Will I have enough money for my bills on the 1st?
I'm brand new to YNAB.
In the past, I've had a spreadsheet where I listed upcoming bills as well as salary. It gave me confidence that I'd have sufficient money in my accounts to cover the bills months ahead of time. I'd adjust the account totals frequently to make sure I was on track. It definitely didn't provide me with the here-and-now confidence that I get from YNAB, nor the granularity.
I'm struggling to obtain the same confidence when using YNAB. It's really hard for me to see if I'll have enough money for bills on the 1st. In YNAB it looks super tight and it's honestly freaking me out a little. Glancing at my trusty old spreadsheet helps calm me down.
What am I missing? How can I tell what my liquidity will look like in a few weeks? How can I tell that I'll have enough money for bills, etc.?
If you need money on the first, it needs to be in its category on the first. For most people, until you have a YNAB buffer and can operate a full month ahead, that means that a category with an outflow on the first will need to be budgeted either in the prior month or during the prior month but in the next month’s category (ie you’d flip to January now and budget for that expense in the appropriate category).
Whether account has enough money is a different and in fact unrelated question. As long as your budget is accurate, then you have the money to pay whatever it is you need to pay somewhere. Whether that money is where you need it to be in order to make that payment is then up to you. in practice, when you’re first starting out, that means checking your account balances after you have checked your category balances to make sure that the account can handle a payment that large. Or it means consolidating all of your money into one account so that you are always assured that you have the money.
when you are a more advanced user, a credit card that you pay off each month coupled with once a month budgeting using your buffer effectively reduces the cash flow analysis to a once a month endeavor.
And an additional comment: it can be a little challenging to learn to use YNAB if you are already a pretty solid money manager. YNAB works differently and on different principles. So it’s ironically often easier for people who’ve never had a grip on their money to get a grip quickly than it is for those of us who’ve always had a pretty clear system to learn a new one. I spent a short time banging my head against the wall very vigorously when I started and finally because I am stubborn, did things the way people told me instead of the way I thought was better, in a “FINE I’ll show YOU!” kind of way. Fortunately I did that stubborn tantrum approach pretty soon into my YNAB use because the other people were right, so I learned to use the system well quickly. If you can break through how you think things ought to work, the sooner you’ll get to YNAB nirvana.
A traditional budget may mask the timing aspect giving the misleading impression that there is no problem. YNAB, however, has an annoying knack of showing the stark reality. As you probably know, realization is the first step to improvement. WordTenor gave some excellent advice. Just keep at it.
It's common that you have to catch-up on various True Expenses, leaving less for other things. Once you can spread such contributions over a longer period, your check will go further. Converting a $120 annual expense due 2 months after starting YNAB sucks up $60/month. However, the following instance should be spread over 12 months, so only $10/month.
Aquamarine Sidewinder said:
In YNAB it looks super tight and it's honestly freaking me out a little.
Just want to call this out: it looks that way because it *is* super tight. You are absolutely threading the needle with your current inflows and outflows and you are operating with no cushion if something goes wrong. It also sounds like you’re probably riding the credit card float, which will be another scary a-ha moment when you go to budget that first January pay. This feeling is colloquially called “The YNAB face slap” except usually we put an expletive which begins with a B in place of “face.”
How do you know what to fund first with your new paycheck? They’re the things which cause your throat to close at the idea of not paying them. Then, you take this feeling of “Oh my god I am truly on the edge even though I make plenty of money” and use it to power through he changes the budget will help you make so that you can be truly ahead.
Aquamarine Sidewinder said:
I currrently have $400 in my bank account.
Is this your only bank account? (One mistake some users make is to try to leave their savings account or emergency fund account out of YNAB.)
My confession: I enter a future paycheck with today's date and I budget in a future month to help me project better (that way, I can reset everything to 0 after I'm done with my projections). This is definitely not recommended by YNAB, but I'm sure many of us do it secretly 😁
Going back as to why YNAB doesn't let future income be budgeted: The hard truth is that like 80% of US workers, you currently seem to be living paycheck to paycheck. If your January 1st paycheck doesn't come in or comes in late, then you won't be able to cover your January 4th bills.
