How to budget when your monthly budget cycle doesn't start the first day of the month

Hi guys,

I am new to YNAB and I love it so far.

I was using a simple spreadsheet until now and I want to understand how to transition to YNAB and use it properly.

Here is my usual workflow:

In my spreadsheet I have many categories where I assign a budget each month and I can see that is exactly like YNAB.

I get paid around the 6th of the month (once a month) so my monthly cycle is from the 6th to the 5th (of the next month). What I usually do for most of my categories is that I do a spending review the day before I get paid and I give you an example to make it clearer.

Let's say I budgeted $300 in groceries for December. On January 5th I review my groceries spending of the month (December 6th - January 5th). If I have spent $250, I move the remaining $50 to the savings account. Then the next day when I get paid I budget another $300 for groceries.

That's what I am struggling at the moment to reproduce it in YNAB. I think I need to work with goals but the fact that YNAB starts the next budget monthly cycle on the first day of each month is confusing me.

Hope everything is clear.

Thanks in advance for any tips and suggestions.

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  • It doesn’t matter when you get paid. For anybody and everybody, no matter how often you get paid per month or when, you do the same thing each time you get paid. You ask yourself, “What does this paycheck need to fund until I get paid again?” You then fill in your categories based on this question until To be Budgeted is 0. (Rule #1)

    Having said that, many of us like to fund a whole month at once while also getting approximately a month ahead of our paychecks. We call this breaking the paycheck-to-paycheck cycle. For you, that would mean budgeting all of next month with the paycheck you receive on the 6th of this month. To do this, you can either draw from existing savings or save up the funds needed to fund the current month over time. 

    Like 3
  • Goals don't work well if you're removing funds from the category in the current month. They're hardly necessary, though, and a number of people don't use them at all. For your example:

    • In the January budget, there will be $50 available on Jan. 5. Move that to whatever high-priority category you like. (Physical movement of funds to a savings account is a separate consideration. *)
    • On Jan. 6 when allocating your paycheck, add $300 to the Grocery budget entry. I would click in the budget cell, then type +300 and hit Enter to leverage the built-in calculator. Tip: put the desired funding level right in the category name for reference (Groceries $300/mo).

    One option that would allow the use of Goals is to remove the funds from the category in last month's (Dec's) area, but if you spend on Jan. 1-5, that impacts the amount you should remove. At the least, I suggest you open a second browser window for reference to the current month so you can at least see the correct amount (balance as of Jan. 5) to remove. Again, use the arithmetic operator; e.g., -50 <return> to remove $50. 

    This revisit of the previous month is typically necessary anyway as Import or Reconciliation will often pull a sneak attack and introduce overspending with transactions that post in last month's area.

    Regardless of which of these you pursue, I find one very efficient way to "sweep" the leftovers is to remove all the balances first (putting those funds in To Be Budgeted), fix any overspending, then put the lump sum into the high-priority category.

    As Superbone mentioned, getting to the point where you can align your budgeting with the calendar will make things a bit easier. Many will use part of their income replacement/emergency fund to do that. (If you did lose your job, that money would already be covering your categories in the current month, since your paycheck would have gone toward next month's categories.) Here are a couple workflows you might find useful. I suggest using the second as you work toward getting ahead (progress is obvious), and the first once you have the entire month covered on the 5th (before budgeting your check).

    (*) There is no need to tie a category (or category group) to your savings account balance. Indeed, doing so will lose out on interest. Location of money is independent of purpose, and dollars are interchangeable. Just keep enough in Checking to cover upcoming expenses (running balance and scheduled transactions make this trivial to assess) and shuffle the rest to the higher-rate account.

    Like 3
  • Thank you so much to both Superbone and dakinemaui for the very useful info you gave me.

    I am starting to understand how it works. A couple of things just to clarify:

    I am already not on the paycheck-to-paycheck cycle because I spend less money than I make and I have savings.

    I tried (on a test budget) the second workflow linked by dakinemaui and I guess it could work but I noticed a couple of things:

    1) If I have category (let's say called "savings) where I put all the money that I didn't spend then I still need to make the transaction of moving that amount from the checking to the savings account. If I am correct, I found this a bit counter intuitive and it feels like a double step that could be one step.

