Projecting the Future (Months)
[Sorry in advance for the rant, there IS a specific use-case and question in there, the rant is only if I'm correct in thinking that there isn't any clean way to do it, and I have to use one of the awkward hacks I listed below.]
[This might be a restatement of the issue over the "Age of Money" implementation and not having the option to rollover negative balances nor to have your income be "Available Next Month".]
I have a very stable job with extremely predictable income. It includes numerous seasonal bonuses. (Four quarterly, an annual, two stock purchase plan payouts, and one stock vesting time period). With the new YNAB, I am finding that giving every dollar a job, and balancing "value-add" categories like retirement/savings vs vacation vs monthly "fun" money is a nightmare.
What I expect and want to do: project out the next year's income, use (and adjust) a monthly budget for "every month" categores like bills and groceries and "fun" money, then fill out categories like Retirement, Christmas presents, Property taxes, vacation, etc, at various points, and make sure I've given every dollar a job, and am balancing my priorities how I planned (e.g. 15% towards savings in the next 12 months, to make up an example.) And, of course, that everything is funded at or before when the money's needed.
I get that YNAB's philosophy is probably a bit different - but don't really understand the justification for the current narrow implementation of that philosophy?
As far as I can tell, some huge minority (majority?) of YNAB users are using a "Buffer" category or "Income is a negative expense" hack to get around all the weird issues with the current month caused by the strange inability of the software to allow you to presume you know what will happen 5 days in the future. Which is great and all *for the current month*.
But the combination of that with the
* Inability to future-date transactions
* See what WILL happen if all the scheduled transactions happen in order
* Can't roll-over negative balances
Means that trying to simply do rule number one on a month 3-6 months away is a nightmare. At least if you have difficulty ignoring a giant red number where you prefer to see a 0.00.
The only hacks I can think of are:
* ignore the red number, (plus use income as negative expense), and just ensure that Budgeted in [Month] is 0.00? (Ugh, I hate the red number.)
* Manually create escalating "Buffer" negative values, that manually get larger and larger every month, and then as real money comes in, if you want to revisit a future month, you have to manually correct each and every "Buffer" value.
You have gravely misunderstood what the Income for Next Month category hack is about, and it sounds like the YNAB method does not suit what you’re looking for.
If you’d care to learn about how the YNAB method works, many of us would be happy to share. Concerns about the current version of the software exist. But regardless of disagreements about the software, most of us agree that the method is life-changing, when you’re ready for it.
There is no need to forecast when income is consistent because expenses should be normalized. You already know money will be there when you need it, as that's baked into the monthly budgeted amount. Adding up entries across future months will obviously total the desired target amount.
When income is inconsistent in timing (e.g., bonuses) but consistent in that it will come (i.e., "stable"), use a Deferred Income approach to normalize income to a consistent monthly amount. If you get a $6k bonus every 6 months, put $5k in the DI category, leaving $1k to mix with your normal income (and budgeted to normal categories). In each of the next 5 months, return $1k to TBB from the DI category.
Your budget targets a constant outlay that is $1k higher than your normal income. No need to forecast because the effective income is constant. (See the first paragraph.)
Okay, let me explain a little better:
One, the goal is to create the best possible budget of TODAY'S money that I can, relative to our family's goals. I've been using YNAB for years, and I do follow the process, more or less. All I am trying to do is give myself the best possible financial advice on how to budget all of my dollars IN HAND.
Think of the projection part like an escrow account. Along with a variety of irregular income events, I have a variety of irregular expenses. Hopefully, we can all agree a simple escrow projection is required to know the amount that needs to be set aside each month. (HOAs and banks tend to add "minimum account balance" to that). Escrow is simple enough. However, I believe it is all upside to have an even more accurate accounting of the complex income + expenses that are occurring at irregular intervals in my household.
Imagine if you tried to make a weekly budget work with the current YNAB, if YNAB were set for weekly intervals instead of monthly? Of course it can be done, but would it truly be just as good, for you? Is monthly some special sacred interval? For everyone?
Before: $10/month income, $7/mo expenses, $2/mo "escrow" expenses, 1/mo savings.
After signing up for the stock purchase plan (SPP): $8/month income, $7/mo expenses, $2/mo "escrow", every 6 months +$15 (+$2.50/mo worth).
In the after case, I'm getting more income total, and my base pay hasn't even changed, it is just that I'm setting it aside for a time. Sure, I could tell my wife that I don't need to forecast when the "escrow expenses" are due compared to the SPP income, and that we "should" just cut our expenses for a time (to $6/mo). But an "escrow projection" that takes into account BOTH income and expenses is obviously even better (with a minimum account balance based on our family's risk assessment and tolerance).
I would like to be able to do that "escrow projection" within YNAB, and indeed could do so with YNAB 4. It seems much harder to do within YNAB 5, and I'm open to suggestions.
I also think I've figured out a hack that will work well enough for me... shrug. Writing it out helped me think, lol. If nothing else, it will work better than not forecasting income, only expenses, and treating my deferred paycheck money as windfall. (I can treat much of it as windfall, but now that the SPP allows 10% contribution, I can't afford to just ignore ALL of that money.)