I feel like I have too many categories -- help!

I'm just entering my second month of using YNAB. I've watched a ton of videos from YNAB itself and fellow users, but I feel like I can't get a handle on my categories. 

I have "daily spending" categories at the top, which is where I put clothing, beauty, etc. Then I have another category called "Planned Spending" where I save up for big purchases. 

I have savings that go into my actual savings account, which is in a category called "Freedom Funds" (I got the name from someone on here :P).

I have fixed month below all that, which is where my rent and car payments go. Then I have a small "fixed occasional" for my bi-annual insurance, YNAB subscription, etc. 

Lastly I have the CCs and loan principles I'm paying off, followed by the separate CC category YNAB created for the only CC I have added as an actual account (the rest are just "tracking" accounts because I don't use them).

Below all that is a Wish List of future things I want to save for. I can collapse this one. 

I've reordered the categories accordingly so the things I look at the most are at the top, but I feel like it's so much scrolling! I want things neat and orderly. Any feedback from those who have gotten a handle on their budget items? 

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  • Its okay to have alot of categories. I have 114 categories. For me, it got better when I got 1 month ahead. Then on the first, it was a single step to fund everything. My groupings are:

    • Monthly Bills: Bills every month
    • Irregular Bills: Bills not every month
    • Life: Splurge, Haircut, Entertainment, Groceries, Get together, Coffee/Liquor, Gas, etc
    • Insurance Funds (General Savings): All Insurance Bills
    • Sinking Funds (General Savings): Dated Sinking funds (Valentines, BDays, Holiday dinners, vacas, etc)
    • Bucket Funds (General Savings): Non-Dated Sinking funds: Clothing, Maintenance, Fun Money, Technology, etc

    Every couple months I will rebalance checking/savings to ensure checking has enough in it.

    In theory, you should not need to scroll unless you are funding. When spending it should show you how much is in the category. 

    Not sure if that is of any help.

    Like 1
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 6 mths ago
      • Reported - view

      RIP_MSMoney That's very helpful! Good point on the whole being a month ahead. My Age of Money is about 15 days right now and I can't wait to hit the 30 day mark and beyond. Thanks for sharing, you've given me some ideas :) 

      Like
      • RIP_MSMoney
      • Software Developer at Microsoft
      • rip_ms_money
      • 6 mths ago
      • 3
      • Reported - view

      Pineapple Gal One thing I will mention is that 30AOM does not mean one month ahead. To be clear, to be one month ahead, you want a category that you place all your paychecks into. When next month happens, you release those funds into TBB and use that to fund next month. It means you live off of last months paychecks. 30AOM doesn't actually mean you are in that position. Hope that helps

      Like 3
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 6 mths ago
      • 1
      • Reported - view

      RIP_MSMoney I've read about a few people creating a category to store their paychecks and then releasing it like you say. I'm new to the concept. So far, I've been taking my weekly paychecks, saving 25% of them, funding upcoming expenses, then paying down debt with the remainder. 

      Is it okay to send all my money straight into TBB and fund as far into the future as it gets me, or should I hold it in a category like that? Is the paycheck category key to truly being a month ahead and funding all at once? 

      Like 1
      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 6 mths ago
      • 4
      • Reported - view

      Pineapple Gal so, the thing with budgeting into the future with each paycheck is twofold:

      First, on a practical level, there is a known quirk (some might say flaw) in the software where once you start budgeting past the current month, *only* the furthest-most budgeted month's TBB box is accurate, and it is possible to budget more money than you actually have and not realize it because the current month's TBB doesn't turn red, only the furthest month does. Keeping all your money in the current month by using a holding category eliminates this problem.

      Second, on a psychological level, there is a shift that happens when you stop looking at your money at the paycheck level and start budgeting a month at a time. "Breaking the paycheck to paycheck cycle" isn't just about living paycheck to paycheck, it's about budgeting paycheck to paycheck too. You see your priorities in a new way when you can look at all of them at once instead of picking and choosing what gets funded from this paycheck and what has to wait. 

      Like 4
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 6 mths ago
      • Reported - view

      Vibrant I appreciate the insight!

      I noticed that I had to flip to a future month to ensure TBB is accurate -- I'm glad it's not something I'm causing somehow! I'll definitely spend some time looking into this method.  

