Budgeting for the month or one check at a time.

  Hello I am new here and  I get paid every other Friday. Is it easier or "better"to budget each paycheck or just do it for the whole month? Thank you for the help. I need it

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  • It's always easier to use income received in one month to fund the budget for the next month.

    However, if you are not in a position to do that, then you must budget with each paycheck.

    Like 4
  • When you first start out, you have no choice, usually unless you have savings you can repurpose. YNAB is an envelope budget, it works only with the money you have. It’s not where you make a plan for the money you’ll get later. 

    If you have only one paycheck’s worth of money, then you’ll need to budget each time you get paid, because once your money is gone, you have to stop budgeting. Over time, best practice is to save money so that each month, you can afford to stick your paychecks into a holding category and then use them to budget the whole month at once.

    Like 3
  • That is a great question actually that it seems the experts don't proscribe one way or the other.  Whichever helps you better.  Consider your options:

     

    Per Paycheck:

    You deal with the money right away, no holding bucket.  You make a plan for it, and you can always roll with the punches and repurpose the money later if you need to.  You are doing it more frequently, which some may experience as taking more time.

    Per Month:

    At every paycheck, you put the money in a category that reserves it for your end-of-month budgeting for next month.  You then budget all of that money whenever you receive your final paycheck in a given month, into the next month's budget.  This allows you to deal with the budgeting decisions once/month, which some may experience as taking less time.

     

    In saying "some may experience" in both of these options, others actually experience the opposite.  Budgeting once/month is literally less times than once/paycheck, but if you have to spend more time that one time, and possibly more stress that one time, than the multiple times combined the other way, then who is to say it is better?

    Like 1
      • dakinemaui
      • dakinemaui
      • 9 mths ago
      • 1
      • Reported - view
      Justin said:
      if you have to spend more time that one time, and possibly more stress that one time, than the multiple times combined the other way, then who is to say it is better?

      Of critical importance are the IF qualifiers you included. Done properly, it is NOT more time or stress. Once you can push all income into next month's area, budgeting the nominal numbers for the entire month should be a one-click affair.

      Like 1
      • Justin
      • justinw
      • 9 mths ago
      • 1
      • Reported - view

      dakinemaui True.  But stress, and how to relieve it, is a fickle thing.  I think some people find it rewarding and motivating to *get* to give each of their dollars a job, with the simplicity that YNAB offers, and so might choose to experience that "stress reducer" after every paycheck.

      Like 1
      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • 5
      • Reported - view

      Justin In all my years of helping people with various issues, I don't know of anyone who has been ahead enough to budget in month-sized chunks that intentionally decided, "Nah, I'd rather budget each check separately." OTOH, I have heard the opposite numerous times -- someone lost the ability to budget in month-sized chunks for reasons beyond their control and they can hardly wait to regain that ability.

      Having your budgeting cycle aligned with your expense cycle simplifies much about YNAB. (I suppose I am assuming the majority of OP's bills recur monthly.)

      Like 5
  • OK Thank you. So should I maybe setup 2 categories for "paycheck 1" and "paycheck 2"?

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      • Justin
      • justinw
      • 9 mths ago
      • 1
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      lj8576 That will break this next month though.  Hooray for January's 5 Fridays!  I just have a "Paychecks" category.

      Like 1
      • Bruce
      • Software Engineer
      • Bruce
      • 9 mths ago
      • 2
      • Reported - view

      lj8576 A common standard approach here is to call it "Income for Next Month" Although calling it paychecks will work as well.  And you can do this even if you aren't currently quite up to the point where you have an entire month's budget saved up by the end of the month.

      Let's say you have payday this Friday.  First, if all your categories for December aren't completely covered yet, use this paycheck to finish  that up, then put the rest into INM category.  On January 1st, you move that money to TBB, and let it go as far as it can.  Your next check will be on the 8th, and you'll probably have to put all of that towards current month categories also.  Then when the 22nd comes along, you finish up the monthly categories, and put the rest into INM.  Keep doing this, and try to make the money in INM be greater each month, and eventually it will be both checks sitting in there, and ready to budget all at once.

      This process will be sped up with windfalls, such as tax returns, stimulus relief checks, and the 2 months a year where you get 3 paychecks.

      Like 2
  • I have been using YNAB on and off for about five years now. The concept worked but I didn't use the YNAB4 version as intended. Last year, we made a plan to pay off debt and have been using it religiously for the past year. Once, it clicks, it is amazing. 

    I am paid biweekly and since my husband is self-employed we changed his paycheque timing to coincide with mine. It made a huge difference in figuring out what to do. We now have a budget meeting the day after payday to go through the budget and discuss. It works well for us. Since we are concentrating on debt repayment, as it is more important to us, we have slowly been working towards getting one month ahead as described by Bruce in his response above. 

    Things that help:

    1. Use the paycheck 1 and paycheck 2 categories to help with knowing what needs to be budgeted when. I didn't use them but can see now in hindsight how they can help. For the month with 3 paycheques, use the third paycheque to either fill up some of those true expenses OR move it to the Income for Next Month category (or both)

    2. I used dates in the category name to help with due dates (Utilities 20th or Cell Phone 1st). It helps to also put them in order of payment so when you go down the line, you can see which one is up next.

    3. Don't be afraid to rearrange the groupings if you find your first one is not working for you. It is easy to rearrange.

    4. Stuff I didn't Budget For - I finally understood that this category was really meant to hold a buffer of budget money. If things came up, you categorize to the proper category (subscriptions for example) and then move any extra money you might have in that category to subscriptions. It is a good holder category for when you are not sure and are still trying to sort out what all of your expenses might be. 