    2) I don't see a way to check how much I spent on category from a specific date. For example from December 6th to January 5th.

    The solution that I have in my head is to enter the transactions of the first days of the next month (until I get paid) in the previous month. This way I will have a clear vision on how much I spent in the period between my salaries and (most importantly) how much I was able to save in that month. I call it "month" because since I get paid once a month, it is convenient for me to budget based on my payday. Maybe I am wrong but in my head is still the easiest thing.

    Like 2
      • dakinemaui
      • dakinemaui
      • 5 days ago
      • 1
      • Reported - view
      Helter Skelter said:
      If I am correct, I found this a bit counter intuitive

      Trust your intuition, because that's not correct. 🙂 Putting money in a category means it's saved. That's all it takes. Moving it to a higher rate account as well doesn't make it any more "saved". Read that article I linked that discusses this further. Once this concept clicks, I believe it simplifies a LOT.

      BTW, a category called "savings" misses out of a lot of what makes YNAB great. There's no concrete sense of what that money is actually FOR. It's rather difficult to evaluate relative importance between the categories in that case.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 5 days ago
      • 1
      • Reported - view
      dakinemaui said:
      BTW, a category called "savings" misses out of a lot of what makes YNAB great.

       It works as a master category. 🙂But that's about it.

      Like 1
    • Superbone Totally agree, I just used it as example but yes I will use it as a master category with more specific jobs for the savings money

      Like 2
  • Helter Skelter said:
    If I have category (let's say called "savings) where I put all the money that I didn't spend then I still need to make the transaction of moving that amount from the checking to the savings account. If I am correct...

    No, that is not correct. Read the article dakinemaui posted above about location versus purpose. The main purpose of a savings account is to increase the interest earned on the bulk of your budgeted funds that aren't required for near term spending. You just need enough in your checking account to pay your upcoming bills. The scheduler and running balance can help with illuminating that. You can then transfer extra funds to your on-budget savings account in one fell swoop, not tied to anything in particular and no category needed.

    Helter Skelter said:
    it is convenient for me to budget based on my payday

    No, it's most convenient to decouple your payday from your budgeting and budget in one month chunks. Budget for all upcoming expenses and true expenses (Rule 2) and the rest can go into savings categories.

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  • Helter Skelter said:
    I don't see a way to check how much I spent on category from a specific date

     Search for the category in All Accounts, select the transactions of interest. (Tip: click on one end and shift-click on the other.)

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    • dakinemaui I saw that but you can only search by month without going into more details. Even I change my way of thinking about the budget and switch to a (calendar) monthly period, I would still be interested to know how much I spent on something between two paydays.

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      • dakinemaui
      • dakinemaui
      • 5 days ago
      • Reported - view

      Helter Skelter I don't understand what you mean. Search for the category and you get all transactions. Select whatever transactions seem relevant.

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      • dakinemaui
      • dakinemaui
      • 5 days ago
      • Reported - view
    • dakinemaui I will re-phrase it: how can I search how much I spent on a specific category from Dec 7th to Jan 6th?

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    • dakinemaui Definitely not by much but I don't see why I should be able to check it? What if I want to know how much I spent on groceries on the week before Christmas?

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      • Ceeses
      • Ceeses
      • 4 days ago
      • Reported - view

      Helter Skelter As dakinemaui said, go to the All Accounts panel (not the budget panel) and search for the category. You will have the list of all transactions for all dates since you started using YNAB. Select the ones falling between the 2 dates of interest. Or add some more filter on the search according to date. Selecting the transactions is faster for transactions at the start of the list, searching on the dates is faster for transactions in the middle of the list.

      Obviously, since you just started you won't be able to see the transactions from before starting YNAB so you may have to wait before seeing that in action (especially the fact it will show transactions for more than the current month) or try it with a shorter time period. Or create a fake test budget that you start in the past add some fake transactions and use that for testing the search in the All Accounts.

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  • Helter Skelter said:
    The solution that I have in my head is to enter the transactions of the first days of the next month (until I get paid) in the previous month

    Fudging the dates? Seems easier to bring up a second window to facilitate sweeping in last month's area as previously described.

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  • Helter Skelter said:
    I am already not on the paycheck-to-paycheck cycle because I spend less money than I make and I have savings.

