Dealing with Ready to Assign Money
I've been YNABing for 2 years, and there has been one issue I haven't been able to solve yet, which is partially just how to set things up within the app, and partially my own psychology. Looking for some ideas.
Basically, each month, I would like to have "extra" money left over that I grow from month to month. I don't want to move it to savings or investments...I just want to have it sit in checking (Ready to Assign) and grow to be about a full month's expenses of ready cash. We get paid 2x/month, and typically, I fully allocate the first paycheck out to most of our various categories, and the second covers the rest, with some "left over." That leftover amount is my issue. What I've been doing is letting it sit up at the top in "Ready to Assign." Rather than going untouched, it sort of becomes free money to me...if I go over in a category, I simply move the money down to cover it, and thus the extra I'm trying to grow gets used up. Rather than live completely within the budget I set, I "kinda" live within it and use the extra to cover things, sometimes needs and often just wants.
Any thoughts on how to set things up to make it more clear to myself that the money isn't there for using, it's there to grow? Like I said, I get that partly this is my own issue with living within a budget, but maybe a category where the extra goes and isn't sitting in Ready to Assign would help?
Put it in a category. Create a category for it - call it one month ahead or extra month, or DO NOT TOUCH or anything you want, really. (I'm not good at creative names). Because you're right - if it's just sitting in RTA, it's going to get used to cover overspending (whether you do that or YNAB does that for cash overspending.) If you put it in a category, that is much less likely to happen.
It *is* a savings category - you don't have to move which account the money is in; YNAB and your categories really don't care *where* your money is. There's a blog post that gets linked to fairly often; I can't find it right now but will add it later if I find it. So you can leave the money in your checking account, but make a category to save up that money.
I echo what Fuzzballs recommends here! :)
Some folks call this a "buffer"—the extra cash that sits in your checking account ready for the future and ensuring you never overdraft—and it's best to put it in a category. It's also a great strategy for getting to a place where you're one month ahead. What if you created a target in that category to encourage yourself to save up that month of expenses by a certain date to create some structure for yourself?
Here's another vote for setting it in a category and accumulating 1 month of income into it. Several reasons, but not least of which is, if you're leaving money in Ready To Assign, you're not following the 4 rules. the first rule is "Give all your money a job" If it's sitting unassigned, then it hasn't been given a job. That's why you're finding it so easy to "steal" from it, because you've never clearly defined what its job is, so if it doesn't have a job it can do anything!
Not anymore! Give it a job, and now you can't find it as easy to steal from it.
- Put it in its own category so you know what you're taking from if you need to move that money around.
- Work on dialing in your budget so that you don't have to take from other categories as frequently. My vice is the dining out budget. For over a year, I pretended I wasn't going to spend as much the next month, and then I had to move money around later because dining out was more important than other things I pretended were more important at the beginning of the month. A dining out budget that reflects reality allows me to stick to a realistic plan.
- Always check the budget before spending. The whole "coffee isn't more important than getting a one month buffer of income" decision point fails if you bought the coffee already.