Just started. A little lost.

I have been needing to start budgeting for years and YNAB might be the piece of software that makes me do it.  I watched a few videos and I am confused.  I like the idea that you only use money this month that you made last month.  This solved a lot of problems for me because I have many sources of income which I receive all over the month.  My question is, should my first step be to collect income for a month, put it into one savings account in my bank, and then I know how much month I have, then I can start budgeting in YNAB?

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  • No, you need to start where you are right now and slowly save to get a month ahead over time.

    Reply Like 2
  • Unofficial rule one, only budget dollars you have.

    Rule one:  Give every dollar a job.

    You don't need to put money in a savings account.  You can start budgeting today.  You have dollars and bills, Start paying them.

    With YNAB, you can run everything out of one account, most people would consider a checking account necessary.  YNAB is in the middle.  Your account/s are on the left of YNAB and your categories are on the right (from the videos).  YNAB only looks at how much you have, not where it is.  

    Okay, now that that is out of the way.  Congratulations, you belong to the irregular income crowd.  So do I.   YNAB recommendation is to put everything in one account, and use that to pay your bills, save for your big "why." while saving for your retirement, true expenses and long term goals.  

    First thing I would recommend is working out a budget, what you believe you will need to spend on what, and when.  Check this against your expected income.  When expenses are less than income, I would set goals for those amounts in the appropriate categories.  Then, as income arrives, you fill in your budget.  Some feel goals are counter productive.

    When considering a purchase, check your category balance before and make sure you have the money in the right place.  If not, fund (move money around) your purchase before making it.  

    That requires you to choose which is more important, the jobs your dollars have or that purchase you are thinking about.   With this, and a big "why" I have been able to reduce my spending on things that don't matter, and now give my money the jobs of doing things that do matter, to me. 

    It's important to reconcile your accounts, often.  This helps you keep up on what you have to work with, and catch any transactions you forgot to enter.  

    There is no such thing as a regular month.  there is always something that is going to have to change before the end of the month.  After a while, you will be able to use the inspector (right side of budget screen) to get a feel for what you are actually spending in any category.  Now you get to choose, is this spending okay with you?  Great.  If it isn't make different choices going forward.  

    Then, just follow the plan.  You no longer need to check your bank balance to see if you have enough to cover your purchase, you now check the appropriate category balance.  Keep doing this, make sure to budget for your "why," retirement, true expenses, and long term goals, and your net worth will increase.  

    About once a month (week?/day?), or so, make sure you are spending according to your plan.  Make sure you will receive the income this month.  Make sure your money is doing what you want it to.  

    You can also put something aside for your buffer.  Your goal is to have enough to cover one month's worth of expenses.   When this is full, you go to the next month, take out the money and fund the month.  As income arrives during the month, put it into your buffer category.  Then when the month rolls over, you should have enough in your buffer category to fund the next month.  Repeat monthly.  

    Always fix overspending as soon as it happens.  Overspending makes YNAB do stuff that doesn't make sense and will mess up your budget.  Avoid this by covering overspending as soon as it happens.

    Reply Like 2
      • jacobacro
      • When you budget you tell your money where to go. When you do not budget you wonder where it went.
      • Cornflower_Blue_Cleric.5
      • 2 mths ago
      • Reported - view

      MsTJ Thanks for all of that info.  I will read it a few times.  

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  • One of the most unique features of the YNAB method is that you only budget dollars you actually have. Most budgeting methods are theoretical, asking you to project how much money you will earn in a certain period - most often, a calendar month - and to create a spending plan based on those projections. But with YNAB, you only budget once you have the money. Even though this may sound like a formality if you have a salaried job with a regular (every week, bi-monthly, etc.) paycheck, it has the practical consequence of shifting the user's mindset to one of not spending money he or she doesn't yet have, which leads to avoidance of accumulation of debt.

    In conclusion: No, don't wait a month to collect income and then budget. Truly the best time to start is now, as opposed to waiting until the first of the month or payday.

    Reply Like 5
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
      • Reported - view

      Slate Blue Pilot 

      Slate Blue Pilot said:
      Even though this may sound like a formality if you have a salaried job with a regular (every week, bi-monthly, etc.) paycheck

       Hehe. It may sound like a formality, but it really isn't.

      Mrs. nolesrule has worked for MegaCorp for 16 years. Back in 2009 she returned from mternity leave but they forgot to reactivate her payroll. And toward the end of last year, she had 3 straight paychecks that were incorrect (the second two were due to trying to fix the initial error).

      My employer switched payroll companies this year. Just as I hit the max for the state's employee-paid employment taxes. The new payroll service started the withholding all over again.

      Relying on accurate payroll to predict future income always works great... until it doesn't.

      Reply Like
  • Slate Blue Pilot said:
    it has the practical consequence of shifting the user's mindset to one of not spending money he or she doesn't yet have, which leads to avoidance of accumulation of debt.

    Wonderfully summarized.

    There's also a better understanding of the relative priorities between categories. You fully realize that there are consequences to your spending decisions that go beyond the "here and now".

    Reply Like 6
  • Welcome to You Need A Budget, Cornflower Blue Cleric ! The best time to get started is now, and budget the money you have on hand, in your accounts—today. 😄

    Here's what I would recommend for an action plan:

    1. Sign up for a Learn the Four Rules workshop, because getting started in YNAB is all about prioritizing–and our education team is awesome!
    2. Check out the Ultimate Get Started Guide to walk through the process.

