Help, first steps!

Goodmorning everyone. I welcome you to this very active community ... and I ask you a question:

I don't quite understand how it all works :-)

Despite the very good support, I want to try to involve you community users.

Let's start from the beginning. I have tried an impressive number of programs to help my disastrous finances. moneypro, Banktivity, MoneyWizz never really helped me. I found YNAB and, despite being an Italian user, I found it useful.

I started entering my earnings and my expenses (alas, this month I'm out of € 1700 !!! damn Covid) !. First strong doubt: to be able to manage the budget well ... must the To Be Budget box be green? Or must be at "0" all the items of the individual categories and the red box with the writing "-1700 €) ???

Thanks in the meantime, and I apologize for my language, with Google Translate (I'm Italian, as mentioned)

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  • Rule 1 -- Give every dollar (euro) a job. To Be Budgeted will be $0 when that is complete.

    Rule 3 -- You should not have any red, negative categories (cash-overspending). Move funds from one or more green categories until all the red is gone.

    Yellow, negative categories (credit-overspending) is a bit of a middle ground. You obviously added debt when you used the credit card, and this yellow warning indicates you do not have cash reserved to pay it off. Sometimes it is necessary to finance a high priority category for which you were unprepared, but ideally you would move cash from green categories to eliminate those negative categories as well. If you cannot do that in the month of the overspending, you will need to budget to the Credit Card Payment category to allow a larger payment (and thereby reduce that debt).

  • Thanks.
    What I didn't understand is this. I collect 1000 € of salary. I take these 1000 € and divide them by category, giving all the money a job. But in reality, the categories of fixed expenses are 1200 €, so I will find 200 € in excess. How do I manage this surplus? if I put them in the budget of a single category, the TObebudget item will turn red, -200 €. If, on the other hand, I do not include them in the budget of the category, this will turn red, but tobebudget will remain green with 0 €. What is the way?

    • sir_cla You simply cannot buy 1200 € of stuff with only 1000 € of money. If To Be Budgeted (TBB) is red, you know your plan is infeasible/impossible. (The budget is the plan for your money.)

      That is why Rule 1 directs you to budget your money until TBB is 0. You should allocate to the more important categories first. That way, when you have to stop (because TBB is 0), it is only the less important things that do not get funded (or purchased).

      That said, you can use credit when you don't have enough cash and cannot avoid spending, but that is only a temporary solution. That debt must be paid back eventually, and there is likely going to be an associated cost as well.

      Like 1
  • sir_cla said:
    If, on the other hand, I do not include them in the budget of the category, this will turn red

    1. Budget TBB to 0, do NOT make it red.

    2. BEFORE you purchase something, check the Available column of the category. If there is not enough money in the category you have a choice:

    • Skip the purchase.
    • Find something less important in the budget and move its money to the category so there IS enough in the Available column. Then it is OK to make the purchase.
    Like 1
  • sir_cla said:
    but tobebudget will remain green with 0 €.

    This is what you are aiming for. Maybe if you already spent money in a certain category, it will be red for a while. If you have more salary coming in very soon, budget money there and it will turn green again.

    However, if you are spending more money than you have, then perhaps it is time to look at your regular fixed expenses and find where you can spend less. Think hard about what you *need* compared to what you *want* right now. Can you stop buying something for a while or find a cheaper alternative?

  • the reason why I decided to try YNAB is this.  I find myself facing many fixed expenses, too many.  I want to improve, I want to remove the superfluous in order not to go into crisis.  I have many fixed costs: rent (650 €), personal insurance (400 €) bills.  This month, due to covid19, which hit Italy hard, I lost less than half of my normal salary.  and it's a problem.  inserting the real expenses, and adjusting the budget of each category, the TBB went to € -1700 !!!  that's why I'm in trouble.  so the right thing is that the TBB is 0, and the surplus must be in the individual categories ...

    • sir_cla you do not want your categories to be negative either. You allocate money to categories in order to plan. Part of planning is recognizing when expenses exceed income. In that case, you should either reduce expenses or increase income (or both).

      The  problem is such changes are not immediate, so one option is to employ credit to buy time, so that you can make it to the point when income is higher or expenses lower.

      Another is to change the plan for money you already have. For example, money originally planned for a holiday / vacation can be used for more important things -- like food.

      It is indeed a difficult time for many, but your desire to plan will help you make the best of things.

  • sir_cla said:
    so the right thing is that the TBB is 0, and the surplus must be in the individual categories ...

     Not exactly. As you budget, decide which costs are most important. Budget in each of them until TBB hits 0. At that point, whatever is still unfunded will stay that way. Now, your budget shows what you can pay for and what you cannot. You might find this video helpful. I hope things improve for you and you stay safe.

    Like 1
  • Oh, you can also include the amounts and due dates in the category name so that you can see at a glance the necessary costs, especially for those things you currently do not have enough for.

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