Pay on 26th each month - how to best budget?

Hi all,

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!

 

Regards,

H.

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  • To be budgeted should be zero. When starting out, fund the categories with the nearest expenses. 

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    • Khaki Storm thank you for reply but I do not understand what you mean.

      The activity shows up in October’s budget (as the date of the debit was 1-Oct) but I had budgeted for it in Septembers budget. Septembers budget is now showing available funds (aka green) although this budgeted item should now be zero as I have paid it.

       

      this does not make any sense to me.

       

      thanks!

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

      Aquamarine Wrench YNAB is a forward looking budget. So if you had $500 in a category on Sept 30 but you don’t spend $500 until Oct 1, the Sept available amount isn’t going to change because in September you did indeed have $500 available and the fact that you spent money in October does not change that fact. 

      Like
    • jenmas thank you.

      What happens end of October when I do my budget for the month of November (I do the budgeting in the Oct month and not November) - I will then already have an activity  (debit)?

      would it have been better to even if I get paid on the 26th to actually do that budgeting in the October budget?

      Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 4 mths ago
      • Reported - view

      Aquamarine Wrench I believe jenmas explained it better.

      Like
      • jenmas
      • jenmas
      • 4 mths ago
      • 1
      • Reported - view

      Aquamarine Wrench there will be no debit in the activity column (middle) until you enter a transaction in an account register so yeah I would assume that there will be activity by the end of the month. Activity does not happen on the left budgeting column though, only in the middle. Budgeting happens in the left column.  I used all of my September paychecks to fully budget for October. I did it in the October budget because I use the Quick Budget function to budget same as last month. It’s personal preference. 

      Like 1
    • jenmas Many thanks jenmas.  So do you think the best way for me would be to do all the budging for the month of October in October's budget - I know this is probably not the proper YNAB method but this is of course a journey for me I have just started.  

      If this is the best way of budgeting for me, what happens to expense transactions which take place between the 26th of each month to the 1st?  Will that show up as an "Activity" in the October budget so that the "Available" column gets reduced by that Activity/transaction's amount?  I pay some of the bills in the days between the 26th and the 1st.  So the timeline for me would be:

      1. Pay on the 26th

      2. Budgeting in October budget

      3. Certain transactional activity between 26th and the 1st

      4. October budget gets reduced by the transaction in point 3. above.

       

      Sorry for all the questions...

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

      Aquamarine Wrench If you receive money on Oct 26th and need some of that money to cover you from the 26th through the end of the month, you have to budget for at least that amount in October. The rest you can budget in October and it will roll over as available in November or you can flip over to November and budget funds there; it really is up to you. None of the money that I receive in October will be needed until November 1, so I budget it all in the November area. But that's my personal situation. 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 and then when it does, you empty out the category and finish budgeting your month so that when your next pay arrives on the 26th, you can flip over to the next month and budget it in full as it should cover 1st-31st rather than 26th-25th.

      Like
    • jetmas ok many thanks.  I have further read in the support documentation that any categories funded but not used (i.e. I have budgeted for it but it doesn't get used) will roll over to the next month? Am I getting this wrong?

      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.  

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

      Aquamarine Wrench If Sept's Available is +$100 (green) right now, you can flip to Oct.'s area and see $100 in the Available column as well (with $0 in the first two columns).

      Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 4 mths ago
      • 1
      • Reported - view

      Aquamarine Wrench You may be confusing the Budgeted column (where you add or remove money from a category) with the Available column, which tells you how much money is currently in the category.

      Like 1
    • Aquamarine Wrench A lot of good advice given in this thread. I suggest focusing first on the question of getting through the October 26 - 31 period before you worry about budgeting for November. And don't just worry about bills; think about any spending you are realistically going to be doing before the end of the month. Trip to the grocery store? Need to buy a gift for your friend's birthday party? What about filling the car with gas? All of that should be budgeted for October, on October's budget screen.

      Only then should you move on to November expenses. It sounds like one of the things that's tripping you up is the concept of budgeting something on October's budget screen, even though that something isn't due until November. As others have said, any unspent funds you have budgeted, even though they are on October's budget screen, will roll over to November. If you're paid on October 26, and know you'll have a big utility bill due on November 10, you can budget for it on October's budget screen, the amount will roll over at the turn of the month, and will be there waiting for you on November 10 when the bill hits. 

      All of this becomes much more simplified if, when your October 26 paycheck hits, you'll have enough money to budget for the rest of October AND for November. If that's the case, what you can do is budget for the rest of October's expenses on October's budget screen and then, on November 1, budget for the entire month of November on November's budget screen. It took me several months of using YNAB to get to that point. 

