Is there a better way to do this?

I am trying to reconsider how I think about money.  The way YNAB is set up to work, at least the way it works for me, encourages me to spend most or all of the money in a particular category.  For the foreseeable future, I'd like to do something different -- I'd like to put a layer of deep mindfulness between me and any negotiable expense.

I have been a YNAB user for more than a decade, and it revolutionized my finances.  I have funded categories every month and it has worked brilliantly for me. But I find myself thinking: The month is almost over and I STILL HAVE MONEY LEFT IN BUDGET X!  Do I want to carry it over, or buy something with it?  (...starts trolling on Amazon...)

Instead of: Am I budgeted for this? SPEND! I am aiming for a mindset of: Do I need this? Do I want this? Have I investigated all my options? What is the least I can spend without compromising my quality of life? 

Yep, I've set myself a mindful spending challenge for the coming year, and I'm excited!

I should also say that I am newly retired (thank you, YNAB!).  My income is partly funded by investments, so at the beginning of the year I will be taking money out of investments to fund the difference between my income and my outgo. 

I plan to have a category in my budget called "cash on hand" where all income and money on hand will be deposited.  As I spend money I plan to move money from my "living" fund into the proper category, ala "WAM."  

For instance, while my rent and certain annual insurance premiums remain static, and will be funded as such, categories such as food and entertainment are flexible in that I have some control over how much I spend.  So I'm funding rent and insurance, but not the more flexible categories until I actually spend money in those categories.  I'll play WAM to fund these categories from that "cash on hand" category.

It is my hope that this will motivate me to be much more mindful about how I spend my resources and what I bring into my life.  I am positive that this mindset will become automatic at some point, but until then I need some extra motivation to keep me focused. I can tell you that watching that "cash on hand" category go down over the course of the year will be very motivating!  

So, what do you think? Is my way of doing this the best way? Are there better ways to set this up to track my (hopefully) mindful spending?

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  • It sounds to me you just need to examine your categories, perhaps being a little more granular or updating for current interests. I think your suggested approach of "Don't plan, just WAM as I go" will have the opposite impact from the mindful spending for which you're hoping.

    Like 1
    • dakinemaui I too would imagine the big pile of money, meant to WAM from, would be easier to use up,  much faster then different categories....

      Like 1
  • I think I'm asking for a way for YNAB to support my mindset goals instead of fitting my thinking to the way YNAB works.  Once my mindset changes, it makes sense to go back to funding each category each month.  I was hoping that I could use YNAB to teach myself mindfulness. 

    Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 4
      • Reported - view

      Powder Blue Trumpet The way to change your mindset is to think about what higher priority goals you could accomplish with that money if you don't spend it.

      Figure out which of your goals would excite you to be able to achieve faster, and ponder that when thinking about needlessly spending money just because it's in the category.

      Like 4
  • If you want to spend less on a category, put less in the category initially  and then don’t overspend that amount. 

    Like 2
  • Y'all, I know this.  I'm just trying to figure out if YNAB can be used in support of this, and if so, did I set it up right or is there a better way.

    Like
      • WordTenor
      • Not throwing away my shot.
      • WordTenor
      • 2 mths ago
      • 6
      • Reported - view

      I mean, no you did not set it up right and yes there’s a better way. 😂 What do you want? To be told your way is the best way to achieve what you want? It isn’t! But if you’d like someone to pat you on the back about it try the FB group; they’re great at that. We’re trying to help you achieve your goal of mindful spending, which means pointing out that the way you want to go about it is unlikely to get you there.

      You say you’re looking at your categories which means, great, step one achieved: you’re using your categories to guide your spending. Step two is to make sure the categories have an amount in them which supports reaching your bigger goals. If you feel like your spending is not mindful, the mindfulness is found on the front end of what you choose to fund. (And then in the individual choices to change that initial plan .)

      Like 6
  • Obviously financial goals are a very individualistic thing.  I think all we can offer is our own personal mindset.  The only feedback I have on your specific proposal is that it sounds much more likely to have the opposite effect on reducing mindless, discretionary spending.  If anything, seeing $50 left over in the Dining Out category and spending it just because you know you have it, is much more mindful than WAMming from a slush fund all year.

