covering overspending from next month.
hi guys -
New to YNAB 4 from YNAB3. I am a bit irritated by how YNAB4 handles overspending. I have numerous categories, like utilities, where I spend a bit more in one month and a bit less in the next. So traditionally I have just put an average amount in the budget. What I liked about the old version was that if i overspent, it took from next month's budget. Then when i underspent in that category the next month, or a few months down the road, it all evened out. Or clothing, where I have a yearly amount i know I can spend and I put in the average amount each month in the budget. Now if I overspend in one category I have to pull it from another. And I lose perspective on how the category is averaging out over time. Advice on how to handle this?
You missed a version. YNAB4 was the pinnacle in the minds of many and also allowed one to carry a negative category balance, and they're now onto just "YNAB", often called nYNAB or web-YNAB to differentiate in discussion. nYNAB won't let those negative balances carry forward.
The solution to your issue is to budget the average and cover overspending. Eventually, you'll build up a surplus in the category to draw on during the high months. This is in contrast to implicitly stealing from other categories in the budget by letting a negative category persist.
Realistically, if you have enough "slack" in the budget to implicitly steal from other categories, you have enough to reallocate to keep the category positive. nYNAB just wants you to be explicit about where're you're "borrowing" funds.
It really is easier than fighting the tool.Reply
FWIW, the quick-budget button on the right gives you the average spending. If that's getting too high for your taste, don't spend so much, right?Reply
This is a controversial subject to be sure, but I think you're missing one of the crucial aspects about the current Rule 3 (the one directing you to cover overspending). There's been some reordering of the Rules over the years. I suspect it was probably Rule 4 in the YNAB3-era methodology, but I'm not sure.
You see, if you're chronically overspending a category, that's an indication that category may actually be more important to you than you originally realized or that things simply cost more than you originally estimated.
Bottom line is you set the original budget using information at the time. It was a guess as to what you would need in the future. Don't beat yourself up for not being able to predict the future with absolute certainty. Just use this opportunity to revise the plan with this new information in mind.
Bear in mind that you should be reallocating from lower priority categories. After you've reallocated from there to the higher priority that is going overspent (e.g., Clothing), your revised budget is a better reflection of your priorities! That's a GOOD thing.
Of course, you should also do this reallocation in advance, in case you can't identify a lower priority category. In that case, it's far easier to say, "no" to whatever purchase being contemplated, look for sales, or get by with what you have.Reply
it robs me of being to carry over the unspent money in the underspent category to the next month and build up the needed cushion in that category
The reality is you already used it elsewhere. It's gone, and therefore isn't much use as a cushion. 😉Reply
So, the way I handle this may not work for you, so caveat emptor.... So, I have arranged for my billing cycles to roughly correspond to my pay cycles. So, when I get my Google Fi and Electric utility bills, they are roughly four days before the end of the month, or right at the end of the month. I get notifications via text when the bills are ready/the cycle is completed. At that point, I enter future transactions for these bills. When my pay check comes in, I simply use the Quick Budget (underfunded) option as it includes future transactions. It's not perfect, but it generally works for me.
Oh, and for things like automobile fuel, which I have a separate category for, I budget a monthly amount. Most months I bike into work or walk, so I generally end up having more in the month for the warmer months, than I actually spend. I leave it there, and just let it accumulate, because I know in Winter, I'll be using that "surplus" - I have excellent statistics on prior year spending, and that generally helps out quite a bit. Of course the price of automobile fuel does vary. But not enough that I had any frequent difficulty "rolling with the punches"...
As for automobile maintenance., I decided to roll the routine, scheduled maintenance (including oil changes) into the car payment. At some point in the future, I will have a decision to make... sell the car and buy something cheaper, allowing for more savings for maintenance, OR potentially, in the most frugal of choices, go CARLESS (almost all my business travel is covered by my institution, and when not, I can usually carpool with a colleague) - since I live in a small town with all the amenities arrayed on the route between home and work. Another option would be to buy or lease a NEW car, and roll the maintenance into that car payment.
I like options. In five to ten years, who knows what sort of transportation options will be available? And which of them will be best suited to my needs and desires.