    Let us know if we can do anything to help you along the way. We're rooting for you!

    Reply Like 1
    • jacobacro
    • When you budget you tell your money where to go. When you do not budget you wonder where it went.
    • Cornflower_Blue_Cleric.5
    • 2 mths ago
    • Reported - view

    I have a question about yearly subscriptions.  I have amazon prime which is 120 per month.  Is there a way to put in yearly subscriptions, or should I divide 120 by 12 and put it as a 10 dollar a month subscription?

    Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
      • 2
      • Reported - view

      Cornflower Blue Cleric Rule 2 is to save for your True Expenses. The best way to this is to save an equal amount each month so that you reach the amount needed when the payment is due.

      A side benefit of this is ensuring that you are really living below your means.

      However, if you are just getting started and you have an annual subscription like Amazon prime, you may not have a full year to save up for the next payment. If it's in 6 months, you need to save $20/month, not $10, or alternatively you can pre-fund with $60 out of your existing savings, and save $10/month going forward.

      Reply Like 2
      • jacobacro
      • When you budget you tell your money where to go. When you do not budget you wonder where it went.
      • Cornflower_Blue_Cleric.5
      • 2 mths ago
      • Reported - view

      nolesrule Whoops.  I meant to say that amazon prime is 120 per year.  Are you saying that I should pay it a year in advance?  The billing cycle is on Feb 4th so I should fund Amazon Prime from now until then.  So 5 months, 60 dollars.  Also are you saying that I should make a goal to save 120 dollars by feb 4th, and that's how I pay for prime?

      Reply Like
      • jenmas
      • jenmas
      • 2 mths ago
      • Reported - view

      Cornflower Blue Cleric No, don't pay a year in advance. You can either save $24/month for 5 months and then switch to $10/month after you pay in Feb or your can allocate $70 right now and then $10/month until it's due.

      Reply Like
      • jacobacro
      • When you budget you tell your money where to go. When you do not budget you wonder where it went.
      • Cornflower_Blue_Cleric.5
      • 2 mths ago
      • Reported - view

      jenmas I set a goal of 60 dollars to be reached by February.  If I wanted to allocate 70 dollars for this year so far how would I do that?

      Reply Like
      • jenmas
      • jenmas
      • 2 mths ago
      • Reported - view

      Cornflower Blue Cleric just type 70 into the budgeted column. You'll have to adjust your goal.

      Reply Like
      • jacobacro
      • When you budget you tell your money where to go. When you do not budget you wonder where it went.
      • Cornflower_Blue_Cleric.5
      • 2 mths ago
      • Reported - view

      jenmas Cool.  I got that to work

      Reply Like
      • jacobacro
      • When you budget you tell your money where to go. When you do not budget you wonder where it went.
      • Cornflower_Blue_Cleric.5
      • 2 mths ago
      • Reported - view

      Cornflower Blue Cleric should I create goals for all of my monthly bills?

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      • jenmas
      • jenmas
      • 2 mths ago
      • 1
      • Reported - view

      Cornflower Blue Cleric It's up to you. I don't use goals at all because I don't find them useful. I know if I've saved up enough for something based on the balance and the math is easy enough to do in my head if I want to figure out how much I need between any two points in time.

      Reply Like 1
      • MsTJ
      • Gray_Nomad_f6eeb59e1a1c
      • 2 mths ago
      • 3
      • Reported - view

      Cornflower Blue Cleric  And my budget is so much easier with goals.  I don't have to reinvent my budget every month, I simply fill the categories with my goal amount and I'm done.  For me, goals are a vital part of my monthly budgeting.  Maybe that is because I have variable income?

      So, there you have both sides of the reasoning.  Find one that works for you.  

      Reply Like 3
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 2
      • Reported - view

      MsTJ Goals are just one of multiple ways to avoid reinventing the budget every month. IMHO, it's not even a very good one since it obscures credit overspending and doesn't play nicely with Rule 3.

      As an aside, I strongly urge anyone with variable income to employ a deferred income category. This normalizes the amount with which you work each month to a consistent amount. Less mental effort each month.

      Reply Like 2
      • MsTJ
      • Gray_Nomad_f6eeb59e1a1c
      • 2 mths ago
      • 1
      • Reported - view

      dakinemaui Again, to each their own.  I'm surprised you say goals don't play nicely with rule 3.  They do for me.   The beginning of my month, I fund my goals.  As the month progresses, things change.  I might have to pull a few dollars from one of my goals, turning the category yellow (underfunded), and that is part of the process.  Goals won't necessarily stay green all through the month and when they don't it's because of a choice I made.  For me, most months I make some progress, though not necessarily as much as I would ideally like to make as set up in my goals..  

      We do agree on the deferred income category, which I also use.  I prefer that much more than budgeting in the next month.  

      You have obviously enjoyed much progress working with YNAB, as have I.  We all work the budget differently, and can succeed with many different small changes.  

      Congratulations on your progress with budgeting.

      Reply Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
      • 4
      • Reported - view

      MsTJ They don't play nicely precisely because they turn yellow, leading to warning fatigue and eventually ignoring the color altogether, even when it's important.

      Reply Like 4
  • I started in February on the 19th. Between paychecks and with only $700 to my name after paying the last of the bills. I budgeted that $700 and then waited impatiently until my neck paycheck. Every month since then I've had more and more $ available to put into savings because the program makes me aware of my spending (and my habits). So no, just take what the balance is in your checking account and put it to work. What does it need to do until your next paycheck?

    Reply Like 7
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