    From my own personal YNAB use for 11 years, my financial situation and cash flow has changed more times than I can count.  If I didn't have YNAB, in any of its iterations, I'd be dead in the water by now.  But how I choose to progress is I make up my own little "challenges" for myself.  I might do one a year, one a month, or three times in one sitting because a certain situation presents itself.  They are often more arbitrary than researched, but sometimes they are based on financial wisdom I've learned here and elsewhere. Here are some examples:

    As my cash flow increased in the last couple of years, I chose a few discretionary categories to budget the "average" for every month.  That is not a built-in YNAB goal, but I use an emoji symbol to remind me that's how I chose to budget that category.  My reasoning behind this, was these are historically categories I underfund, and then regret it later because I don't have the money when I need it.  However, my goal is definitely not to spend it all as quickly as possible.  Sometimes I check my own progress by looking at previous months and comparing the average budgeted to the average spent.  Two years ago they were almost always the same, indicating that I was often zeroing out the category (probably by wamming).  For the past year I've seen that gap grow larger and larger each month, signifying I'm saving more now than in the past.  It also helps me relax a bit when making decisions like, spring for the more comfortable rental car on vacation, park closer to the airport, buy a ticket to that special event, etc.

    I set annual spending goals for myself on other expenses, and "ride the wave" as I go, trying or hoping to keep the month's outflow in line with what is available.  If it is not possible, then so be it, YNAB will help me get back on track going forward.

    After one of my two dogs died, and I adopted a new one a few months later, I set up a new plan to self-insure for vet expenses for both of them so that in their senior years I'm not faced with a huge financial/ethical hit again.  I made up my own formula of a base amount funded per dog per year, plus an addition each year based on the dog's age.  I have no idea how this will support their healthcare expenses going forward, but I'm giving it a try.

    I'm trying to escalate payments of a car loan by increasing my payment by 10% each month.  Again, no clue how long I can sustain this, but it's a personal challenge I'm trying.  

    I could go on and on.  I don't need YNAB to always tell me what I should be saving or spending in a category.  Sometimes their tools really help, and sometimes I come up with my own, and often they complement each other.  You should do some mindfulness exercises on setting your own goals and challenging yourself to meet them, and forgiving yourself along the way if you don't, and adjusting as necessary.  THAT'S the power of YNAB, but the rest is up to you :).  Good luck in the new year!  We all need it...

    Like 2
  • Powder Blue Trumpet said:
    The way YNAB is set up to work, at least the way it works for me, encourages me to spend most or all of the money in a particular category.

    I love having money left over in a category. My overarching goal is to save. To grow my net worth. I can then decide to spend extravagantly in that category or to use those funds elsewhere in a higher priority category. More likely, I'm going to move them to a savings category. Don't you dare blame YNAB for your motivations. It is just a tool to optimize your funds the way you see fit.

    Like 4
    • Superbone Blame? I was merely asking if anyone had suggestions of a better way of setting up YNAB to meet my goals than the one I had implemented.  Blame?!  I was explaining how I found myself unmindfully using YNAB (and I believe I was pretty clear that this was on me and not on YNAB, which has been a God-send to me) and, having made a decision to practice mindfulness, I outlined a way I found to use it differently.  Then I asked if anyone had better suggestions than the one I came up with.  Blame? Really?

      Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • Reported - view

      Powder Blue Trumpet Hey, I just quoted you. It sounds like blame to me. YNAB "encourages" you to spend all money in a category? Really? I merely suggest you look inward. YNAB encourages good habits. It doesn't enforce them.

      Like
    • Superbone And I quote: "... at least the way it works for me..." 

      I have identified a personal mindset I'd like to change.  I am asking for input from my YNAB community for input on better ways of doing this using YNAB as a tool than the one I came up with.  That is all.  

      Thank you all for your input.

      Like 1
      • WordTenor
      • Not throwing away my shot.
      • WordTenor
      • 2 mths ago
      • 7
      • Reported - view

      Powder Blue Trumpet Or another way to think about it is sure, maybe you do have categories that you want to basically spend to $0 every month. My dining out category is like that for me. It has $25 in it right now and I'm stoked. It's going to be in the high 40s here the next couple of days and because of COVID, I will only go to a bar if I can sit outside. So yay me, here are a few beers to have with friends at the end of the month. I'm not looking to save that money AT ALL. Each month, I budget an amount to Dining Out that matches my overall goals and if there's money in there heck yes I'm spending it. 