    In that case, why not use some of those savings to advance where you budget your paycheck? Consider, you get paid on the 6th. Sometime between the 6th and the 30th, you hit the Underfunded button in next month's area and everything is filled out. Now THAT'S convenient.

    Like 2
  • Sorry guys for being a pain but here's another one related to same matter that it's driving me mad.

    Say I budgeted $300 in December on groceries and I spend only $250 (in December).

    In January when I get paid (on the 6th) I budget another $300. So now I have $350 available and I decide to move $50 to another category (savings or not saving it doesn't matter...).

    My available money is now $300 (fine) but my budgeted column now says $250. Why?

    I budgeted $300 the current month and I had $50 leftover from another month, if I move the leftover it shouldn't matter because in the current month I still have budgeted the same amount ($300).

    I hope it make sense.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 5 days ago
      • Reported - view

      Helter Skelter Because that’s how much you budgeted in January. First you budgeted $300 for Groceries. Then you decided to move $50 to another category. Now you’ve budgeted $250 for Groceries in January. Budgeted and Available are two different things. Budgeted is how much you added (budgeted) to a category that month. Available is how much is currently in that category. When you spend from a category, it is subtracted from the Available balance. Available rolls over from month to month. That is how you accumulate Rule 2, True Expense funds.

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    • Superbone that’s one way to see it but I moved $50 from the available column not from the budgeted’s one. The way I see it is that I budgeted $300 but I have more money available ($50 more) so if I move $50 I still have budgeted $300 in that month. That’s because I moved money from the available column and not from the budgeted one! 

      if I had moved $70 then I should see $280 in the available columns and at this point yes it makes sense that the budgeted goes down to $280. 
      in my opinion the $50 carried over are “owned” by the budget of the previous month and the budgeted column of the previous should go down. 

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      • dakinemaui
      • dakinemaui
      • 4 days ago
      • 3
      • Reported - view

      Helter Skelter sorry, that's not how the tool works. Money is fungible. There are no December dollars in the category, only dollars. 

      If you want to reduce the previous month's budget entry (or any month before that, even), you're welcome to do so. The Available amount will be identical.

      Like 3
  • Helter Skelter said:
    I will re-phrase it: how can I search how much I spent on a specific category from Dec 7th to Jan 6th?

    Just how dakinemaui said. Search for all transactions using that category and select all transactions from Dec 7th to Jan 6th. The total will be show in the upper right.

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    • Superbone how would I select them? Manually?

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    • Superbone Thanks! It is clear now. So it is manual with a shortcut 😁

      Like 1
  • Helter Skelter said:
    in my opinion the $50 carried over are “owned” by the budget of the previous month and the budgeted column of the previous should go down. 

    That may be your opinion but that’s not how the software works. 😄 Available rolls over from month to month. (Again, Rule 2.) Only Budgeted is “owned” by each individual month.

    Like 1
    • Superbone Ok got this one too. The only way to make it work "my way" is to transfer the money in the previous month and let rollover only the categories where I want the rollover to happen and not touch it.

      I still think is not intuitive like this but that's how the software works so... 😄

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    • Helter Skelter From my perspective, it is intuitive because the available on the rollover is how much was in the envelope from all previous months. It is the sum of ALL previous months.  Thus, it cannot go back to just the previous month because it could be the result of saving for the past six months. The budgeted column is how much I have adjusted it this month. Whether I adjust via the budgeted or available column, the result is an adjustment to the budgeted for this month so it is reflected in the budget column in the end.

      Like 3
    • Navy Blue Pegasus That makes perfect sense! I didn't think about it this way but you are absolutely right! It still feels a bit weird that you budget $300 on that month but if you move things around it affects the budgeted column and I guess that the software cannot know how to "assign" money to a specific month. I made a simple example but you are absolutely right, if the available are months old, you can't change the budgeted column of the previous month because it could be two (or more) months before.

      If I get annoyed by the current month, I simply move money from older months.

      Thanks a lot!!

      Like 2
    • Helter Skelter Glad that the explanation helped! Sometimes you have to take a step back and come at it from a different perspective to get a full understanding. It has taken me several years and actually I have done better with nYNAB than the older versions. 

      Good luck going forward!

      Like 2
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