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.?

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  • 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.

    Like 3
    • I'm struggling to wrap my head around this. Please bear with me :)

      Scenario:
      It's Dec 20th. I just started with YNAB. Blank slate.
      I know I will have rent, utilities, credit card bills, etc. the 4th of every month.
      There's also a yearly premium on my life insurance on Jan 4th. 
      I currrently have $400 in my bank account.
      I'll probably spend $200 on groceries for the rest of December.
      My paycheck on the 1st will be for $3,500.

      What can I do in this scenario to feel confident that I'll be able to pay my rent on Jan 4th?

      To be clear, I'm not so much worried about making sure the money is in the account where it'll be automatically paid from. I can handle that part of the equation. I need to simply know if I have the money to meet all my obligations on Jan 4th. Can YNAB help me see that or will I just need to hang in there for a month or so until money actually starts moving in and out?

      Like
      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • 4
      • Reported - view
      Aquamarine Sidewinder said:
      feel confident that I'll be able to pay my rent on Jan 4th?

      Rule 2 and your own prioritization. Fund the important things first, because you have to stop when you're out of money. (You want the things that go unfunded to be the things you can do without.)

      It is extremely beneficial to develop a plan IN ADVANCE for making your allocations when you are paid. It can be as simple as putting the intended allocations in the category names. YNAB also has goals and scheduled transaction that will tell you the required total needed.

      The crucial part: It's up to you to arrange for the intended allocations -- including True Expense categories -- to fit within your income constraint.

      It's really that simple. It's perhaps obvious when stated, but so many new users miss the forest for the trees. The only hard part is understanding your priorities!

      As a heads up... Right now, you have to wait for Dec. 1 to budget for the Dec. 4th rent. You'd probably feel better if December's rent was already allocated and you could allocate your Dec. 1 income to JANUARY's rent. (Same thing for all other categories.) That's something to work toward.

      Like 4
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 8 mths ago
      • 1
      • Reported - view

      Aquamarine Sidewinder 

      Aquamarine Sidewinder said:
      My paycheck on the 1st will be for $3,500.

       Not unless it's in cash. The 1st is a banking holiday, so you will either be paid on December 31st or January 4th.

       

      Aquamarine Sidewinder said:
      I know I will have rent, utilities, credit card bills, etc. the 4th of every month. There's also a yearly premium on my life insurance on Jan 4th. 

       You probably want that money already in those categories before that "Jan 1st" paycheck that may not arrive till the 4th. That's cutting it really close.

      Once you get going and in future months, under normal YNAB usage, the money for credit card payments will be there as long as your credit card spending is from budgeted purchases, since the purchase was made on the credit card with a category backed by cash, but the cash never left your bank account. YNAB transfers it from the spending category to the CC payment category. You only have to budget for credit card payments to pay any credit card balance that was not covered by a budgeted purchase transaction in YNAB.

      Like 1
    • nolesrule Fine, let's just say Jan 4th is pay day and Jan 5th is bills day. I also don't make *exactly* $3,500. The numbers and dates are mostly placeholders to have a simpler scenario to discuss and to help me understand.

      You don't need to tell me it's cutting it close. I get it. I also think I understand how valuable the YNAB approach is going to be in a month or two, but right now, when I've just started, I would like to learn how to use YNAB to help me see if I'll be able to cover all the bills or if I need to go borrow money from my parents or whatever. Figuring that out on the 4th when I use the money from my paycheck to budget the various categories and then realize that I'm out of funds... THAT is cutting it close. I want those answers now so I can try to dust up the money somewhere if I don't have enough.

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      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • Reported - view

      Aquamarine Sidewinder As Periwinkle Flute mentioned, the running balance (in conjunction with scheduled transactions) in the account register will show the future account balances. That's not the best assessment since it only considers actual outflows and a limited timeline. In other words, it's only a short term upper bound and could be worse later. However, if that says you have a problem, it would answer whether to borrow funds or not. 

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  • 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. 

    Like 4
  • 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.

    Like 3
  • 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. 

    Like 3
    • WordTenor I'm perfectly aware of how dire the situation is.  I've had more than $20k of unexpected expeneses in the last month.  Right this second, I want to know if I'll be able to pay the bills in a few weeks.  Due to my trusty old "upcoming bills" spreadsheet, I'm actually not THAT worried about making it, but if YNAB was the only tool at my disposal, how would I determine if I'd be okay?

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      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • Reported - view
      Aquamarine Sidewinder said:
      if YNAB was the only tool at my disposal, how would I determine if I'd be okay?

      That's the easy part. The total of intended allocations (that you took the time to define in advance) do not exceed your expected income.

      For future discussion, are you paid once or multiple times per month?

      Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 8 mths ago
      • 1
      • Reported - view

      Aquamarine Sidewinder That wasn’t scold; please don’t take it that way. The most well off to the most hand to mouth YNABers will all tell you we had the “Oh s— this is tighter than I realized!” moment when we started using this method. If you’re having that realization, welcome—you’re one of us now. 

