Goal Dates at the 1st of the Month and Proper Month Budgeting
I was curious as to some opinions on this....
If you've set a monthly goal (let's say your rent or mortgage as an example) that is due on the 1st of every month. Let's pretend it's January and you are starting to save for your February 1st rent/mortgage. Do you tend to put that money into your January budget as you build it, or do you skip ahead to February and place the money in that budget since it's due on February 1st? Or.... Does it really even make a difference?
This is such a great question! The short answer here is that if you've set a Needed For Spending goal (which is the goal type I would typically recommend here), you can fund the category for your February 1st payment in January or February!
With something like a mortgage, where the payment amount is typically set and you won't have available funds rolling over from month to month, I would likely toggle into the new month to fund the goal for that month there.
That said, with Needed For Spending goals, rolled over available amounts will count towards your goal - once the month has actually rolled over in real-time!
So if you decide to fully fund the goal for February in January, those available funds will count towards your monthly Needed For Spending goal, but only once the month rolls over in real-time!
I hope this helps, but feel free to hit us with more details or questions!
A lot of people prefer to put their money in the current month. It avoids a problem called Stealing from the Future. You can search the forum for more information. It tends to be more of a pain than it is worth and any leftover funds roll over so not a big deal to do it in January.
You may also wish to consider getting one month ahead by using a "Income for Next Month" category process. Again, there are lots of posts on it which do it much better justice than I ever could. As you build towards living on last month's income, you put the income into the Income for Next Month category. Then, when the month rolls over, you release it and budget. Once you are at that stage, it can be a game changer. We are not there yet because we are focusing on debt repayment but I can see the value in it.
once the month has actually rolled over in real-time
What a pain.
That's the reason I don't use any of the needed for spending goals on a monthly basis.
The reason I don't use them on a long-term basis is that they require either category bloat or multi-outflow calculations (I go with the latter, which YNAB doesn't support).
Like satcook I put it in the month it is due to be paid.
The first thing I do on payday is to fund my immediate obligations in the order they will be paid, so I have a couple of bills that come out after payday of February, they will be funded first, then I'll skip forward to March and fund my immediate obligations there. That way I know that they are funded for when they are due and I can pop back to February and start funding any true expenses or topping up the grocery budget for the remainder of February.
But really there isn't a wrong answer - it's whatever works for you. For the first year of YNAB I funded March's mortgage in February's category, following a fresh start I started doing it the way I do it now, which fits better with my mindset.
The ultimate goal though is to be funding April's Mortage with February's paycheck. That's my target for 2021.