      The mindfulness part of the spending comes when I choose how much goes in that category, and then again when I choose to limit myself to this last $25 and not, say, to pull from "Income Replacement" to have one extra night out this month. 

      What matters to you more than your discretionary categories? In retirement, that might be leaving a legacy, or buying a vacation home, or traveling the world, or simply not outlasting your money. If you've budgeted on the front end in a way that prioritizes those things, then who cares if you spend your shopping money on Amazon trinkets? Conversely, if you feel like you have too much money for Amazon trinkets, then figure out why that's bothering you and what your psyche is telling you that you'd rather be funding and fund that instead.

      Like 7
    • WordTenor Thank you for your input.  It's helpful!  Right now I find myself in the position of not really knowing how much (or little) to budget in each category because of how "non-mindful" I've been to date, so I figure if I have to consider each and every purchase then over a few months I will come up with a target for the categories and can then start populating them with meaningful amounts.  I'm really hoping I can use YNAB as a tool to achieve this.

      And you're right -- a "what-for" is very important when I'm faced with the temptress that is Amazon!

      Like
    • Superbone Yes!  This is the core of my mindfulness journey!  Now to set up a tool to help me achieve it! 

      For me, putting $25 in a category feels like deprivation and hunger.  Whenever I overshoot that limit, I feel like I've failed myself.  Having a zero limit, and having to value each purchase against my "Income Replacement" feels... I don't know, thoughtful rather than destitution.  $25 is negative -- $0 is positive! This is how my mind is working these days, which I hate, which is why I'm trying ways to change it.  Mindfulness, not desperation.

      Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • 2
      • Reported - view

      Powder Blue Trumpet It is definitely a balancing act. I agree that too little is deprivation. It also depends on what stage of life each of us is at. Early on when money is tight, the category balances are going to be tighter.

      At your stage, in retirement, you hope to be able to live comfortably with some freedoms. You just have to make sure you spend in a way that your retirement funds/income last the rest of your life. The beauty of retirement is you can adjust as you go along. Some years might be spendy where you take a lot of vacations whereas if you feel you're spending too fast, you can slow down in other years. You are able to make course corrections along the way.

      Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • Reported - view

      Powder Blue Trumpet How did you do it way back before YNAB?  Did you look at your checking account ATM receipt to see what you "could spend?"  How did that work out?  For that matter, you could just make an account for your regular fixed outgoings (rent, insurance, etc.) and another account for everything else and be done with it.  

      I gave a bunch of long-winded examples of how I set baby goals and challenges for myself, while also embracing what I want to and will spend while still setting certain limits for myself.

      Also, about retirement income, I'm not sure if you meant you're withdrawing a whole annual amount early in the year, but if that's the case, rethink it.  Funds are best left where they can continue to grow as long as possible.  Plus, smoothing the withdrawals out over the year will help keep your budget more predictable each month, not to mention potential estimated tax benefits as well.

      Like
    • Annieland Heh... I was a financial mess pre-YNAB.  I was definitely living on the edge, and I have no idea how I got along. My finances were definitely a white-knuckle ride. YNAB was an eye opener.  I've set many goals and challenges for myself over the years, and this mindfulness money project is one of those. I know I'm weird, but I find them fun, and I learn a lot about myself in the process.  The money saved is almost the icing on the cake!

      As far as taking money out annually, it's not a large amount.  I have monthly income that covers my daily living expenses, and the cash I take out annually funds certain specific categories whose amounts don't fluctuate much, most of them due annually. This gives me a little bit of wiggle room in my monthly budget in case I need it. It feels good knowing those expenses are covered, so I may sacrifice a small amount of interest but for me it's cheap peace of mind. I start the year with all my annual expenses met, just like I start each month with my monthly expenses met. For occasional infrequent expenses such as vacations or a computer replacement or a car I'll just keep that money invested until such time as I might need it.

      Funding a retirement definitely requires a different mindset and different planning strategies!

      Like 2
    • Superbone Yes, financing a retirement is a completely different mind-set for sure! It's scary as hell knowing that just going out and getting a better paying job (or a second job) is not an option if funds get tight or if I make a big mistake with my money or want to blow it on something stupid (not that I would know anything about that...ahem...). I do need to make sure it lasts.  My mom lived into her 90's, so my family history says I have many years to fund.

