I get the idea of Age of money... but I don't get it.
So to make things clear: By many peoples definition, I've never been "bad" with money. I think I'm pretty good at living frugally, mostly because I always think I have less money than I actually do, and I always feel bad for spending money even for things that I can afford and . This is the reason why I'm actually super awful with money: I'm always stressed about it and I have no idea how I'm doing until checking my bank account the day before my salary (when I usually realize that well, I probably didn't need to stress about replacing my old shoes etc)
This is the reason why I love YNAB. I don't need it in order to avoid stress in the end of the month, I need it to avoid stress every other day in the month.
So Age of money! It replaced "live on last month income" from old YNAB, and I think that it's way better, because it's measurable (hence can be a part of a SMART goal) and is easier to extend beyond 30 days. Cool!
What I don't get is why it would be such a game changer with 30 days. Have I misunderstood in how it's calculated? I understand it as "The age of the oldest income that is still not fully spent yet". Having lower than 30 days in that case would mean that you don't even manage to survive until next month. In order to match old YNABs bit goal, it really should be 60 days or more, right?
I know that a lot of people really don't get it to the end of the month, and for them 30 days would be a really nice first step... but It's not really... you know, *that* much of a gamechanger.
Unless I've completely misunderstood it, and in that case, please enlighten me! :) (And
There is nothing magic about 30 days or 60 or any other specific number. It's simply a feel good / motivational number that is very likely to increase. On the surface, it seems like a good thing because it goes up as you get ahead.
Unfortunately, the reverse is NOT true -- a rising AoM does not mean you're getting ahead. It rises when you stay even (make True Expense contributions). It even rises as you fall behind (sink deeper into CC debt).
You could have an AoM of 100 (seemingly a good thing) and be flat broke, having spent your last dollar.
It also is a very different thing than Classic Rule 4. Someone can have an AoM of 100 and still be paycheck to paycheck.
Classic Rule 4 on the other hand, is most definitely and solely focused on getting ahead and being able to budget on a cycle aligned with expenses rather than income.
The new Rule 4 is not actionable. It's merely a consequence of following Rules 1 and 2. Marketing genius, though, as it's almost certainly going to increase as you use YNAB.
I'm not sure why you think Classic Rule 4 (CR4) isn't measurable -- you either can or cannot budget all of this months income in next month's area. Extremely clear.
Alternatively, you can quantify progress toward CR4 for a SMART goal. You need to save $X and a category balance IS your progress (measurable). Pick a timeline of T months (timebound). That mandates monthly contributions of $X divided by T (specific). Does such a budget entry work with your other priorities (achievable)? Hopefully the Relevance is obvious.
Edit: forgot to mention $X is the total of expenses incurred between your first paycheck and the end of the month. Or it can be your entire monthly income for simplicity. Either is equally specific.
Having lower than 30 days in that case would mean that you don't even manage to survive until next month.
It doesn’t actually mean that. Let’s say your AOM is 8 on the 15th of the month. But what if you don’t have to make any more expenditures for the month because everything is already paid for.
AOM goes up for any number of reasons. I was laid off for 6 months. My AOM climbed during that entire period because I was getting farther and farther away from the day that I received my severance check.
All AOM does is average your last 10 cash based transactions and calculate which bucket of money it came from, with a bucket being a cash-based inflow. As dakinemaui stated, it makes you feel good but doesn’t particularly measure financial health.