      Like
      • RIP_MSMoney
      • Software Developer at Microsoft
      • rip_ms_money
      • 6 mths ago
      • 2
      • Reported - view

      Pineapple Gal It was a huge game changer for us! We were half a month ahead. So the last paycheck of Feb paid for first half of Mar. So we kept that up but instead took the extra savings and added towards the "One Month Ahead" category. When that category reached one paycheck's worth we were good. So we then took the last paycheck of the month and the "One month ahead" category and we became 1 month ahead from that point forward.

      From that point on we lived on last months income. Any income that comes in that month (eg Mar) goes from TBB _right_ into One Month Ahead. At the end of the month (eg Mar), we release those funds back into TBB (eg in Mar), move to the next month (eg Apr) and budget away. Left over funds go towards any savings/wish farm goals. But the best part is the whole month is done and funded as of DAY 1.

      Best way to use the software (in my mind) is keeping TBB at 0. Get that money out of there and into a job. It is closest to 0-based budgeting. Give every dollar a job. If you don't, any category that goes neg will/might pull from TBB and you lose sight that you are not within your budgeted amounts.

      Like 2
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 6 mths ago
      • Reported - view

      RIP_MSMoney I'm going to try it! I've been keeping TBB at $0 by assigning every dollar to a category as soon as it comes in, but that leaves me with some things already funded for next month (April) and others not, so I feel like I have no idea how far "ahead" I am with my paychecks. 

      As far as what I put into the One Month Ahead category, do you only put in the amount needed to cover your monthly expenses? I ask because I have a lot of categories related to saving and paying down debt...

      Let's say I had a major paycheck come through. Would I put all my money into One Month Ahead and wait to plan for debt payoff/savings come April 1 or would I only put in enough to cover April's expenses and divvy up the remainder across savings/debt payoff today? 

      Thanks in advance to both of you! This forum is such a help. 

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      • RIP_MSMoney
      • Software Developer at Microsoft
      • rip_ms_money
      • 6 mths ago
      • 1
      • Reported - view

      Pineapple Gal When one month ahead, my perspective, is that Mar is budgeted and done with Mar 1st. After that point ANY income goes into One Month Ahead and will be dealt with Apr 1st. So in your scenario, come Apr 1st, you pay all requirements and be left which this huge lump sum to determine what to do with.

      I see several benefits with this:

      • Forces you time to think how to spend
      • Keeps the logic simple (Budget is done/funded on 1st; now just roll with punches)
      • Funds cover any expenses that would actually come from other accounts
        • An example of this for us would be clothing which actually lives in Savings. We reconcile at end/beginning of month to ensure accounts have sufficient funds. So if we spend clothing funds, the One Month Ahead dollars living inside Checking would "technically" be covering those costs. If we instead moved those funds to some Debt and also PAID that this month it might lower our Checking to a point we were not comfortable. (Not sure if I explained that well enough)
      Like 1
      • Nicellla
      • Nicellla
      • 5 mths ago
      • 2
      • Reported - view

      Pineapple Gal I budget right into next month and the month after. I use the desktop toolkit so it warns me if the furthest month goes negative. I worry that if I use a holding category I will steal from it because its not really budgeted out. 

      Like 2
  • I've changed up my categories quite a bit. I've found that it's helped me to figure out what's going to be most helpful & practical for what goal I'm currently working on (or challenge that's tripping me up).

    For example, just starting out I honestly had no clue about money I had, needed, or what I really was spending it on. So I needed to have lots more categories that were painfully specific: every current and future bill/expense I could possibly think of got its own category. I put the due date in the description and assigned goals to each to make sure I was saving up enough money. 

    I realized quickly that with this type of list it was easiest to have things sorted by when they were due--weekly, then monthly, then annually, then savings--with the due dates in chronological order. That worked because my highest priority was making sure I was funding every item in full and on time. 

    As I got more wiggle room financially and paying these items became automatic, the long list was too cumbersome. I didn't need to focus on each bill or due date anymore because I was always reliably funding them on time. So I combined them into their general categories (insurance, subscriptions, repairs). 

    I still struggled with how I was handling "fun" money, so I made that more specific. Instead of just "fun", I used about 5 different categories -- 3 to describe goals (entertainment, education, travel), 1 for impulse buys, and the other "upcoming events" so I could make sure I was saving up for plans I'd made in the future.  This worked because my goal now was learning to prioritize my discretionary spending according to my personal interests/aspirations instead of spending purely on impulse, so categories helped me quantify those values and let me recognize when I was "robbing" myself. 

    Right now I'm trying to build up savings and reach more long-term goals, so I'm yet again shifting things around. 

