How do y'all handle non-monthly budgeting items? I mean, I get the YNAB system when it comes to budgeting stuff like mortgage and energy bills and creating sinking funds and stuff - but for us, we handle our budget for daily expenses like food on a bi-weekly basis (because that's when I get paid, but it could be weekly if you prefer).
I think I'm just missing something, but the current budgeting tools mean that I either have to have a decent buffer in my accounts and leave that money just sitting there, or I have to deal with it in some convoluted way. As it is, I am currently just using a scheduled transaction to move money into that category every two weeks on payday, after which I can then budget the rest (although at that point I tend to just make add categories to the scheduled transaction to auto-allocate much of the paycheck as soon as I get it).
I recognize that I may need to alter my thinking on this, so what are some other approaches?
Not sure I quite understand the dilemna. What's that about ramen the last several days? Don't you generally have more food than days in a shopping period, or are your freezer and pantry completely bare when you hit the supermarket? I could easily eat out of the pantry and freezer for 2-3 weeks, as long as I was still allowed to buy milk and produce as needed.
As Sky Blue Tape said you should be able to survive on your pantry/freezer staples for several weeks just buying some eggs, milk and such. I am my mom's son, she was an army wife who raised 3 kids. She always bought a bit extra, it is like budgeting and generally takes me about 3-5 months to fill my pantry when it is depleted after something major or a move, but I have gone 5 months without out a major shopping trip after losing my job years ago.
You could have multiple categories, one for each week.
But what I would recommend is just using goals and the move money tool (MMT). When you get paid, you'll add (Total grocery amount)/number of paychecks to the grocery category by moving it from TBB. Then, when you're paid again, you'll use the MMT to budget more to groceries.
As you get to a point where you're budgeting for next month with this month's money, this will get easier. For right now, when you hit a 3 paycheck month, you can just allocate the extra amount you're going to use from those categories when you get the money. I like to put the $ amount in the category name. So, if I have a biweekly category, I'd list, say "Groceries $300 biweekly". And then you know, when you get your paycheck, just put 300 into that category as you're going through the paycheck. Same with allowance. I would also put those "fund first" categories at the top.
FYI: we get paid biweekly too. But now that I am buffered, the first biweekly check of the month goes toward the first half of next month's expenses (I tend to cover housing stuff and half the groceries first), then the 2nd paycheck covers the other half plus any leftover goes to sinking funds. So I allocate enough for the month, but dole it out weekly or biweekly or whatever needs to happen. 3rd paychecks I treat as bonuses and they get allocated not to day-to-day stuff but to filling up sinking funds for emergencies and annual stuff (like property taxes).
Hi Lavender ,
The way I do this is to put all of my fixed monthly expenses into my budget as recurring transactions. This gives me a bird's eye view of the month as it is unfolding. It also triggers YNAB's budget screen to show you areas where you have upcoming expenses that don't have enough budgeted for that month, highlighting those areas in orange.
I know that I'm going to always take care of the "four walls" first as soon as I get paid, and I know which dates I will get paid (every other Friday). The four walls are food, shelter (including mortgage/rent and utilities), basic clothing and transportation - in that order. Once I've budgeted food (and I know I'll always need about the same amount every two weeks), I look at my upcoming bills in the accounts page to see which of them is going to come due before the next time I get paid. That is, anything that's coming due in the next two weeks gets money allocated for it. I work my way down the list of four walls first, then tackle the other things, like debt payments and saving for an emergency fund. The extra fun stuff comes last. But a credit card payment never comes before food or the mortgage/rent. Ever. Eat first.
For the record, I also tithe at my local church, so that money comes "off the top", before anything else. Yes, even before the four walls.
I guess the bottom line here is that I don't look at YNAB from a monthly perspective. Since I had experience with other budgeting apps that insist on seeing the entire month in advance, I had the same issue you did. When I finally started looking at it from a biweekly perspective, everything changed for me.
Remember the YNAB rules:
- Get some money
- Tell it what to do (give it a job)
- Spend it the way you said you would
When you look at it in this way, the boundaries between months simply fade into the background. I'm working only with the money I have in the bank, not worrying about the money I haven't yet been paid. I'll deal with it when it comes.
As annaraven suggests above, this all becomes a non-issue as you age your money and build up a large emergency fund. I suggest you aim for an emergency fund large enough to cover 3 to 6 months of expenses. That's not the same as 3-6 months of income, unless you are truly already living on beans and rice and have nothing else that can be cut out of your budget.
