Paying next months bills on this months income
I just wondered what people thought worked best or which method I should use.
I need to pay several month's bills from the income I received today. For example, Car insurance for Oct, Nov, Dec at £50 per month.
> Assign £150 in September to the car insurance category
> Assign £50 in each month: Oct, Nov, Dec
Or do both of these work the same? Thanks so much
I personally prefer the second approach, because I like to have a plan that consistently looks forward. By using the first one, I find that I cannot plan ahead, because (imho) that's not budgeting, it's just writing down the expenses.
For example I pay my car insurance annually, but I split the bill over the 12 months, so every month I save a small amount of money, and when the annual bills come, I'm prepared.
Here's a third option:
Assign this month's bills.
Create categories called October's Bills, November's Bills, etc (you could also just have a single Future Bills category if you like).
On October 1st, take money out of the Oct. Bills general category and assign the specific bills categories. Ditto for each other month.
It really helps to have the whole plan (budget) on one page without having to flip around to see everything. Plus, if a bill amount changes, you don't have to do the busywork of changing it in each subsequent month.
Consider using a Buffered workflow and a Deferred Income workflow. Search on the forum for more details on those (or ask). They can really help you maximize YNAB's positive effects in your life.
Ultimately, both of these methods work the same. The goal is to have $150 in the category by whenever in December, and if you put it there now and don't touch it (use it to cover other expenses), it'll stay there so you have it in December. If you put $50 in there per month, then you still end up with $150 at the end of those three months, whether you do that by flipping forward or by using the buffered methodology mentioned previously.
Personally, if this was the only income I was expecting or could count on between now and December, I'd put the full amount in the category now, because then my brain knows it's for that purpose and I won't accidentally put it somewhere else. If I was expecting other income between now and then, I'd set up a target in YNAB and may or may not fund that category to full, because it wouldn't be as important *right now* to have that money set aside - I can set aside some from the next income if needed.