When to start a new budget?
Hi all, I'm a newbie to YNAB (think: 4 days in!) and wanted to get my budget all set up for when I get paid on December 15. I put all my expenses in and then put a scheduled date for when my pay check comes in. My 'to be budgeted' button is in the red, naturally, as I want to start my budget from the 15th. I have a few questions that I can't figure out from the help docs. Appreciate anyone's input.
- I'm guessing that when my money comes in, the button will switch to green?
- Can you budget ahead for future months, or will this affect the current month? (I usually like to budget ahead a few months, especially when I have irregular bills to account for)
Rule 1 of YNAB is Give Every Dollar a Job.... but that also means you do not give jobs to dollars you do not have yet. If you are paycheck to paycheck, you wait for the income to arrive, and then you budget it into your categories based on priority.
The reason for this is that you rely on the balances in your categories to make spending decisions, but you can't spend money you don't yet have, so it should not be in your categories yet.
Can you budget ahead for future months, or will this affect the current month? (I usually like to budget ahead a few months, especially when I have irregular bills to account for)
For irregular bills, you want to figure out how much you will need to budget each month, so that when you reach that month the sum of that money is in your categories waiting to be spent. You don't need to budget it out into future months. This is the purpose of Rule 2, the idea of which is to turn all your non-monthly or lumpy spending into regular monthly budget amounts. Not that when you first get started, the monthly amount may be higher until the next time you spend. For example if you have an annual bill coming up in 3 months, you have 3 months to budget for it in the first cycle, rather than the full year.