I think everyone has good suggestions with how to "smooth" out your income. I get paid every other week as well, but the way I do it is I assume that my monthly income is the value of 2 paychecks -then twice a year when I get a third paycheck, I use that to fund a larger big picture goal (currently student loan debt.)
The answer to all timing problems between budgeting and spending is to Budget using the previous month's income. (Classic YNAB Rule 4). Until you get to that point, there have been some good suggestions.
It's a rare recurring expense that has an actual frequency less than one month outside of what I would consider the "everyday spending" types of categories. We've been budgeting the same amount toward groceries, restaurants and similar other everyday spending categories every month for the 3+ years we've been using YNAB, with a slight inflationary increase. Didn't matter if the month was 28, 29, 30 or 31 days. The same amount has always been enough.
Most of my budget is fortnightly/biweekly.
For expenses that get spent straight away, like groceries, I forget about the months. I just go by fortnight. I budget $500, for example, when the pay comes in and if I am still in the same, month, make that figure $1000 with the next pay.
I either go by memory or by putting the amount in the name of the category.
Monthly and fortnightly regular transactions are scheduled and for the rest (quarterly, annual, ad hoc like car service or date driven like Christmas) I use the goals.
First pay of the month:
- allocate for the expenses due this fortnight, rent, groceries, fuel, orthodontist payment etc
- What ever is left over then goes to the bills that are paid quarterly or annually. I use the goals to guide me, along with if I have received a bill, making sure that category has what it needs.
- any left overs after that to saving or debt reduction -
Second pay of the month (and 3rd if there is one)
- allocate for the expenses due this fortnight, rent, groceries, fuel, orthodontist payment etc (so same as first pay)
- If I was short with step 2 of last pay, then top up those categories, especially if a bill has come in higher than expected.
- savings, debt reduction or WAMing if need be (sadly normally this one).
This difficulty I have to have in to add together the amounts. Sometimes I stuff up that entry.
To initially work out what I needed to allocate (and could afford to allocate), I did a basic yearly budget in excel, then added a monthly column and a fortnightly column. I then used this budget to work out my categories.
For those who do not have a temporal buffer in place and who are budgeting twice a month after receipt of each paycheque, you can speed up the doubling by category by keying:
[End] * 2 in each budget cell then using a cursor arrow up or down to complete the action and enter the next cell down or up.
Obviously, you can multiply by any number (*2, *3, etc). You can also divide the current entry as well by using /. So to halve an existing budgeted cell, key [End] / 2.
Quick comment: If you budget income directly into a category, then it will not be tracked as income in reports - it gets listed under expenses in that category as a "+ expense". Only transactions categorized as Inflow: To Be Budgeted are listed as Income in reports. So if you care that your reports are accurate, then all income should be listed as Inflow: To Be Budgeted then allocated to the expense categories.
I think a template (see previous post) would work well for you; I know other folks separate out their budget as week 1, week 2, etc. based on their pay cycle and what has to be paid when. Troy Miller : I am confused though - if you are buffered (you mentioned that in a comment), why not budget the monthly amount for groceries? (If it's a matter of pacing, the toolkit has a visual indicator for that.)
You've gotten some good suggestions. Here's one more way to look at it:
In reality, there aren't five full weeks in any month, so you don't need to feed your family for a full extra week. It's just that because of timing, you might get paid an extra time and that's a different thing.
You budget $300 every two weeks for groceries. This is $7,800/year or $650/month. At the beginning of the month, put $650 in your grocery category. Some months you might have extra, but let it build up for those months where your grocery bill is bigger.
This is part of the concept of budgeting for "true expenses." Your true expenses aren't what you spend for two weeks or for one specific month. They're what you spend over time. Because isn't your grocery bill bigger at the holidays and smaller when you go on vacation? Over a whole year, if you really are spending $650/month and budgeting for it that way, so you have the extra at the holidays to ease up the annual "I cannot believe how expensive December is" panic. Now, when December comes, you just say to yourself "it's okay, we've got this."
Your tithe and your kids's allowance would work the same way. Whatever that money is every two weeks, just multiply by 26 and divide by 12. That's your monthly budget for that category. When you pay it out, in these cases, is up to you,
And, as long as you're trying to budget based strictly on your paycheck cycle, you're living paycheck to paycheck. Sure, lots of us are in that place and need to figure out how to get through the next two weeks. But the goal should be a lot bigger.
