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.
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).
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.
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.
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.
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.)