    5. Reach out to the forum. There is a TON of great advice out there.

    Like 2
  • When splitting your check between this and next month, using groups to guide the order of allocation is very common. Instead of Paycheck 1 & 2, I suggest "Budget 1st" and "Budget 2nd" as that's really what's going on and you won't be thrown by the occasional 3-check month.

    The choice to use a holding category or budget directly in next month's area is a completely separate consideration from your groups. I personally favor the holding category as it makes it obvious when you're "getting ahead". Specific workflows I recommend when using the holding category are described here. Once all income can be budgeted to the holding category, feel free to drop the Budget 1st/2nd groups.

    Incidentally, the 3rd check works seamlessly with the holding category, as it naturally goes into the holding in its entirety. It's a convenient jumpstart if nothing else, and is often enough to put you "over the top" with an entire month's worth of income in the category.

    Like 1
      • lj8576
      • Steel_Blue_Mermaid.5
      • 8 mths ago
      • Reported - view

      nolesrule nolesrule I guess I worded it wrong. I cant budget all of y bills off of one paycheck (I wish I could) but I think I was asking if I should make two categories for each paycheck or keep everything together and budget 1/2 the first paycheck and the rest on my second paycheck. I am confusing myself just trying to ask this lol. I hope this is clearer but I don't think it is. Thank you all for your answers

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 8 mths ago
      • 2
      • Reported - view

      lj8576 one approach is to budget 1/2 of each necessary category with each paycheck. This may require a few months of "catch up" to get going, because depending on how your pay falls, it can be difficult to do right away, but you eventually get to the point where you are budgeting half of every category rather than a set of categories. 

      I did something slightly different because I'm weird, but it nevertheless was around the idea of budgeting a fixed potion of my fixed expenses each pay, so I could determine what money existed for savings/discretionary spending/etc.

      Like 2
      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • 1
      • Reported - view

      lj8576 Single-payment per month bills could work with two groups. (Electric, for instance, is going to be one or the other group.) Where the Groups break down is for things like Groceries. I don't want two different grocery categories (for a number of reasons!), so doing half from each works well there. (Put the per-check amount in the category name for reference.)

      From there, it's a pretty short jump to budgeting half toward all categories for consistency of process. In which case, the per-check groups aren't needed at all.

      Like 1
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 8 mths ago
      • 5
      • Reported - view

      nolesrule dakinemaui Oh geez, it's really that odd? It wasn't me, but I love budgeting $1.28 in interest that suddenly comes in!  I know I do a lot of bizarro things with my YNAB budget, but still, I've always loved distributing income in categories.  It feels like shopping when I can't afford to shop.  I'm not telling anyone else to do my weirdo error-prone stuff, but I pass through my INM category and pull it out in the next month each time :D.

      Like 5
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 8 mths ago
      • 1
      • Reported - view

      Annieland Well, technically I already have next month's budget fully laid out, and it's just a matter of receiving the income and sending it to next month.  😉 I just don't bother with the small stuff, which can amount to up to about $300/month at current bank interest rates (and inclusive of CC rewards)

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 8 mths ago
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      nolesrule You don't bother with it?! I hope you don't leave it in TBB! There's a little thing called Rule 1, buddy! 😉

      Like Annieland , I only categorize my regular paychecks for next month. Any interest or bonuses I budget this month when I get it. However, Ally is the only vehicle I have that pays interest mid-month. Other interest is budgeted at the end of each month.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 8 mths ago
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      • Reported - view

      lj8576 Until you have saved up a month's worth of expenses, you will want to budget each paycheck. But there should be no category for paychecks at all. Your paychecks just provide your To be Budgeted amount. You then budget that to 0 while budgeting for bills that are due before your next paycheck first. Anything left over can be budgeted for bills due later. Also, you should be budgeting for Rule Two, true expenses, as you can and have funds available to do so.

      Like 3
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 8 mths ago
      • 2
      • Reported - view

      Superbone 

      Superbone said:
      ou don't bother with it?! I hope you don't leave it in TBB! There's a little thing called Rule 1, buddy! 😉

       Hehe. It goes into the Extra Money category in the current month, which also includes the money not funding budget categories that was from last month's income. It then gets distributed in that month as part of the month switch process. In a typical month this Extra Money represents about 17-20% of total take home income, with a non-typical month being the month after Mrs. nolesrule receives a 3rd paycheck.

      Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 8 mths ago
      • 2
      • Reported - view

      Superbone I remember that's how I used to do it with YNAB4.  Paychecks were for next month and any unanticipated/bonus income (I did lots of eBaying and such to stay afloat back then!) I allowed myself to budget in the current month (which sure could use it).  I guess I still kinda do it that way, I just don't have much supplemental income that isn't either specific to a category, a reimbursement, or already has a deferment plan in place.

      Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 8 mths ago
      • 1
      • Reported - view

      nolesrule Yeah, I can't look at a red TBB in the next month.  It gives me flashbacks of "Oh crap, I'll never get that positive."  Even if I do, it gives me palpitations for the current month.

      Like 1
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 8 mths ago
      • 2
      • Reported - view

      Annieland There's no Red TBB in the next month. It's in the month after that. 😄

      Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 8 mths ago
      • Reported - view

      nolesrule Aahh, 🤬.

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  • lj8576 said:
    keep everything together and budget 1/2 the first paycheck and the rest on my second paycheck

    Very astute of you. This is simply applying the True Expense concept on a paycheck basis. Since all (per-check) budget increments must fit in a single paycheck amount, it's trivial to see how far your money goes down the list of priorities (categories). This simplifies a LOT, especially when priorities or amounts change. 

    In fact, it has almost all the same advantages as being ahead enough to budget month-sized chunks. In that case, you're still applying True Expenses on a paycheck basis -- you merely have a month-sized "effective paycheck" when you release funds from the holding category.

    Like 1
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