Pay on 26th each month - how to best budget?
New to YNAB and the learning curve has been steep to say the least! However, I am getting there.
I am still in the pay check to pay check land so my question relates to how to best set up the budget per month - the facts below:
1. I get paid monthly on the 26th
2. So in my first budget I budgeted in the month of Sept. Set my goals and budgeted what I needed.
3. Most of my bills will hit my account in the following month - in this case October 2019.
4. My first bill hit my account today and I added this in the transaction window for my checking account.
5. However, the money budgeted is still showing in Sept and the available amount is still in green. Instead the debit is showing in the October budget.
So to my questions:
- Can I sort of forward the budgeted bill to October; or
- Is it better to simply budget my "October bills" in the budget for October and vice versa budget only my bills which will hit my account in Sept in the Sept budget?
The drawback with the second alternative above is that I do not get a good overview of my budgeted items but perhaps this is less important - I should instead focus on the "To be budgeted" amount in green at the tope of the page?
Thanks very much all!
What you could do is slowly set aside a bit here and there in a category until that category builds up enough to cover the 26th through the 30th/31st
To elaborate on this in a simplified scenario, say it's October 15, you have a monthly income on the 26th of $175, a $100 outflow on the 28th (category "C28") and $25 outflow on the 10th (category "C10"), and that's your only 2 categories. You obviously need to budget $100 in October's area in the C28 category. TBB is now $75 and October is covered.
You also need to budget $25 to the C10 category for the Nov. 10 outflow, but whether you do that in Oct's area and let carryover happen or directly in Nov's area is your call. I think most people prefer to budget directly in Nov.'s area. So flip over to Nov. and budget $25 to C10, leaving $50 in TBB.
You are living within your means, so you will have money left in TBB and can use this to get ahead. You can budget $50 to the Nov. C28 category. (Again, this is money you physically received in Oct.) TBB is $0, so you stop.
Fast forward to Payday on Nov. 26, and TBB = $175. You only need to add $50 to C28 in Nov's area because it already has a head start (TBB = $125). Since Nov. is all covered, you flip over to Dec and budget to C10, leaving $100 in TBB.
Again, you are getting ahead, and in fact, can fund all of C28 in Dec's area. (Again, using money received in Nov.)
Now the cool part when Payday on Dec. 26 arrives -- Dec's C28 is already covered! You don't need any of Dec's money in Dec's area, so you can push it all into next month's area (Jan). No longer do you have to "split" months. In fact, with suitable choice of goals/scheduled transactions, you can budget the entirety of Jan with a few clicks using money received in Dec.
At this point, I find it counter productive to budget more than one month ahead. The extra $50 you'll have can be stashed in an emergency fund category (also in Jan's area), increasing your financial cushion. When you receive Jan. income, you can budget all of Feb. with a few clicks (allocating all of that Jan. income). Repeat.
Hopefully this walk-through helps.
Aquamarine Wrench said:
In any event this "roll over" does not happen for me. Say I budget in the month of Sept using Sept 26 pay and the expense I have budget for doesn't debit my account-budget until Oct - I still show zero available funds in that category in Oct.
Well when in October did it hit? If you budgeted $1000 for rent in September and it didn't hit your account until October 1, as soon as it is October 1, the Available amount should be down to 0 but the activity column will show the -$1,000 transaction. Or is @nolesrule correct that you are mixing up the budgeted column, which should say 0 in October unless you explicitly put something there, with the Available column?
Aquamarine Wrench said:
(May have some questions...)
No doubt! I personally feel budgeting everything in the current month leveraging carryover is more efficient and easier to understand. After all, you're solely thinking solely about "purpose" (category). The specific screen/area in which you should budget is always the same regardless of when money arrives or expenses occur. (It's a truer representation of the old-school, paper envelope approach.) You may be leaning that way as well, and if so, then use the second walk-through for getting ahead.
However, others love the fact they can flip screens and after a bill is paid, they see a satisfying pattern in that category for the remainder of the month. For a $100 bill, the three columns would be "+100 | -100 | 0.00". Different strokes for different folks, really.
(Once you're completely ahead, you'll get the convenience of both single-month budgeting and the nice pattern.)
Many thanks all for your input here. My next question is off topic but I hope ok to post here since perhaps you are still following the thread. (God forbid) but let's say I have budgeted 100 for travel card for the month but realise that I have overspent when it is time to pay from my checking account. I instead put it on my credit card. If I link the travel card to Monthly Travel it comes off my budget and my CC balance payment increases. However, that 100 has freed up then so that I can use that 100 for whatever crucial outflow it is for. How do I take that 100 and put it in "To be budgeted"? I would not pay that 100 on the CC until the following month.