
What if I have *too much* money?!
Sorry, this really isn't meant to be a humble brag.
When I started with YNAB4 years ago it was a revelation. I've always felt uncertain about what I could actually spend versus what I knew I needed to save for, and what I didn't know I needed to save for but knew could get sprung on me any time, and YNAB gave me the control I needed. I definitely turned my finances around.
I've used it mostly their way, a little bit my own way (e.g. putting some side-gig cash in categories named for the side-gig, and just never spending it, rather than giving it a 'proper' job/category) but years and years later I'm now in the position of shifting over to nYNAB, starting over, and wondering what the hell to do with all the cash I've got saved up.
I know I need to make some investments with it so I'm researching that. But even so, for now I could easily just go through the next six months to a year, if not more, and budget for absolutely every category.
Or I could just stick with budgeting for next month at the start of this month, and keep all the rest of the cash in a 'to be invested' category or something, and try to live off income like I'm 'supposed to'?
Alternatively, I could just whack an entire predicted years-worth of funding into every category right now, and then never fund them for the next year. But that seems dangerous.
Advice and suggestions welcome!
-
It sounds like you need to be more intentional with your money. As you said, you are not giving every dollar a job.
Both my wife and I are in sales, so we have very variable, but also great income. We have a designated amount set aside as an emergency fund. We also have a fixed amount we call "buffer", for the rare case that both of us have a bad sales months.
Beyond that, the cash gets used for something. Right now, it's going to both extra payments on our mortgage, and investing in post-tax items.
Having too much cash is an issue. You are losing opportunity to either pay less interest on debt, or make money on investments.
Long story short... Decide how much cash you need to keep around, then be intentional with every dollar beyond that.
-
1. Budget next month in it's entirety
2. Put the remainder in an Income Replacement fund
3. Ongoing: As income arrives during the current month, stash it in a temporary holding category, then release it all at the end of the month to budget next month.
Strive for a nominal budget that is your Plan A each month. As "life happens", allocate within the month of course, but Plan A is typically more slowly varying. (E.g., when bill amounts change or priorities change.) Put these amounts in the category name for reference or Goals to allow populating the month with a couple clicks.
Consider whether your income replacement is excessive and that money would be better served going out of the budget and being invested. Budget to an Investment category and send it off.
On a larger note, are your retirement contributions in various avenues maxed out each year?
-
Blue Harvest said:
Alternatively, I could just whack an entire predicted years-worth of funding into every category right now, and then never fund them for the next year. But that seems dangerous.It's also a pain in the butt if your cell phone bill goes up $0.38/month and you have to go make that change in every future budgeted month. In theory, I could budget through at least August, but I don't want to have to deal with fiddly changes. I've fully budgeted February with January's income and that's good enough for now.
-
I read A simple path to wealth, which helped me a lot. I believe Jesse wrote things on investing as well. Then I researched “sustainable” funds and about a year ago I finally felt confident enough to start investing.
We still have a lot of money in 0% accounts, though. Quite some in an income replacement category, some more for our next car, but all with a job. I haven’t found an other place for it where it would be easily accessable and which is prefably with a bank with good ethics.