(By the way, if you were living paycheck to paycheck, I would have suggested following Jesse's fundamental advice: Whenever you get some money, ask yourself, "What does this money have to do until I get paid again?" In your grocery example, it needs to provide $300 for groceries over the next two weeks. If you get paid near the end of a calendar month because you get paid every two weeks, you can still put $300 in the grocery category. You don't have to spend it all in that calendar month. What you don't spend will still be sitting there in that category when the calendar changes. So you'll spend some in month 1 and some in month 2.)
Lastly, as sort of a final summary to this topic - as a programmer, when I look past the UI and see how things are set up (or how I assume they are) in the back end in order to facilitate, I do see the difficulty of reconciling the monthly view with a bi-weekly view and that in almost all circumstances it is better to shift your behavior to match that of the software tool. However, I talk often with very un-technical people, so this whole conversation has given me a much better context to help with that conversation than it would modeling an ERD on the blackboard. ;)
Troy Miller I had to step back and think about this for a bit, but here's an idea to budget every two weeks. You could create three category groups: Paycheck #1, Paycheck #2 and Paycheck #3 (or Day 1-14; Day 15-31 or whatever makes sense to you). Each group should have a version of your bi-weekly categories [groceries #1, kid's allowance #1, groceries #2, etc - it seems like you don't have too many of these categories so it shouldn't be too bad]. Additionally, since you know what your spending will be, use a monthly funding goal. When your paycheck comes in, record it as inflow to TBB. Then go to the budget, use the checkbox to select the appropriate category group, then click underfunded and budget anything else (no convoluted transaction necessary & accurate reporting). If you are buffered, you could budget to all of these categories for the whole month at the beginning of the month and spend from the appropriate category by paycheck/date. Since groups are collapsible, you could collapse the category group(s) not in use, depending on the paycheck/date. And if you ever wanted to know what your total average spending on groceries, for example, you can just select all the grocery categories and check the inspector. Just a thought.
I'm new to YNAB, only have had it a few weeks, however before YNAB I used a spreadsheet budget that followed many of the same principals. My husband gets paid every week, I get paid twice a month. So for items like groceries that need to be paid every week, I take the weekly amount - say $150 per week. multiply by 52 weeks a year- $7,800. Divide by 12 months- $650 per month. I grocery shop every Thursday. So, Jan has 4 Thursdays- that's $600. $50 left to carry over. Feb budget $650. Feb also has 4 Thursdays- $600 again. Another $50 carryover, so now I'm $100 ahead. March has $5 Thursdays, so I need $750 total. Again, March budget is $650 , but I have $100 carried over from previous months, so all is good. Yes it overlaps months a few days in either direction, but it all washes out in the end. Don't let it stress you. The $650 is budgeted, but only funded $150 per week as my husband gets paid. Kids allowances, gasoline, pocket money, anything allocated weekly or bi-weekly would work this way.
I love YNAB, but.. forcing people to do monthly is really annoying for a few reasons.
One, I'm pretty broke, it is hard to build a buffer of a month when I don't even have a buffer of a week.
Two, I'm so sick of multiply numbers by 4.33 and then entering in a total that doesn't reflect how I actually spend my money in a month.
Money is being utilised incorrectly as I allocate money to things that aren't actually due till the start of the next week on Monday, not on the last day of the month. i.e. I do no have 33% of a weeks costs due on the last day of the month.
This is forcing me to do manual transactions that are different from month to month, i.e. more work. If it is a a four-Monday-month I have to calculate my weekly budget by 4, and if it is a five-Monday-month I have to multiply it by five to be ACCURATE. If it were weekly I could set and forget.
Monthly is a stupid cycle, weekly just makes so much more sense. Our lives run much more on a weekly basis than a monthly basis. A budget should match the way we live our lives. That is, people live on weekly routines more so than monthly routines.
As an idea, I think progressing to a monthly cycle once it is viable may have some merit, but for people trying to get things under control, it just doesn't feel like I have things under control. Monthly numbers mean very little to me.
My 2 cents (which I have budgeted for)
Here are your steps from your post arguing monthly at https://docs.youneedabudget.com/article/205-budgeting-with-non-monthly-pay-cycle
- Enter your income – whenever it arrives. (this makes sense.. no problem!)