      In my opinion - and some of the more experienced YNAB forumers may be able to clarify here - it seems like the best way of doing things are:

      -If you cannot budget for the entire month of November with money you already have by the end of October, embrace the rollover approach. In October's budget screen, budget for the rest of October and for as much of November as you can, understanding that the unused October amounts will roll over to November, where they'll then be spent.

      -If you can budget for the entire month of November with money you already have by the end of October (and congratulations if this is the case!), then embrace a "live on last month's income" approach. Budget on November 1 for the entirety of November, on November's budget screen.

      It seems that a middle-ground approach here of switching between October and November budget screens during the month of October, and trying to partially fund November on November's budget screen, would be very confusing.

      Like
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 1
      • Reported - view
      Slate Blue Pilot said:
      It seems that a middle-ground approach here of switching between October and November budget screens during the month of October, and trying to partially fund November on November's budget screen, would be very confusing.

      [Emphasis mine] I agree, and yet, that's how YNAB envisions the product to be used. Fortunately, the "current month" workflow used in previous versions of the product still works. Sometimes "new" isn't necessarily "better", though opinions on this particular topic do vary.

      Like 1
  • Lots of categories will accumulate money and not be spent in the same month. It's called "saving".

    If you prefer, though, you can budget that money in Oct.'s area.

    Personally I don't like spreading my spending plan across months, but your call.

    Like 1
    • dakinemaui thank you. I posted a reply to jenmas reply above - does my description of the budgeting sound right? Many thanks

      Like
  • jenmas said:
    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.

    Like
    • dakinemaui Many thanks for this! Just wanted to say thank before I try to digest! :-)

      (May have some questions...)

      Like
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • Reported - view
      dakinemaui said:
      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.

      How does the other approach (using carryover from Oct) work when you're trying to get ahead? Continuing the example from this point, you would increase C10's budget value by $25 in the current month's area (Oct). (There may have already been a budget value depending on when you started. Either way, the Available would show $25 (which will carry over to Nov). TBB is $50.

      You are living within your means, so you will have money left in TBB and can use this to get ahead. The idea is to be able to not have to budget any of the money you receive into the current month. C28 in the current month is covered and you've decided you're not flipping between months to budget. You don't want to just increase C28 any further. (While this would work for bills where spending is predetermined, the additional money would be misleading for discretionary things like Groceries. You would naturally think you could spend it in the current month.) The solution is simple: just stash it in a category that you grow until it's enough to cover all the post-payday budget entries. Call it Transition, as it will allow you to switch to budgeting everything into next month. So in this case, put $50 into Transition.

      Fast forward to Payday on Nov. 26, and TBB = $175. You add $100 to C28, $25 to C10, and $50 to Transition (taking it to $100), all in Nov's area. (Pretty easy since everything is on one page.)

      So the cool part is Payday on Dec. 26  (TBB = $175). You have $100 in Transition, and you need $100 to finish out Dec. How convenient! Move that $100 from Transition to C28 and Dec. is handled -- all without touching that $175 you just received. (In a more complicated scenario, you would move all of Transition to TBB and budget the remaining categories). Since Dec. is handled, you can now switch to budgeting your income into the following month's area (Jan in this case of Dec. income) including putting that extra $50 toward an EF for additional cushion against unexpected expenses (or wherever you feel it's needed, really). When you receive Jan. income, you can budget all of Feb. with a few clicks (allocating all of that Jan. income). Repeat.

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

      Big picture: Regardless of whether you flip between screens or leverage carryover, by living within your means you will be able to get ahead (either budgeting increasingly further into next month or into the Transition category). At some point, you won't need any of your income in the current month. You can then budget on a calendar basis, which is convenient as that's typically how your expenses recur.

      It's also extremely clear what you can and cannot afford since the entire month's budget total is set. Lifestyle creep vanishes, because each month gets what it gets. Unexpected expenses are almost always handled by reallocating within the month. You don't want to take from next month's income because you're already planning to use all of it next month. (That said, in an extreme emergency when you simply don't have anything left in the current month to reallocate, you can use some of next month's money, but you obviously lose the convenience and clarity of being ahead.)

      Like
  • 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?

    Like 1
  • 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.)

    Like
    • dakinemaui and jenmas  and Slate Blue Pilot  - thank you all for your input and taking your time. Very much appreciated.

