed down a lot now that I've made a lot of progress (paying extra early saves more money in interest than paying extra later, so this was the right order!), so I can fund my TEs and E-fund.  I was doing Dave Ramsey's baby steps last year and this year I made up my own plan.  I wrote about it here.

https://support.youneedabudget.com/t/k9v6qr/my-new-personal-personal-finance-plan-bye-bye-dave-ramsey

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.

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.

Aquamarine Griffin I have a fines category for this purpose. I may only get one ticket for parking at a restaurant that I thought had free parking but the restaurant had sold the lot once in my life. But I will absolutely get another parking ticket, a library fine, a speeding ticket, a headlights fine, a rolling red, etc. and those things will happen with some regularity, so I need a category with some reasonable amount of funding for such events. You might not need to pay tickets every month, but it's pretty much a given you will need to pay for a ticket again at some point in the future. 

(I technically call it "oops" and it also gets used for things like when I lost my wallet and had to pay to replace my ID cards.) 

Aquamarine Griffin 

I use a catch-all administrative category for a bunch of small annoying stuff: bank fees, customs and duty on international mail order, postage,  fees on currency exchange, the very rare times I need to pay for parking, budget reconciliations that correct for lost/stolen money.  I got a photo-radar speeding ticket last year, my first such infraction, and used this category for that transaction.

Aquamarine Griffin I have a generic Tax and Government fees. So all one-off fines, fees for admin stuff (like passport) etc. Typically money I pay to "the" government no matter why or the name attached to it or which government.

Aquamarine Griffin My category for this is called Stupid Tax and I top it off at $600.

Superbone Great category title!

Superbone Ha ha ha!  I guess you're also a Dave Ramsey listener.  I've stopped listening to him as much, but I love this term of his. 

Maybe I should change the name of my HEL payment category (from my divorce from someone who I should have run from as fast as I could, the red flags were huge and bright) to "stupid tax" in my budget?  I like it!

Orange Lobster that is one way of doing it. Another option would be add those known expenses as scheduled transactions. Budget and pay the $60 one now for October 2020. Then, the transaction can be set up to repeat on an annual basis. When you get closer to October 2021, you will see that there is a schedule transaction for that amount and budget for it then.

However, for most of us, we want to build up some funds to pay for that $60 expense over time rather than one time because what ends up happening is that you get a whole bunch of the little ones that add up that you can't afford because your money is already tied up somewhere else. Hence the budget 1/12 of the expense.

I try to make sure that these expenses are tied to larger categories rather than individual ones. It can be as simple or complex as you need it to be. Someone once shared a quite detailed chart of finding the optimal use of your budget dollars in these types of scenarios. I can't find it right now. But, you could create a category or categories that suit all of these expenses and include it in the budgeted amount for that category so that it grows over time and you have the $60 already sitting there come next October.

Orange Lobster The point is to have funds available by the time the outflow occurs. For those expenses due this month, you have no choice but to budget for the entirety of them.

After that, you wouldn't hide them for 11 months, though. For the NEXT occurance of those bills, though, you can spread out contributions over multiple months so you can have a consistent budget moving forward. More importantly, you don't have to short anything else in the month of the outflow, as you would if you didn't accumulate things.

Most people have a category group for these non-monthly expenses with Goals defined so budgeting is a one-click affair. The advantage is it's trivial to figure out a budget value that works. The drawback is a) category bloat -- though it can be collapsed most of the time -- and b) it typically ties up more money than necessary. Again, though, it's drop-dead easy, which is why most people do this.

Others lump several outflows into a single category. The advantage is no bloat and just the right amount is tied up... IF you do the math correctly. The disadvantage is the math to arrive at the optimal budget entry isn't trivial. You also have to periodically evaluate whether you're on-track, as it's not built into YNAB. There's a spreadsheet posted in this thread that may be useful.

Bruce Awesome. Thank you for the reply. The "running balance/scheduled transaction" part you've mentioned... do you do that with another tool or is there a way to do that with YNAB? I have been doing something like that in Google Sheets.

Maroon Lion In one of your YNAB account registers, click on "View" then check "Show Running Balance" - that should be available just above your transactions. 

To schedule a transaction, just enter a date that's in the future and select a repeat cycle. Future transactions will appear greyed out and at the top (collapsible) of that register.