Forward money to next month?

I've heard a lot about aging your money and moving money to next month when you've funded this month. How do you do that? Do you just create a category "Next Month" and pile everything in there and then sort it out when you do the next budget, or can you actually put it for a specific bill or item in the following month?

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  • I just click to the next month and start funding there.  

    Others will come along and tell you the category way. :-)

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      • MXMOM
      • MXMOM
      • 6 days ago
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      satcook Carrie Caribou I am in the category camp.  

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  • Carrie Caribou said:
    aging your money and moving money to next month

    Just to be clear - these are 2 different things. An increase to your Age of Money is a natural byproduct of either a) living below your means, b) living entirely on credit while not using your existing cash to pay off credit card debt, or c) receiving no income at all but continuing to spend what money you have.

    Using available funds to fund next month is just month you click on in your budget.

    Like 3
  • Both ways work. YNAB intended for people to use the "click to the next month" route but this can lead to a problem called Stealing From the Future. That's when you use money this month, you have assigned in next month money. YNAB used to do this silently so folks would have less money than intended in the next month without knowing it. I think there is now an indication it is happening.

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  • Hey Carrie Caribou ! I know you'll get lots of ideas on how to handle extra money at the end of the month in your budget, but I wanted to shoot you a link as to what we mean by Aging your Money, when we're talking about Rule 4.

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      • Yes I can
      • yesican2020
      • 6 days ago
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      Marisa Hey thanks for the link.  I've never seen these guides before. Although I've read lots of your blog content and watched lots of YNAB videos. 

      I'm interested in ageing your money being more than just being able to budget a full month at a time.  I've been getting paying arrears on some big bills and slowing funding True Expenses so I'm still budgeting each pay cheque. However, more and more funds are sitting in my bank account and I am having money for bills before they arrive - even if I don't pay them.  

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      • MXMOM
      • MXMOM
      • 6 days ago
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      Yes I can I am not a fan of the Age of Money because if you are saving up for something (e.g. a car) and have $10k piled up, the AOM will be high but the day you buy the car it plummets. I measure myself more on my “month ahead” category. I just went over the one month tipping point and it makes a huge difference. 

      Like 2
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 6 days ago
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      MXMOM Agreed. Age of Money has a "True Expenses" problem in that the calculation treats it like it's extra money even though you really are accruing cash for known future expenses, and when those expenses happen, the amount of money you have will drop. So the money isn't aging for the sake of aging. It's aging because you're going to spend it in some other month. And once you spend it, you get to start the cycle all over again.

      The better measure is actually based on how much money you have that is budgeted today that isn't devoted to known expenses (emergency fund, income replacement, money for next month) because those are what actually allows your money to age.

      It's also a silly measurement, because as jenmas rightly points out you can inflate it by taking on debt.

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      • Yes I can
      • yesican2020
      • 5 days ago
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      MXMOM  I agree.  I actually meant applying Rule 4 and saving money for future months, as opposed to using the metric in YNAB.  That's more what the guide is about.    

      I've also read a bit of the stuff on variable incomes and think I need a Next Months Income category as well as a Next Month +1 Income category for when I finish my current contract.  I'm going to start saving a bit towards this from November for the Next Month's Income at least.

      Like 1
      • monkeyhanger
      • No animals were harmed
      • monkeyhanger.1
      • 5 days ago
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      Yes I can I work as a contractor and as such have both variable income and the possibilities of gaps between projects. For me, there is an important distinction between the administrative category (NMI) that allows you to live off and budget with last month's income and categories to cover periods with no work. I appreciate it is just a different way of thinking about it but for me it's an important distinction. I have the following categories:

      • ➡️ Month ahead - This is my NMI category. This isn't about covering next month's budget and then moving ahead to NM+1 once I have enough. All money received this month goes into this category temporarily ready to be budgeted on the last day of the month. It's the administrative buffer that makes budgeting easier, avoids the risk of SFTF and keeps all my budget on one screen. I don't consider this part of any bench fund but if things really hit the fan I could unbuffer and it would become so.
      • 🦊 No Fox Given - This is my bench fund and is there to cover low/no income months. 
      • Various emergency funds - I've been doing this for long enough thankfully that I don't have a single emergency fund but several different categories addressing most 'emergencies'. They're not fully funded yet sadly but the late great Patzer made a great case for individual categories. If you're just starting that can all be too overwhelming and a single emergency fund category makes sense.
         
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      • Yes I can
      • yesican2020
      • 5 days ago
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      monkeyhanger Thanks for sharing your perspective.  I can see this approach is where I need to be heading and understand the distinctions which wine nabbers draw between emergency funds, true expenses and income replacement.   I  particularly like the idea of NMI as an administrative 'buffer'.   I'm currently working on a long term 4 day a week contract, so need to plan for what happens in January (or there's maybe November if my client fails to get the final approvals for my extension through HR).    

       I'm a big believer in incremental progress! As I'm also paying down debt, I plan to  start with one pool of savings to cover emergency funds / income replacement / NMI - either in something called buffer or NMI- so I can see it go up.     This is the same approach I'm taking to True Expenses where I'm adding in funds for each quarterly bill when I pay back the arrears and plan to add the Annual expenses in November when I've paid back all of the arrears.  Some of the longer terms savings categories will have to wait a bit for now. 

      Like 1
      • monkeyhanger
      • No animals were harmed
      • monkeyhanger.1
      • 5 days ago
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      Yes I can I totally understand. I've just signed a 6 month contract but that doesn't mean that much when you don't get paid if there's no work. You've got this.

      There will always be debates about whether to prioritise debt repayment, true expenses, a YNAB buffer (living off last month's income) or an emergency fund. Ultimately, money is fungible so whichever you choose, the money can be repurposed as needed. Go with what makes most sense to you psychologically.

      No job is ever 100% secure but those of us working contract have to pay extra attention to cashflow. Arrears are one thing but there's no point in going weapons hot at debt repayment if it could potentially lead to an even tighter spot down the line. 

      Good luck.

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      • Yes I can
      • yesican2020
      • 4 days ago
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      monkeyhanger  Thanks.  I definitely learnt this the hard way when COVID hit - I was new to working for myself (2.5 years) and had been fine the first year but had a tough second year.  It was turning around in the six months before COVID, but I hadn't rebuilt the coffers.   Fortunately my current contract is guaranteed income regardless of the volume of work and COVID. 

      I'm definitely going to prioritise income replacement instead of going hard on debt when the arrears are paid off (by the end of October).   Making hay while the sun is shining.   How did you calculate the funds for your No Fox Given? I'm thinking a 'bare bones' month and a 'normal spending' month scenario, with my first target being a low bones one.   I'm due a $2.3k windfall in late November so am going to put most of that into my income replacement category. 

      Like 1
  • So, it's the end of the month, and you planned $500 for your grocery ... expense and need to carry that balance forward to next month.

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  • Yes I can said:
    more and more funds are sitting in my bank account and I am having money for bills before they arrive - even if I don't pay them.  

     You're aging your money! As others have pointed out, that number will drop when you have a big outflow, but that's ok. In my budget, Aging your Money looks like larger account balances, and categories for jobs that might not be needed in the immediate future.

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