      I am currently paying off debt so I will not be able to save up like you have described.  Obviously at some point I'd like to get out of the pay cheque to pay cheque style and do it the proper YNAB way but for now I would feel more comfortable budgeting on a month per month basis. My "budgeting month" is 26th to 25th the following month.

      So having said that, I just can't make this work.  

      Issue 1

      If I try option 1 - budgeting ALL of my bills from 26-Sep to 25-Oct, ok any budgeted amount not used in Sept rolls over into Oct. But what if I need to top up one category during the month of Oct - do I increase that category in the budget I created on 26-Sep or do I add any top-up in October's budget?

      Issue 2

      Another issue (as I see it) is my "Food at work" category.  Some of that category will have to be allocated in Sept and the rest in Oct.  Is it better to calculate the days I need for food in Sept (say £8 x 5) and then the rest in Oct or do the rollover, i.e. budget the ENTIRE category on 26-Sep and NOT see anything budgeted for it in October (although the available amount would be whatever is left from Sept).

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 4 mths ago
      • Reported - view

      Aquamarine Wrench You're only talking about shifting 4 to 5  days. How long would it take for you to shift that much? personally I'd 1) tighten my belt as much as possible 2)  go a month or two on minimum debt payments and/or 3) raid the emergency fund to make it happen.

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      • WordTenor
      • I'm the oldest and the wittiest.
      • WordTenor
      • 4 mths ago
      • 1
      • Reported - view

      Aquamarine Wrench You won’t be topping up your category in October, because you don’t have any money to do that with in October. 

      You budget everything you need until Oct 25 on Sept 25. From then on, you use Rule 3 and either use the move money tool to change the amounts in the categories, or offset any new budgeting with a decrease somewhere else (this is what happens automatically when you use the MMT but you can do it manually as well). On Oct 25 you get new money, and you budget again. 

      And yes,  most of your budget adjustments will take place in October. Don’t fret overly about the budgeted column. It doesn’t show anything other than how much was moved into or out of the category in that month. Your available column is what matters. 

      Like 1
    • Aquamarine Wrench 

      As to Issue 1: Let's say you budget on September 26 for everything you'll need until October 25. When the clock strikes midnight on October 1, all unspent funds will roll over to the October budget screen. You are now in October. No need to go back to September's budget screen. YNAB is forward looking. Any topping up that you need to do in October, you should do in October's budget screen. Play whack-a-mole and take funds where they're needed less and apply them to categories that need to be topped up before you are paid again on October 25. For example, let's say you run out of grocery money on October 18. Well, you need to eat for the next week! Perhaps move $100 out of your Vacation 2020 category into your Groceries category. The money has to come from somewhere, afterall. But do not go back to September and mess with anything on that screen.

      As to Issue 2: I suggest you budget what you need, on September's screen on September 26, for anything you will need through October 25 when you'll be paid again. In other words, budget for a month of work lunches in September's budget screen. When the clock strikes midnight on October 1, all unspent funds will roll over to the October budget screen, and will be available for you to use in October. Then, once October 25 hits, you will budget on October's budget screen for another month of work lunches. Repeat process described above.

      Like
    • Aquamarine Wrench 

      After reading your message again, I feel I should add this:

      Since we're now in October already and it only makes sense to look forward, I'm going to shift my example from September/October to October/November.

      Key question: Excluding investment/retirement accounts, do you have any savings that are in an Emergency Fund category? Or, any savings that you for whatever reason have not entered into YNAB? Let's say, approximately a week's worth of expenses?

      Reason I ask, and why this matters: If you wish to budget on a rigid month-to-month basis, and use your October 25 paycheck to cover the entirety of November, you're going to have to somehow bring enough money into the budget to last you NOT ONLY the month of November, but also that last week of October. In other words, you're going to have to stretch to cover a month and a week of expenses. But, understandably, you may not be able to do this with just one month's pay. That's where some potential savings comes in to cover the gap. 

      If you don't have enough savings to cover this gap, I can't see any way around the rollover approach I've described in other posts in the thread. And, if it helps, I did the rollover approach for six months when I first started YNAB and only very recently moved over to budgeting for the full month. I had - and still have! - plenty of student loan debt that I'm trying to pay off. So I get that debt payment is a priority for you, as it is for me. But as others have suggested, if the rollover thing is driving you nuts, maybe try to reduce debt payment for a month or two to free up some extra cash that you can use to transition over to a calendar month schedule. Think of it as taking a small, temporary step back from debt to build your savings a little. 

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    • WordTenor Many thanks. What does MMT mean and do I adjust the budgeting need by moving from the available column from one category to another? Then will there not be a deficit compared to the budgeted amount and if so do I adjust the budgeted amount as well or leave as is?

