Blip in cash, drop in AoM
I've been using YNAB for several months and was days away from hitting the 60-day AoM milestone. (We're points people and charge everything, so 60 days has been our first target.)
We had a large amount of cash in one of our accounts last month for earnest money for a new home, but only for about two weeks. Since then, our AoM dropped to 28 days.
Now I understand that there's much controversy around the value of AoM, but it's been a useful metric to satisfy my ego and make me think I'm doing something right.
Our months, thankfully, our very similar from one to the next. Should I expect AoM to shoot back up as quickly as it fell, or am I really back to 28 days?
Age of Money has what I like to call a Rule 2 problem. It builds up while you are saving money in your budget for future expenses because you are living below your means, but as soon as you spend it, it's gone. And with a big chunk like that, it's going to make a huge drop because it's consuming a large amount of past income.
It takes much longer to build back up than it does to drop for this very reason. The max it can increase in a day is by 1 day, although you will see some fuzziness due to the fact that it's an average age of your last 10 transactions.
So no, it will not get back there quickly at all.Reply
Couple of data points.
1. When we made the down payment on our house purchase, AOM dropped by 45 days that month. It took 4 months to get back there. But that drop is artifical because it was only 6 months after we had started YNAB and our income was still mapping back to starting transactions.
2. When I bought my car, AOM dropped 76 days that month. It took about a year to recover.Reply