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?
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.
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.
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.
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.
➡️ 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.
This is what I do. Makes budgeting very boring but I think that’s the point. Finances should be exciting like a carnival ride.