Funds for Month when budgeting this month’s income to next month
Hi folks - my Funds for Month is consistently about twice as high as it should be. I can see what is happening, but I need some help understanding why it makes sense.
To start - I have budgeted all my savings in every account, and every dollar does have a job. I don’t ever leave anything in TBB.
What happens is that I get paid on the last Friday of every month. I always budget that paycheck to the future - the next month. So let’s say I make $5000 every month. It’s July 31st, and I get my paycheck and budget my $5000 to August. These are counted as July funds in Funds for July.
But now it is August, and I have not received my August paycheck yet. However, my $5000 in July funds is now also being counted in August, and my Funds for August shows $5000 even though I haven’t actually gotten a paycheck in August. If I go back to July, my Funds for July is now $10000 - it counts my June funds that were budgeted to July, as well as my July funds that were budgeted to August.
Why is the same set of funds counted as being both funds for the month they came in, and funds for the month they were budgeted in? Shouldn’t it be one or the other? I would expect that if I budget a dollar from July to August, it is not an August dollar - it is a July dollar, and I am waiting until the end of the month to get my August dollars. I wouldn’t mind it if my income was steady, but it’s variable - so it makes it really tough to understand how I’m doing from month to month when I don’t have my side job income.
What I do to avoid this madness, is this:
1) I created as category called Next Month (terribly original, I know)
2) My income is actually categorized directly to the Next Month category, instead of TBB
3) When I’m ready to budget for a month, pull the money out of Next Month in the month where I plan to spend it. Usually this is done the weekend after my last pay.
Note: this will mess up the income/expense reports, because that looks for a TBB inflow for the income side of the equation. To avoid that, replace step 2 with this:
A) set your income as TBB
B) each time you have income you want to send to next month, budget that much money Next Month
The only report I actually play with is the Net Worth graph though, so I opt for the version that lets me be lazy and type in a number one less time