Income vs. expenses reports, not reflecting a true picture.

I have found that the income vs. expense report does not reflect a true picture of the current months net income. Perhaps there is something I need to adjust in order to correct it but I am not sure what that would be or how to do it. Let me give you an example of what is happening. The available column in the budget reflects money that has be categorized from previous months. And let's say this month I have budgeted 25 dollars for auto maint.  out of this months income.  And lets say the available amount under the available column in the budget is 500 dollars total. During this current month I end up with an auto maintenance expense of 100 dollars. So, when I look at the income vs. expense report for this month the 100 dollars is taken out of this current months income. However, 75 dollars was money that was categorized from previous months but is taken out of this current months income. And, if you spend more than you budgeted from this months income in other categories it gives a false net income in the income vs. expense report, either red or green. So, I am hoping someone has suggestions on how to solve this problem. 

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  • It's working exactly the way an income vs expense report is supposed to work. The month that I had a new HVAC installed, the outgoings exceed the income because the HVAC was $8K and my net income each month is less than that. So in that particular month, expenses absolutely did in fact exceed income. For that specific span of time. But that is in no way an indication that there was anything wrong in my budget. I had saved up that $8K more than a year in advance (I had planned on having the installation done in the spring of 2017 but I was out of town for most of that period so I ended up doing it in the spring of 2018 instead). 

    Reply Like 3
    • jenmas 

      I am not saying that that my budget is wrong. I know it's right where I want it. However, as you stated, you saved 8K from previous income. But the report takes money, that you saved over time, and takes it out of your CURRENT months income placing you in the red when in fact you have not overspent your current months income, I am assuming. Some folks could potentially look at that and think that they are not budgeting appropriately and become discouraged to do so. If the report is going to deduct expenses it should be from the totality of your income.

      Reply Like
      • Tobias
      • Toviathan
      • 4 mths ago
      • 2
      • Reported - view

      Cadet Blue Welder That's not how an income statement works. It's based on that month and that month only. Yes, you had cash available to cover how much you went over your income that month, but you did, in fact, spend more than you earned.

      That's the whole reason we save, to cover those months where we will inevitably need to spend more than we make that month. The problem is if you are consistently in the red, then there might be a problem.

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

      Cadet Blue Welder The income vs expense report is doing exactly what it is supposed to do and conveying the exact information that such a report is meant to. If one is going to look at such a report, it may be better to first learn what information this report is and is not going to convey.

      Reply Like 2
    • jenmas 

      So please explain what information the report is conveying.

      Reply Like
      • jenmas
      • jenmas
      • 4 mths ago
      • 1
      • Reported - view

      Cadet Blue Welder it tells you how much money entered your budget this month vs. how much money left your budget. 

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

      Just like any cash-based Income and Expense or profit and Loss report.

      Reply Like 1
  • The reports are based on your transactions, not your budget.  Income is simply the total of all transactions you've categorized as "Inflow: TBB" during the month.  Expenses are the total of all other transactions.

    It's totally normal (and expected) that there will be some months where your Expenses exceed your Income. As long as you're saving up for those big expenses (aka "True Expenses") you should come out ahead in the long run.

    Reply Like 2
  • What they said. The Income and Expenses report is a summary of your actual transactions with monthly resolution. It is not a budget report, and your budget has no impact on the numbers. So the report isn't wrong. Your expetation of what the report means is what is incorrect.

    Reply Like 3
  • Interestingly, this is the second post on this topic I've seen today. The short answer is monthly "net income" is useless in the context of an allocation budget. It makes a lot of sense in the context of a traditional budget where that "net" amount is funneled off to a generic "savings" account, but you should be far more deliberate when using YNAB.

    What will you do with that information?

    You're already making a plan for every single one of your dollars, right? Some will be spent soon, some later, but they all have an intended purpose.

    Reply Like
      • Kombucha Kid
      • Slate_Gray_Router.1
      • 4 mths ago
      • Reported - view

      dakinemaui I check net income on a monthly basis, but when I run the report I exclude things that were bugetted for over previous months. For example when I run my report at the end of February, I'll exclude a $400 purchase I'll be making mid-month that was budgetted for over the last three months. What it tells me then is income that is "surplus" after immediate needs, and that helps me to ensure that I'm reserving enough of my income for future use. Since YNAB can't tell you the percentage of your income you're "saving" like a traditional budget, this is my work around. My budget categories are separated by time-frames rather than type (immediate, imminent, possible, hopeful) so it's easy for me to customize the report.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 2
      • Reported - view
      Kombucha Kid said:
      that helps me to ensure that I'm reserving enough of my income for future use

       Every penny budgeted is reserved for future use, though obviously time frames vary. Forgive me, I must be missing something... Are the group totals not exactly what you need to define percentages you seek?

      You seem to be working really hard to get around "lumpy" actual expenditures, but the budget entries themselves should already have normalized these out (Rule 2). I would look toward the budget itself as the most useful report for future timelines.

      Reply Like 2
      • Kombucha Kid
      • Slate_Gray_Router.1
      • 4 mths ago
      • Reported - view

      dakinemaui I just like knowing that of my monthly income, roughly $X goes towards things farther in the future than one month. That can vary a lot on a month to month basis, because my income fluctuates a fair bit, so the report can give me a quick comparison of many months at once. If I used the budget screen I'd be flipping between months to get the long term picture I prefer. I prefer the income vs. expense report because it lets me see multiple months at once. I can look at the current month on the budget screen to see how much of my total cash assets I've reserved for future use, but that's a different metric. That helps me see how close I am to achieving my goals, but the "net income after immediate needs" number helps motivate me to get there faster. It's been fun seeing that number increase steadily as I get better at planning for the future. 

       I don't have to work hard to produce this information at all - the report takes less than a minute to generate and 5 minutes to analyze, and then I move on. 

      Reply Like
    • Kombucha Kid 

      Thanks Kombucha kid, this is exactly what I do. I should probably have explained that in my initial post. However, I find it time consuming and wish ynab was able to have that process built into the report. I guess I just like the traditional income vs expense reports. That being said, I do love everything else about ynab.

      Reply Like
  • Kombucha Kid said:
    If I used the budget screen I'd be flipping between months to get the long term picture I prefer

    I guess I have a totally different approach to budgeting. I strive for a consistent budget (outside of overspending reallocations among categories like groceries and similar that I intend to go to $0). If I were to flip between months, I'd just see the same numbers! Thus, the current month is all I need to see. Everything is normalized to a monthly basis, conveniently sidestepping the "lumpiness" in the timing of actual outflows.

    My income fluctuates as well, but I've taken steps to normalize that, too. Most of my budget targets my average income level, with a Deferred Income category absorbing the excess or supplementing the deficits in actual income. This consistent "effective" income (along with consistent effective expenses) allows me to budget each month literally with a couple mouse clicks.

    If you're not doing things this way, I can see how any one month's budget wouldn't give you a good overall picture. In that case, the average over the last year in the reports seems like it would do the job nicely.

    Reply Like 1
  • Cadet Blue Welder  Look at the total or average column in the Income/Expense Report. 

    The problem you've described exists because of the "lumpiness" of outflows. (Alternatively, it's due to a time lag between saving and outflows, that is typical with lumpy outflows.) Over a year interval, it's very likely you will have saved and spent equivalent amounts, because one year is probably the greatest common factor (or a multiple thereof) of actual expenses as well as saving/budgeting entries.

    (If 12 months is not the GCF, then figure out what it is and configure the report to run over that interval.)

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