New YNABer - what to do when income paid at irregular intervals?

Hello! I'm a new YNABer - apologies if this question has been answered previously (can't find an answer in the forums).

I have received as a lump sum the amount of income I'll earn for the next 6 months. I want to budget monthly, but my money won't come in monthly. I've set up my December budget with the relevant categories (groceries, rent, etc.), but what's the best way to account for the fact that I've already received my income for these next few months? Should I create a budget category for each coming month, eg. 'January', 'February', etc and budget a lump sum (my monthly expenses) into each category? Is there a better way to do this?

Thanks very much!

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  • I'm no expert on ynab or budgeting but I do see two different ways you could deal with it. A) budget each of the next 6 months, starting with the essentials for each month and working your way down the list. Ie. Budget for rent / mortgage for Dec, Jan, Feb, etc. then groceries for each month, then utilities, etc. Then use what's left to budget for everything else. 

    B)Stick the money in a savings account,  decide how often you want to get paid (weekly/monthly/etc.) and pay yourself on a regular basis. If you get paid 26000, you could pay yourself $4333.33/month or $1000/week. In your budget have a category for your saved income and when you get the lump sum, budget it to there. When you take money out of savings, move the same amount out of the category and into to-be-budgeted. Now you can budget that income like everyone else and there is lots of example of how to do that.

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  • Create a Deferred Income holding category. Budget the money to it. If it's supposed to last N months, then in each month it needs to be used, remove 1/N from the holding category and use it to fund that month's budget.

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    • nolesrule That seems like the simplest and most effective thing to do - I'll do that! Thank you.

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  • Keep in mind this if you're going to get another shot of income in, say, June, then ideally this money will carry you THROUGH June. That way you don't need to wait on the June income to pay for expenses occurring at the end of June. In other words, the DI category goes to $0 in the same month you get more income. Keep this in mind when working out how much to take out each month (and put in this month).

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      • Annieland
      • YNABbing every day since 2009!
      • Annieland
      • 7 mths ago
      • Reported - view

      dakinemaui That's kind of the pickle I'm in right now, actually.  I took the last 6th out of my RSU category this month and the next comes in on Jan. 15.  The first 6 months of 2019 I had to just empty it by month 4 because of some major emergencies.  So I'm trying to figure out if I should start deferring in Feb., or do 1/7th in Jan. or just hold onto my hat til the 15th.  Maybe it'll be more clear when the paycheck comes in at the end of this month and I'll see how January is looking.

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 1
      • Reported - view

      Annieland Ideally, you'd try to use as little of the new (Jan) money as possible in Jan to allow most of it to fund the Feb-July block. To make that easier, try to limit the use of the current block in Dec, so less of the new money is needed in Jan.

      In the end, you'd defer 5/6 of whatever is left of the Jan infusion in Feb's area (leaving 1/6 in Feb's TBB).

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
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      Annieland Alternatively, you can consider that the Jan money + what you took out this month needs to fund 8 months (with the money to support Jan arriving in two instances).

      For example, if you took out $1k in Dec and expect to receive $6k in Jan, that's $875 from Dec. through July. So you'd put back $125 into the DI category this month and use it to try to get to Jan. 15. On Jan. 15th, you defer $5250 (=$875*6 or you could look at it as =$6k - ($875-125)). In Feb, you're back to pulling out $875/mo for the next 6 months.

      Generally speaking, I prefer to "spread the pain" across more months so the impact is less in any given month.

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      • Annieland
      • YNABbing every day since 2009!
      • Annieland
      • 7 mths ago
      • 1
      • Reported - view

      dakinemaui Thanks!  I'm leaning towards option #1, because December is my ugliest month.  I hit my gift budget way too quickly this year and had to unravel some things to figure out why (not all my fault).  What I probably shouldn't have done was budget half of November's 3rd paycheck into January towards an expense I'm paranoid about (the other half covered the same expense in December, since I moved up my target goal to start in Dec.).  But I committed those dollars to that required expense and I'm not ready to break that piggy bank yet.  Better to tighten the purse strings for the next few weeks or so.  And just pray our stock stays at its record high until then.🤞🤞

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