- Give those dollars jobs. (again no problem)
- Spend based on your budget. (My budget says I have $400 for groceries - hooray!! time for some nice food!!)
- Adjust when needed. (It's the 25th of the month and my budget says I have $2 left for groceries. I don't have money in other budgets to transfer back into groceries. I have made a mistake with my budgeting, which would have been avoided if I had just ignored what YNAB was telling me and stuck to me $100/week budget)
Here is another example
- Enter your income – whenever it arrives. (all good)
- Give those dollars jobs. (I have $433.33 this month for play money - drinking and eating out etc. Adjusted to a monthly budget instead of a weekly budget of $100)
- Spend based on your budget. (It's the 9th of March (today) and I have $333.33 because I was able to mentally track my weekly spending limit is $100. I keep spending $100 per week end then it's Friday the 30th of March. The weekend has landed and I have $33.33 in my play money account. I guess I am staying home...?
- Adjust when needed. (Yes, sure I can adjust now, but I have to take money from other budgets because I have in fact made a mistake with my budgeting. Because it is a 5-weekend-month, my monthly budget was actually short by 2/3 of a week. And now I can't just re-use that budget for April, it's a weird month that starts on a Sunday... and then 4 more weekends.. so how the hell do I budget for that?)
Anyway, I believe there is a very strong case for allowing weekly budgeting..
I get paid biweekly, so for the most part -- I budget biweekly as well. That means I don't always get paid on the 1st or the 15th, since it depends on when the weeks fall... So what I've done is used the categories and a simple Note to keep things in check.
For categories, I give them a name to represent what it's for, how much the monthly cost is that I need to pay/save, and what date it's due. For example, my electric category looks like "Electric $40mo (12th)", so I know it averages $40 a month and is due on the 12th of each month. For a quarterly bill like the water/sewer, I name it "Water/Sewer $10mo/$30qtr (15th Jan/Apr/Jul/Oct)". This tells me that I can pay my utilities at either $10 a month or $30 a quarter (the average cost), as long as the total amount is paid in full by the due date/months I listed (Bill needs paid by Apr for the 1st qtr, July for the 2nd qtr, etc.)
Each month, I keep a list of the paydays and what I expect to get on each paycheck. Then I take a look at my list of bills and when they're due, so that I can plan ahead and see which paychecks will be paying off which bills by the due date.
Every payday, I budget in my income and the bills I'm paying out of that paycheck until I've zeroe'd out YNAB at the top. If I budgeted correctly, I won't have to do this again until next payday. I just enter my transactions as I go, knowing what my budgeted limits are for the categories. If I haven't already set up the billpay in the beginning of the month, I will do so on payday for the upcoming bills.
I just never really think of my budget in terms of monthly. When I get my paycheck from my job (every two weeks) I budget for that with the money I have. When the check from my side gig comes in (1st and 15th) I budget for that. So I figure out what bills are being paid with which paycheck and just do it that way.
There are so many things--incoming and outgoing--that are on different cycles that one has to adjust all the time. I get paid weekly, but most of my bills and my rent are paid monthly. Some bills are paid every two months. Some things are roughly weekly expenditures. Bills aren't always the same amount (like the gas bill in the winter or the water bill from the summer when the yard needs watering). That's never going to fit into a rigid weekly system. It doesn't fit in a rigid monthly system either. This is why people do things like budget average amounts of money and let extra roll over to the next month and build up for things like those five weekend months or the winter gas bill.
YNAB is the best budgeting system I've come across, but you still have to look at it constantly in the first couple of months until you get a better handle on what you're doing. And if your finances are really tight, then you will have to continue to look at it constantly.
I budget the way FPU would do. When I get a paycheck deposited into my account, I then budget for what needs to be done with that money until the next paycheck. Some of those YNAB envelopes are accumulating cash and some are just monthly income/outgo like rent. I currently have an AOM of 109 days and using the chrome extension a buffer of 199 days, but I still don't move ahead in the ynab month to budget money. Instead, I am accumulating in my cash accounts. This works best for me. So, when I get paid, I think, I have 2.5 weeks before the next paycheck, I will need 250.00 dollars for groceries. If I spend less, that's okay, I leave it as a buffer. If I need more, well I roll with the punches and look at another category to move money from. All, the while, I am building my Emergency Fund category. Perhaps once I get 6 months in my Emergency Fund, then I might place funds into the next month or not. This works for me.