I am just starting out, and just started with some classes. I entered a transaction for my paydays. I have created most of my budget. It is showing a negative amount at the top in red because my budget amounts are for the month, but it is not recognizing future pay dates in this month. Is this ok?
Hi Lavender Display ,
Welcome to YNAB! 🎉
It sounds like you're off to a great start with your budget, and you've hit on a really important aspect to the YNAB Method. Future income is scheduled, but not budgeted.
This goes back to the core idea of only budgeting the money you have on-hand. We talk about this in our Prioritize Guide. Here's a quick summary of why YNAB is designed this way:
Available money. When you budget money you don't have yet, you can't trust the amounts Available in your categories when you make spending decisions.
Scarcity. Scarcity is that feeling of wishing there were more. (Time. Money. Dessert...) Scarcity is good for you. When you forecast how much money you might have down the road, you take your focus away from right now. When you step back and embrace scarcity, you make good decisions.
We do recognize that looking forward is important. Upcoming transactions and Goals help you plan for weeks and even months ahead without needing to input future income. As you go, all this prioritizing will naturally create a longer delay between when you receive money and when you spend it. As your money ages, you'll be able to budget the money you receive this month for next month.
We know this can be a shift in thinking, so let us know if you have any questions.
I'm just starting out too, but I THINK this is normal ... assuming you entered those payday transactions as future transactions. Those funds show-up when the date hits. Maybe a YNAB vet can confirm?
BTW - I say this sounds like what happened to me too and I was confused. I decided NOT to budget future paydays (or any transactions) as a result, at least not until I get a little more comfortable. I decided to stick with the basic idea of setting my budget based on the money I currently have available ... for now.
YNAB is a zero-based allocation budget; not a forecasted budget. This means we only budget money we actually have in our accounts. You will probably find, as I did, that you see the money differently when you are forced to only make plans for the funds in hand. All of a sudden that last $100 is definitely needed for food and utilities instead of clothes and entertainment. When you get your next paycheque, that's when you'll set funds aside for a little fun. Most of us have been making spending decisions based on the imminent arrival of our next paycheque for so long, we didn't realize that doing that is what is keeping us scrambling for money all the time.
Stop budgeting when you get to zero. Don't live with red overbudget numbers or red overspent numbers, and you will be amazed.