But I get why you would want to get an idea of if you will be able to cover your bills with your next paycheck. After all, if for the past 5 years, you received a paycheck on the 1st of every month by your employer, what are the chances that it will not be there then? As long as it doesn't become your main way of using YNAB and you undo that fake paycheck date asap.
Green Orca said:
I select all categories (select your first category, then go to the last one and while pressing Shift, click on that last category) and on the right hand menu, click "Reset Budgeted Amounts".
One slightly easier way of selecting everything is to select the checkbox that is ABOVE the checkbox of your first category (on the header section of the budget). That will select/deselect everything. It's a toggle. So if you have 5 categories selected and hit that checkbox, it will deselect them. Then if you hit it again, it will select everything. hit again everything is deselected...
I am really surprised that no one has mentioned the Budget Template yet. This is exactly what you need.
A short summary:
- Budget December completely; cover all overspending without letting To Be Budgeted go under 0.
- Go to January. To Be Budgeted should be the same number as it was in December. If it's under 0, read about Stealing From The Future (enough posts on the forum about it!) and fix this.
- Check that you have a category for everything you will need to pay in January (bills, saving goals, and variable spending like groceries). Since you have just started, don't forget to add 'Stuff I Forgot To Budget For'! 🙂
- Add a Goal for all categories. The Available amounts will turn yellow and you will see the Underfunded amount on the top button under Quick Budget (bottom right).
Note: add a Goal to all categories, even if they already show as Underfunded because of an upcoming transaction. YNAB only looks at the Available balance and does not check if the transaction will have occurred earlier (so, for example, if I have $12.99 Available for Netflix in December, which is a repeating transaction on the 28th of every month, the Netflix category in January will not show as Underfunded in January, because YNAB thinks the $12.99 is still Available. So for a complete Budget Template, this category should have a Monthly Funding Goal of $12.99.)
- You now have your Budget Template set up. Scroll to the top of your Budget and select all categories by checking the checkbox in front of 'CATEGORY'.
- Look at the Underfunded amount under Quick Budget Selected. If this is less than the income you expect, you will have enough money to fund all your categories. If not, edit your Goals until it is.
Keep in mind:
- This only works if you do not overspend in cash in December. If you do, YNAB will subtract that amount from your incoming money (because you have already spent it!).
- Like all other commenters are saying: this does not tell you anything about your cashflow, only about the totals for the month, and will only work if you are SURE your paycheck will arrive before your bills. If you need to pay the bills before you receive your paycheck, you will still be short. This is why YNAB wants you to be a month ahead: so you can already budget for January's bills with December's paycheck instead of just planning for them.
If you receive multiple checks a month, you can of course still use this method by only looking at the Underfunded amount of the categories that a certain check will need to fund. To make this even easier, you can set up master categories for '1st Paycheck' and '2nd Paycheck', so you don't even have to look at the dates in the category names.
I hope this helps!
It sounds like you "need to see it work" ... I'd suggest seeking out a few YouTube videos to see how budgeting into the next month actually works in YNAB. Without actually seeing it firsthand, it can feel really theoretical, and I agree, hard to trust.
I'd suggest watching some videos from Nick True's Mapped Out Money or YNAB's own "Heard it from Hannah" ... those two are really how I learned what YNAB looks like when it's actually working. (plus they teach you the tricks of naming your categories with their due dates and amounts, and also setting the goals in a way that will help you see them better.) ... Also Hannah has two great videos on "Budgeting bi-weekly paychecks" and "budgeting on any pay cycle"
From a practical stand-point. If you have goals set for all the bills you have due, you can flick into that month and then check all their checkboxes on the left side and then look over to the right side and look at the "underfundered" number... that's how much your bills will be. Since you know what may come on January 1st for payday, maybe knowing those two numbers will help ease the uncertainty.
WHatever you do, stick with it for a while. I'm just a few months in and I can already feel things changing for the positive.