      Like
    • Slate Blue Pilot Many thanks for this. Reading your messages it seems the best option for me is to go with what you describe here https://support.youneedabudget.com/t/h44maw?r=36419b

      I budget everything in September's budget covering the period 26-Sep to 25-Oct and will then make all adjustments if necessary in October's budget.  Then repeat on 26-Oct.

      I guess I can always change method at some point or do I have to create a whole new budget template for that?

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

      Aquamarine Wrench MMT = move money tool. When you click on a green available balance, it opens up a dialog box to allow you to move funds from that category to another. By doing so, it changes the amount in the budgeted column. For example, let's say you budget $50/month to vacation (including in October) and the balance has built up to $350. But you need $150 to fix your car. The MMT will allow you to move $150 from Vacation to Vehicle repair. The available balance will be reduced to $200 and the budgeted column will show -100. People freak out about that -100 but that doesn't actually mean anything bad. It means that you moved money out of the category (the $50 you budgeted this month plus $100 of accumulated funds).

      Like
    • jenmas Ah ok I understand.  And to adjust the numbers in your example above - let's say I have budgeted 100 for something I can live without in Sept's budget but this is a one off and not a per month budget item.  In Oct I realise I need to cover an unexpected outflow of 50.  I then use the MMT to move 50 from the 100 in Oct's budget to the "unexpected" category. The availability column in Oct will show 50 in both categories and the budgeted will show 50 as well.  If I get those end result numbers am I doing it correctly then?  Having lived with YNAB now for a couple of weeks I get the sense I am rolling with the pinches a lot.  Perhaps that's normal in the beginning?

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

      Aquamarine Wrench Yes, it is extremely commonplace to have to move money, especially right before you're paid again. Remember, you made a guess as to how much you would need in each category based on information you had up to 4 weeks ago at that point. "The best laid plans" being what they are, it's VERY likely some of those guesses were not super accurate.

      As many experienced users will tell you, "There is no 'normal' month". The reallocation is your chance to update the plan to what it should have been had you been better at predicting the future. 🙂 

      Like
  • Aquamarine Wrench said:
    My "budgeting month" is 26th to 25th the following month.

    What outflows do you actually incur between the 26th and the end of the month?

    Like
    • dakinemaui I pay my rent, pay my monthly credit card repayments and some other bits and pieces.  Most outflows will occur from 1st to the 25th.

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

      Aquamarine Wrench It's the rent that is the big one. If you have to budget the entirety of that from your check received on the 26th, that's going to be a bit difficult to shift into next month to be technically correct. The CC payment may be sizeable, but that should have funds reserved from budgeted purchases and without requiring your paycheck. (I'm assuming the CC has paid-in-full status.)

      The "good-enough" solution would be to budget for rent in next month and record (fudge) the payment for the 1st of next month. Note, the money is obviously there, it's just the budget that is the hangup. If this allows you to escape the "split-month" budgeting, I would totally do it. (This might not play so well with Direct Import, though.)

      Alternatively, given that the budget is essentially a shell game, you could also intentionally ride the CC float and put the excess funds toward budgeting for rent in the current month. You'll note a PIF CC's Payment category doesn't drop below approximately the statement balance (assuming consistent usage). If that would cover the rent, you'd probably be set. Hopefully it's obvious that you don't need to send that money to the CC until the *following* month. At any rate, escape the split-month budgeting and then work toward getting off the float.

      Like
  • 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.

    Many thanks!

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

      Aquamarine Wrench Yes, YNAB assumes you will pay back the debt incurred for a budgeted purchase made with a CC using the cash backing that category. (That cash is helpfully/automatically reassigned to the CC Payment category.)

      You can move money out of ANY category for a "crucial outflow" that needs more money, but this always has consequences. If you move money out of the Eating Out category to cover some high priority category, you obviously cannot eat out as much. Likewise, if you move money out of the CC Payment category, you cannot send them as much to pay down debt.

      You move funds from a category to TBB by reducing the budget value (first column), possibly using a negative value. Alternatively, click on the Available amount (third column) to access the Move Money Tool and select TBB as the destination. (The MMT can also go straight to whatever other category you like.)

      Should you reallocate from the CC Payment category now, then in order to reduce debt later on you will have to budget to the CC Payment category at that point. That will increase the amount you can send them to pay down debt. Again, this is no different than if you reallocate from Eating Out now, then in order to eat out later, you have to budget for that later.

      Like
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