Income v Expense Report Mismatch

Hi,

After every month, when I review the "income v expense" report, my expectation is "Net Income" is always zero, since I map all inflow/outflow to right categories. However this doesn't seem to be the case. I see a negative "net income" this time.

Where in the budget tab, should i look for this "negative number" to match the income V Expense Report?

FYI - my tbb balance is $0

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  • Net income is all of your income for a given month (which means anything categorized to to be budgeted) less all of your spending for that month. It would only be zero of the amount of money you're spending every month exactly equals your inflows. Not a bad place to be per se but not something to be a goal.

    It is a separate idea from your budget. It is negative because for that month, you had to spend more than you made. And that happens, which is why we save. You won't see it tied to a single figure on the budget, but the report shows you line for line how it got that number.

    Like 1
    • Tobias Is there an indicator in the budget tab, to notify us, if outflow > inflow. I didn't see any alert , nor any indicator to this? My basic question is how would I know that i m in negative net-income scenario, since my budget was all good, until I saw this report for April today

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      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 1
      • Reported - view

      Sky Blue Harp Whether you get a warning or not just depends. You presumably saved for a reason. If your actual spending was within the reserved/planned amount (category Available amount), that's a well executed plan. No warning necessary.

      I've been putting money away for many years toward a new roof and just issued payment on it today. This month was exceedingly "negative cash-flow", but it's non-issue since the category didn't go overspent.

      OTOH, if your actual spending exceeded the amount you had reserved in the category, you would indeed get a warning, right in the category.

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      • Tobias
      • Toviathan
      • 4 mths ago
      • 2
      • Reported - view

      Sky Blue Harp No, and it's not something you necessarily need to worry about that much. The more important thing first is as long as you aren't overdrawing yourself, which the budget does tell you, you're fine.

      Net income for a single month is a fairly useless piece of information. It's more useful at looking at trends across multiple months. If you have a series of negative net income numbers, then you are living above your means and probably relying on savings or credit to get you through month to month. Having some months in the negative are expected. That means that you had a big expense that you, hopefully. saved for.

      Don't worry about net income in the day-to-day. Use it for trend analysis.

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    • Tobias This makes complete sense now. Thank you!

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    • dakinemaui Makes sense to me. TY!

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  • Reports are strictly based on transactions. Nothing to do at all with the budget.

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    • dakinemaui Makes sense. But wondering why is there no indicator when I am most likely landing in this situation. My entire budget for April was good, available balance is positive or zero, TBB is 0 etc.

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      • jenmas
      • jenmas
      • 4 mths ago
      • 3
      • Reported - view

      Sky Blue Harp Because negative net income does not mean there is a problem with the budget. Here is an example of how you might end up in a negative net income situation for the month of June. For the past 3 years you have diligently been saving up your down payment for a new house and have a fat category in your budget. You found the right one! Yay! Closing for the house is in June 16. Your 20% down payment plus closing costs equals $65,000. So in addition to all your regular spending, your outflows for the month of June will include $65,000. So let's say all of your paychecks plus interest in the month of June add up to $7,500. Your regular spending each month is around $6,500. In June your expenses will be $71,500 ($65K +$6.5K) and your income is still only $7,500 so you will have a net negative income of $64,000.

      Like 3
    • @dakinemaui @nolesrule jenmas So does it mean, the only way to check I am leaving below my means, is making sure I don't have overspent balance in YNAB? Is that indicator sufficient, or are there more indicators I should look towards?

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      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 2
      • Reported - view

      Sky Blue Harp The budget tells me all I need to know -- whether spending is within my plan or not. Of course, my plan is within my income constraint, a.k.a., "means". Six to one, half-dozen to another...

      Like 2
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