    TL;DR: have as many or as little categories as you want if they help you reach your goals or develop the spending habits you want.  Don't worry about whether they're "traditional" or not--just if they're effective. And don't be afraid to mix things up later as your priorities shift. 

    Like 2
      • MadDog
      • Navy_Blue_Pegasus.2
      • 6 mths ago
      • 1
      • Reported - view

      Gray Network This is exactly what I did too. Last year we reorganized our budget to reflect a more "activity based costing" type approach. It resonated more with my husband, I like it overall and it helped us get a better idea on what life activities we are spending our money on. Are we eating all of our money or are we going for trips or playing golf or what have you? I think that categories evolve over time as you become more comfortable with what you are trying to achieve.

      Like 1
      • Mx Emmin
      • Orchid_Banjo.5
      • 6 mths ago
      • Reported - view

      Gray Network  I don't have a specific "fun money" category either, I divide it up based on what I'm doing - broadly speaking, into either "social spends", "online shopping" or "hobbies" 

      Like
  • It's not about how many categories other people have, its about how many categories work best for you

     

    I have 8 top level categories - 4 I interact with frequently, and 4 I don't 

    The four I interact with are:

    Weekly Spends (e.g. groceries)

    Monthly Spends (e.g. rent)

    Yearly Spends & Savings Pots (e.g. Christmas)

    Dog

     

    The four I don't are:

    Credit cards (I only have one CC left and it doesn't carry a balance, it's just for large/online purchases)

    Vacation

    Wish List (when I start funding one, it moves to Savings Pots)

    Old/Defunct Categories (some people use the "hide" function for these but I prefer it this way, when I make a new budget I'll delete them)

     

    Weekly Spends has 10 categories

    Monthly Spends has 10 categories (although one subscription is on its final month)

    Dog has 4 categories 

    Yearly Spends & Savings Pots has 26 categories 

    Vacation has 1 category (I'll get round to expanding it once I'm a month ahead maybe)

    Wish List has 6 categories 

    Credit Card technically has 2 categories, I closed one CC but cant get rid of or move that category? But its hidden down at the bottom so doesn't bother me unless I look at it

    Old/Defunct Categories has 5 (soon, 6) categories 

     

    That's a total of 64 categories 

     

    And it could be 264 categories if I wanted it to, as long as I find it useful

    Focus on what works for you, not what works for other people  :) 

    Like 3
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 6 mths ago
      • 2
      • Reported - view

      Mx Emmin said: It's not about how many categories other people have, its about how many categories work best for you.

      ^ this is spot on.

      I have discovered that I need a simplified budget structure. I tend to group a lot of like items together rather than create a separate category for each and every item. I find a plethora of categories simply overwhelming and distracting. It's not unlike being in the shampoo aisle of a huge store. My eyes start to spin from all the options and colours.

      I have a total of 32 categories grouped under these master groups:

       

      Admin holds my categories like Income for Next Month, Reimbursement categories for family, office, and social groups, and a small slush fund to keep my reimbursement categories at zero until I'm repaid.

      Like 2
  • Pineapple Gal said:
    As far as what I put into the One Month Ahead category, do you only put in the amount needed to cover your monthly expenses? I ask because I have a lot of categories related to saving and paying down debt...

     Every penny that comes in this month goes into the Income for Next Month category.  At the end of the month, after your last income event has happened, or at the beginning of the next month, you move every penny from Income for Next Month into TBB and budget it out as far as it will go.  All your monthly expenses, all your True Expenses/savings, all your debt payments...  Everything, until TBB is down to $0.00.  If you have filled all your categories and TBB still has money, then you celebrate by moving that into the category of your choice.  

    Now, continue the process of refilling the INM category for the current month, and at the end of (or beginning of next) month, you repeat the process.  If you don't have quite enough money to cover all your expenses/savings/debt paydown/ etc. one month, then you make the call as to which one has least priority, and you short it, because you didn't make enough money last month to cover it.

    Like 3
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 6 mths ago
      • Reported - view

      Bruce Thanks for clarifying! I’m gonna try this.

      Like
  • Not a huge deal if you have a lot of categories.  This is what we have been using for the last 7 years on YNAB and largely using for 20+ years prior to that in excel.