      Although I began my minimalist journey during some trying financial times (there was that time I was down to my last hundred bucks, for instance) I also find it soul-satisfying. This current mindful journey is not about saving money although I am sure that will be one of the outcomes. It's a journey to myself. I am doing this because I want to, with full knowledge that there are many people who need to take on financial challenges because they have no choice. I will be doing some thinking how I might best support others with the excess that is generated.

      Like 2
  • I'm not a fan of the many "This is the way" replies you have received however,  how does your approach differ from not having a budget at all?  If you are deciding purchase by purchase then other than the set bills you have, how are  you managing your priorities?  That has never worked for me but ymmv.

    Like 2
  • There are a ton of ways of achieving goals such as mindful spending as demonstrated by the posts here. I think it would be far too easy to start overspending in one category and pulling it out of the big pile and then when something really important to you pops up unexpectedly at the end of the month, you have nothing left.

    One thought I had on how to use YNAB is to use other parts of the software to help. What if you colour coded the categories using the flags to denote which ones you can spend to zero with no implications? Others can be ones that you intend for longer term use that should have 10% left at the end of the month to help ensure you have enough available later on. 

    When it comes to mindfulness, i think in the same terms as  WordTenor , which is that it starts ahead of time. If I evaluate each purchase independently, how can I compare it to other priorities I have for my spending? Mindfulness to me is making sure that what I purchase is in line with my goals, intentions and desires for how I live my life. The pile of money gives me no sense of what my goals are because there is no definition to it.

    Powder Blue Trumpet said:
    Having a zero limit, and having to value each purchase against my "Income Replacement" feels... I don't know, thoughtful rather than destitution. 

     What makes the Income Replacement category better than the individual category it is in? What would you need to do to make the category have this same thoughtfulness feel to it? 

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  • Powder Blue Trumpet said:
    having to value each purchase against my "Income Replacement" feels... I don't know, thoughtful rather than destitution

    You should evaluate each purchase first against its relevant category. If there insufficient funds there, then evaluate against the LEAST important thing with funds in the budget. If that is less important than the original category, then you SHOULD take those funds.

    Leaving funds in the least important category while something more important to you goes unfunded (and therefore unpurchased) is the opposite of meaningful, "priority-based" spending.

    Like 1
  • Navy Blue Pegasus said:
    What if you colour coded the categories using the flags to denote which ones you can spend to zero with no implications?

     Hey, that's a good point.  A while back, when I started using some emojis, I put a 🔒next to a bunch of categories.  These were to remind me these are NOT wammable categories.  This is a plan I am committed to, or a category balance that needs to be what it is.  Thankfully, I don't WAM a ton as of late, but they're still there to remind me!

    Like 3
    • Annieland Wait... where did you get a padlock emoji?  It's not showing up on my options, and I LOVE this idea!

      Like 1
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • Reported - view

      Powder Blue Trumpet For me (Mac) it's at the end of the Objects section.  There's a bunch.

      Like
    • Annieland I have a PC.  But I just copied yours from above, worked great!  Thanks for this terrific idea!

      Like 1
      • WordTenor
      • Not throwing away my shot.
      • WordTenor
      • 2 mths ago
      • Reported - view

      Powder Blue Trumpet On windows the emoji keyboard is launched with windows + ;

       

      😁

      Like
      • Melissa
      • Routinely questioning every assumption I have about my budget, my spending, and my savings habits.
      • todays_mel
      • 2 mths ago
      • 1
      • Reported - view

      Annieland Great Idea to use the lock emoji icon! 

      For categories that I allow myself to WAM from (, or that have leftover funds at the end of the month which can either stay or get moved elsewhere) I use the broom emoji:  🧹

      Like 1
    • WordTenor Yeah, I found that.  But you MAC users seem to have more and cooler emojis!  No brooms, no padlocks.  Stealing them both. 

      Like
    • Powder Blue Trumpet OH, WAIT -- I FOUND IT!!!! SO MUCH GOOD STUFF!!!!!

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      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • 1
      • Reported - view

      Powder Blue Trumpet Anytime!! Yay someone found a comment of mine useful! 🤣🤣🤣

      Like 1
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