Budget carry over from previous month

YNAB is working in a forward manner in regards to the budget system.  That is great, but in budgeting it is important to be able to look back to improve a budget and analyze the results of our budgeting.  So I think it is important to be able to carry the available budget amounts to the next month both a + and a - amount.  Example I have a category that contains transactions both cash and credit.  The category in July had a negative available amount, so with the new month it want to my budgeted amount, not the carry over amount.  By the system doing that I lose my history and ability to evaluate my future budget.   

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  • YNAB is a digital representation of an envelope budgeting system. As such, in a real envelope budget, an envelope cannot have more money taken from it than it can hold... it can't go negative. In the digital representation, YNAB allows you to go negative, but you should be following Rule 3 (Roll with the Punches). If you don't YNAB fixes it for you at the end of the month... because the money's gotta come from somewhere.

    YNAB is not a scoring system or a punishment system. There's no reason for the negative carryover. But you can always recreate it manually if you feel it is essential (which it is not). Just realize that any negative category actually means your budget is not correct, and that your other categories actually have less money in them than the presented number, because you don't have as much money as the sum of all your positive categories.

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

      nolesrule Not to mention, if you want to you can just flip back to July to see the negative amount. And it's not as if the negative consequences disappear - if you had a negative category, when the month flipped over, YNAB either took from your TBB or added to your credit card debt.

      Reply Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 4 mths ago
      • 2
      • Reported - view

      jenmas Yup. The money's gotta come from somewhere.

      Reply Like 2
  • Sky Blue Packet said:
    ...  in budgeting it is important to be able to look back to improve a budget and analyze the results of our budgeting.

    Yep.  I totally agree with ^.  I think that the initial discomfort most new YNABers feel with using the methodology comes from  changing from a loosely defined "accrual budget" method (definition quoted below) to a zero-based allocation cash-based budget.  With YNAB you reallocate funds from completely unrelated categories to deal with all overspends in the here-and-now rather than use the accrual method and hope the annual roll up will be what you wanted it to be.

    I was one who always carried forward negatives, containing overspending in a category and kicking the overspend can down the road to the future, and often many overspend cans in different categories. As a result I had an unrealistic view of how much I was actually spending in a category and how much that category needed/used of my income. That's the sense of the unknown that YNAB's methodology forced me to deal with and work through in my first few months. I didn't like it either, by the way. I wanted to budget what I "should" be spending or what I "thought" I would spend on average instead of what I was actually spending.  The trouble was that I really didn't have a clue if a $75 overspend was indicative of me overspending or if I had unrealistic expectations and the category was underfunded.

    I embraced the recommended process and kept moving the funds around between categories to deal with the overspends in the first three months of using YNAB.  After three months, I had a much better sense of what I was actually spending, what I needed to budget and which spending behaviours were completely out of control and needed to be addressed if I expected to hit some savings goals.  The actual and average spending was surprising in some categories.  I mean $150 /month for drive-thru breakfast and coffee? (and the number of times the coffee sat untouched in my car only to be thrown out....)  Yeah, I think not.

    I relied heavily on the average spent for each category to help guide my category allocation in the next two years, as I continually trimmed and addressed my spending behaviours, paid off debt, and began to build up some liquidity.  That $150/month on fast food spending from five years ago is now a nice tight $20.36 average monthly spend.

     

    Accrual Budgeting:

    The accrual accounting convention ignores the function of time and only considers what expenses generate what revenues, even if payments have not actually been made.

    Companies with inventories are required to use the accrual method for tax purposes.

    Reply Like 2
  • The activity column is a more direct assessment of your past spending and therefore a reasonable budget value moving forward. The Quick Budget Average button is also very useful.

    You should be correcting overspending as soon as possible. This develops a better understanding of the true relative priorities between categories. You are missing out on some of the deeper psychological aspects if you just leave the category negative.

    Reply Like 4
  • I think the word budget is misleading. Especially since so many companies and governments spend more than they make and hope to make it up in the long run.  YNAB is a spending plan. Or more accurately, an income allocation system. Money comes in and I decide what do I need this money for. And no spending more than you make. 

    Reply Like 3
  • MXMOM said:
    think the word budget is misleading. Especially since so many companies and governments spend more than they make and hope to make it up in the long run.  YNAB is a spending plan.

     I changed all of our files to our "Money Plan" instead of budget when I started helping other family members use YNAB. It seems to make more sense and remove the negative connotations of budgeting.

    Reply Like 1
  • I've just upgraded from YNAB 4. One budget line where I always used the carry-over option was our health insurance. We pay for our health care expenses ourselves, then submit the receipts for reimbursement. The reimbursement is rarely deposited the same month as the original debit occurs. Sometimes it is not even the month after the original debit, but the one after that! Using the carry-over allowed me to contain those costs easily. This is not a 0-balance budget line since we do have to cover a portion of the expenses out-of-pocket, so just looking at the ending balance for the previous month does not tell me how much extra I may need to allot for the current month.

    Any thoughts on how to manage budget lines like this one?

    Reply Like
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      Halcyonian You're looking for a reimbursement tracking approach. See the official docs for the gist of it (2 approaches, depending on whether you can float the amount from your categories or not). One error with those docs, however, is how to categorize transactions: ALWAYS categorize both outflow and inflow to the same category.

      I suggest using a separate category for the out of pocket portion, leaving the reimbursable portion in a dedicated category.

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