    Monthly Expenses
            General Merchandise
            Food & Groceries
            Entertainment
            Automobile Gas
    Annual Expenses
            Clothing
            Pet
            Car Maintenance & Oil Changes
            Car Tire Replacements
            House & Yard
            Gifts
            Vacation/Trips
            Experiences
            Financial Advisor / Lawyer's Fees
            Health Insurance OOP
            Big Ticket Items

    Kid's Activities
            Volleyball
            K-12 School Activities
            College Prep/Driving
    Donations
            Church Monthly
            Charity
    College
            2015-2019 D
            2017-2020 A
            2020-2024 E
    Insurance
            Life
            Vehicle
            Homeowner's, Boat & Umbrella
    Utilities
            Electricity & Gas
            Water & Sewer
            Cell Phones
            Internet & TV
            Homeowner's Association
            House Services
            House Consumables
            Software Subscriptions
    Housing
            Principal & Interest
            Mortgage Payoff
            Real Estate Taxes
    Savings
            IRA Savings
            Car Replacement Savings
            Graduation Trips/Gifts
            Emergency Fund
            Weddings
            General Savings

    Like 1
  • Pineapple Gal said:
    Is it okay to send all my money straight into TBB and fund as far into the future as it gets me, or should I hold it in a category like that? Is the paycheck category key to truly being a month ahead and funding all at once? 

     Don't do that. Do no more than one month ahead, preferably passing through your next month income category, if necessary.  Budgeting out too far will quickly lead you to have to make constant edits of sometimes merely pennies and greatly increases the chance you will find a Red TBB within a week (Stealing from the Future).

    Like 1
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 5 mths ago
      • Reported - view

      Annieland I've heard future TBB going red without notification is the main reason for using a Next Month's Income category. I'm already in the habit of flipping ahead as far as I can every time I budget because I noticed this early on, but it is a hassle and could definitely lead to a mishap if I forgot to do so.

      I'm so sorry if I'm overthinking this :P

      How do you manage excess in the Next Month Income category? If you put $5k into the NMI category in March and assign $3.5k to cover all of April's expenses on April 01, you've got $1,500 left that can now go to May. You get a big fat check and now you've got $6k in May's category, and let's say that's actually enough for both May and June's expenses (but you don't necessarily know that until you start divvying up that money). 

      It's the first week of April, and April and May and June are already covered. That would be EPIC, but at what point do you stop stashing into NMI? 

      • Do any of you guys do the math to figure out how many months are in the NMI category?
      • If so, how many months are you shooting for? 
      • Do you put any of April's paychecks to April's debt/savings goals? Do you feel the need to cover May before April's income starts getting spent in April? 

      My thing right now is that I'm working to pay down debt. So, if you've got $6k left after covering April's expenses, and you figure out that this could cover all of May and June, and it's still only April 01, when and how much money do you decide to take out of that $6k and put towards today's debt or savings goals? 

      I guess what I'm really asking is: Once you get a month ahead, what's next? 

      P.S. I'm building up an income replacement fund at the moment, so building multiple months' worth of income in the NMI category doesn't seem necessary.

      Like
      • Bruce
      • Software Engineer
      • Bruce
      • 5 mths ago
      • 3
      • Reported - view

      Pineapple Gal 

      Pineapple Gal said:
      I guess what I'm really asking is: Once you get a month ahead, what's next? 
      P.S. I'm building up an income replacement fund at the moment, so building multiple months' worth of income in the NMI category doesn't seem necessary.

       That's it, if you completely budgeted your month and still have money left in NMI, you have to decide what to do with that money.  There's no need to keep in in NMI, because this is the month it was saved for.  Budget it here.  If you want to put a big chunk onto debt do that.  If you want to add a bunch into your Income Replacement fund, do that.

      Just budget it all out for the month, and start again by saving all the income you get this month (April, in this case) and do the same the next month.  You budget everything you need, and if you have excess, put it to the next "goal" whether that be debt, or income replacement, or some other True Expense.  Or split it evenly among them.

      Once your Income Replacement gets big enough (maybe 6 months) and all your other true expenses are sufficiently filled, and you have no more debt, then you can start thinking about investing that extra.

      Like 3
      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 5 mths ago
      • 3
      • Reported - view

      Pineapple Gal exactly what Bruce said. On April 1, you move every dollar from NMI back to TBB, and you give ~every~ dollar a new job. 

      This is why I get on a soapbox on the difference between "being a month ahead" (vague, open to interpretation) and YNAB4's rule 4 (actually rule 1 way way back in the day, I believe) of "living on last month's income."

      Like 3
      • Pineapple Gal
      • Goal-Getter
      • Orchid_Wrench.11
      • 5 mths ago
      • 1
      • Reported - view

      Vibrant Bruce Thank you both for clarifying! As of the first, I'll be using a NMI category instead of budgeting into the future. 

      Like 1
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