We took True Expenses/Goals to the next level...
We have been using YNAB for years and we were always having to cover overspending in our Groceries and Going Out categories. Our idea of how much we should spend in these categories was not matching up with reality! Long story short, or maybe not so short, we finally realized that it wasn't so much our idea of how much we should spend that was wrong, but that we needed to redefine our spending. This is just a psychological point and it really sounds like self-deception, but hey, that's what budgeting is all about!
The reason we continually overspent those categories was because pretty much every month has holidays and occasions that inflate those categories. We had always used Savings Goals to save for future expenses like car registration and annual insurance payments, but our light bulb moment was when we realized we needed to use the Goal By Date feature to make goals for every occasion throughout the year. Now we hardly ever overspend and don't feel like failures!
Because we always felt like we were failing, we never seriously used YNAB, and it was relegated to kind of a lame tracking system for our debt. I guess we just hadn't really taken Rule Two to heart...and now that we actually have budgeted for our true expenses, we can feel confident paying off our debt in large chunks.
Here are our True Expenses/Savings Goals categories:
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Well done! That's a big win.
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Nice! I also have a "seasonal decor/entertainment" category to help out with holiday get togethers. Feels great when the Easter Bunny doesn't have to hit the Grocery category.
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This is a great idea. I'm not going to list every occasion as you have, but will create a target balance item to handle them. Will come in handy for extra groceries/gas for cabin trips. Thanks!
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Alemap I definitely took an overkill approach to the categories, mostly so I could use all the emojis. :) But also so I can pinpoint how much we budget/save for each occasion.
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Powder Blue, love those emojis! And, totally get the reasoning for including all of them. Always interesting to see the different ways that folks tackle challenges in YNAB!
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Emojis on my category names... *mind blown*
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Love it! Yes, there's so much emotion and psychology wrapped up in money and budgeting! The costs associated with holidays can kill the joy. Early on I added a 'Hospitality' category that lets me host dinner guests, book club, out-of-town family etc. (not now of course, but BEFORE) without being annoyed at the extra costs. Less stress! More joy!
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I personally would have just increased my monthly Groceries and Going Out categories to match my spending but this method allows you to know exactly why you're spending what you're spending, so kudos. And it's also a good example of why they call it personal finance. Different strategies work for different folks. YNAB allows you to track as much or as little detail as you prefer!
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Superbone Yes, it is nice to see exactly why, but it also gives me more pinpoint control over how much I want to spend on each occasion. I would be afraid if I just increased my other categories, over time I would end up spending more than necessary.
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I spent some time on a spreadsheet figuring out how much we spend on holidays and birthdays and created a Spend By Date goal that covered the whole year. Christmas is kept separate. But those don't include the extra you spend on eating out, hosting, decorations, etc. I'm going to keep mine as is for now and see how it works for us in the long run.
