Budget in the future vs saving categories
i struggle a bit between the following two methods:
- budget in the future: in this case, i would for Example save less but budget Some of the not used income in the future.
- saving categorie: in this case i gave every dollar a job, Meaning that i put the not used income into savings
it would help me to know how you are handling this. Which money are you YNAB’ers using to budget into the future?
thank for helping me out
Personally, for now I prefer the saving categories (ones with specific goals, more likely assigned to various True Expenses). I'm still in my first year and it's not uncommon for me to find new categories still, or decide to plan for a new trip, or have a major unexpected expense and then focus on rebuilding the related True Expense for the following months. When I tried to budget in the future I found it annoying to have to fix up the next few months whenever something came up. Would love to be able to do it someday, but for now it hasn't been practical for me.
I'd be wary of just putting extra income into a generic "Savings" category though, it's not specific enough so a bit too easy to "steal" from in my own, short experience 🙂
the TL;DR of this is that it should do what best aligns with your goals.
If you want to get ahead of the paycheck cycle and pay your monthly bills (needs) with out worry, and satisfy your other goals too (wants), then go ahead and budget in the future and give every dollar a job in the coming month(s).
If you feel rewarded by seeing your savings budget grow, then go ahead and give every spare dollar a savings job.
I have been using YNAB for over a year and a half so I'm well into the mindset of its philosophy. I've been able to budget fully for next month's expenses using this month's income for a while now. Anything left over went into a really generic "Down Savings" category (sort of like a 'next big thing' category) on my budget. After tax returns and a few months with 5x weekly paychecks instead of 4x weekly paychecks, I thought maybe I should try to budget for the second month out, not just next month. So that was my goal - to be budgeted ahead for 2 months. With the tax returns and the long months earlier this year, I was able to budget about 1.5 months ahead but not quite 2 full months.
Now hold tight here, because I'm trying something that is a cross between the two methods you described. I'm still adjusting to it so while my explanation is hopefully clear, I'm not certain yet that it makes sense to do it this way (only time will tell!)
So I tried it. And I got really confused. I overspent one category one month, and wanted to cover that with money from another category, but then I got a flag saying that I had overbudgeted in the future. Whoops. I couldn't quite figure out where and when that overbudgeted item was hitting me, so I reeled it back - I undid my actions for that session, cleared it up, and thought for a bit. I decided, what if I have a category that just temporarily holds my "spare" income during a month until I can budget the next month? But to reduce the likelihood of that scenario happening again, I just wouldn't budget the next month until the 1st of the month before.
Lots of "next" and "before" months in there, so here's an example:
- It's May 15th and I have June's needs fully budgeted (remember, I've been able to do that for a while now - thanks YNAB!)
- Two more Fridays in May after that date, so I get a few more paychecks. (In my previous ynab life, this is where I would put that money into my "Down Savings" budget category.) But I'm trying something new, so I move it from To Be Budgeted into a "HOLD" account.
- On June 1st, I move the funds from HOLD into TBB and from there into budget categories for July.
- As June goes on, I keep putting my paychecks into HOLD, right up until the last day of June or the first day of July, when I ensure that all my wants for July (discretionary budget categories - like my fun money) are taken care of, and I do my budgeting for August. Remember I'm covered for about 1.5 months into the future using the paychecks I'm earning this week.
- July goes on, and every paycheck I receive I put into the HOLD category.
- Now at the end of July, I take a look. August is fully budgeted for, both my needs categories and my wants categories. And somehow I've got almost the entire month of September's budget in that HOLD category. And even though I overspent in July, I didn't have to mess around with tracking down an overspent/underbudgeted something, somewhere in the future. (I still don't know how that happened, but I won't complain. I'm that much closer to my goal!)
So in summary, I made myself a savings category for a future month's budget. I did it in the manner described above so that when I inevitably overspend something and have to pull funds from a different category to cover the overspending, I don't have to mess around with finding and covering the overspending in a future month.
If you are timing bills to paychecks, budget in the future. If you get more than one paycheck per month budget in the future. If you’re paid once a month at the end of the month, put it into savings.
Put money into the future until you’re able to budget one whole month at once. The you can start directing excess money to savings.