      YNAB tells you only what you can afford right now. So no, it does not tell you you can afford your rent, because today, you can’t. You certainly can’t if you buy $200 of groceries. What it *does* tell you is “wow okay, rent had dang sure better be the first thing I do with the next money I get.”

      over time, using the method, you’ll get to a point where YNAB tells you today that you can afford the rent on January 4 because either the rent, or the income to budget it at the beginning of the month, will already be sitting in your budget. 

      Like 1
    • WordTenor Ok. YNAB can't tell me the answer to that question. That's a great answer, to be honest. Then I can stop beating myself up over not being able to figure out how to do it :)

      Like 1
    • dakinemaui How is it easy to see if anything lines up with expected salary when I'm not supposed to enter expected income?

      Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 8 mths ago
      • Reported - view

      Aquamarine Sidewinder in the beginning, you’ll still need to do this math. How much is coming in, and how much do you plan to have go out, and is B less than A. The goal of the YNAB method is that over time, the “going out” will be funded fully by money you already have in hand, so that you are not waiting for any money to come in before you can afford to pay for the things you want to go out. 

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      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • 4
      • Reported - view

      Aquamarine Sidewinder With scheduled transactions, the running balance is helpful if it shows a problem in the very short term. Again, if it doesn't show a problem, that doesn't mean one isn't looming.

      A better option is scheduled transactions for monthly and goals for non-monthly expenses. The Underfunded Quick-Budget button in the Jan. budget area will show the total of the planned allocations. If that exceeds your anticipated income, you'll have to change your plans. Reduce scope, push back timelines, that sort of thing (with corresponding changes to goals).

      This may help:

      https://docs.youneedabudget.com/article/915-budget-template

      Like 4
  • All good advice here. Set up your upcoming bills as scheduled transactions for the date they are due, as well as your paycheck, turn on the running balance and you'll be able to see what's left after paying all of the bills.

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    • Periwinkle Flute Wait, turn on the running balance? What does that mean?

      Like
    • Aquamarine Sidewinder At the top of your register toward the right there is a View button. If you click it you can show the running balance.

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    • Periwinkle Flute Interesting.

      The very first thing I did when I opened my YNAB account was to set up all these scheduled payments, but the very next day, I had duplicate transactions:  One imported from my bank, one from the scheduled transaction. I assumed I was doing it wrong, since I had also put in my upcoming paycheck which I learned quickly is a no-no.

      How do you do the scheduled transactions thing in this case? Remove the scheduled one once the real one (imported from the bank) is in?

      Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 8 mths ago
      • Reported - view

      Aquamarine Sidewinder Usually, if the amount is the same, it will automatically match, provided the scheduled (aka manually input) transaction has not already been cleared. But if it doesn’t, you can match it yourself by selecting both transactions and choosing match from the menu. The first time YNAB encounters a direct import transaction and a manually input transaction, it doesn’t always know they should match; if you match them once, it will match them/auto categorize going forward. 

      Like
      • dakinemaui
      • dakinemaui
      • 8 mths ago
      • 1
      • Reported - view
      WordTenor said:
      it will automatically match, provided the scheduled (aka manually input) transaction has not already been cleared

       ... and not have a future date. It's very common for transactions to import earlier than scheduled because of weekends, which can (eventually) result in duplicate transactions. Reconciling every weekend will mitigate such issues.

      Like 1
  • 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.)

    Like 1
    • dakinemaui I have multiple accounts. Some are abroad and in different currencies. I also don't have a completely blank slate, but actually have 3 days worth of transactions. I'm setting up a simplified scenario to make the conversation simpler, divert attention from the YNAB parts that I already understand and to focus on the parts that remain mysterious to me.

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      • dakinemaui
      • dakinemaui
      • 8 mths ago
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      Aquamarine Sidewinder The main reason I bring up the multiple accounts is that some users can use "savings" to budget well in advance for the most important things while gradually building up what those savings were originally slated for. In other words, aligning the budget with their true priorities. Just throwing out possible options for your consideration.

      Like 2
      • Ivory Storm
      • Ivory_Storm.3
      • 8 mths ago
      • 3
      • Reported - view

      dakinemaui I did this when i started, and it felt like swallowing icy cold wind to see my savings fund get spread out like that through my budget, but it made the logic of it all soooo much clearer. And now I'm back on track with my savings. I recommend this approach!

      Like 3
    • Ivory Storm I loved it; so good to have true priorities funded. Now I knew this pile of money would take care of important things. It made me worry a lot less. Loved the clarity.

      Like 1
  • 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.

    Like 3
      • Green Orca
      • Green_Orca.10
      • 8 mths ago
      • Reported - view

      Green Orca Just to be clear, I broke the paycheck to paycheck cycle a long time ago. I don't do this to cover my immediate obligations. 

      Like
    • Green Orca This makes a lot of sense. Thank you. 

      I put in my next paycheck, went through all the motions, and just kept hitting Undo until I was back where I started. That was helpful. Thank you again.

      Like
      • Green Orca
      • Green_Orca.10
      • 8 mths ago
      • Reported - view

      Aquamarine Sidewinder No worries! If you don't want to press Undo and risk messing your current month, what I do is go in the following month. When I'm done, 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".

      Like
  • 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...  

    Like 3
  • 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!

    Like 2
  • 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.

    Like 1
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