Budgeting for end of month salary and bills

I get paid near the end of each month.  On the day I get paid, I pay my mortgage, car loan, and other major expenses.  I can budget for the outflows but not the income and so YNAB says I need to adjust my overspending.  I'm not overspending, I know I will have the money - I just don't have it yet.  How can I tell YNAB about expected income?  Am I missing something?

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  • Yes, you are. You are missing that if you don't have the money yet, then you are overspending. You'll catch up and get a month ahead over time using YNAB by spending less than you bring in.

    You'll be able to have money sitting to pay your end-of-month mortgage, car loan payment and other major expenses due at the end of next month when you get paid at the end of this month.

    Reply Like 2
    • bevocat  Hmmmmmmmmmmmmmm..... Thanks buuuuuuut.... I'm not actually overspending.  I'm planning that spend.  If it's acceptable (and encouraged) to plan ahead for bills that you know you will have, then surely its also fine to plan for the money you know you will have?   About 80% of my money comes and goes in 4 days each month.  By the sounds of it, YNAB will only be accurate/useful for those 4 days?

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      • bevocat
      • Crazy Cat Lady
      • bevocat
      • 2 wk ago
      • 2
      • Reported - view

      Turquoise Transistor Nope, it is not fine to plan for the money you know you will have until you have it in your hot little hands. This is an allocation or envelope budget, not a forecasting budget.

      You can absolutely create scheduled transactions for your income, and put the date on them that the income, well, comes in. You can also create scheduled transactions for your expenses, and put the date on them that the transaction occurs. If you have a scheduled outflow that you enter into your account and that outflow makes the outflow's budget category overspent, then it is overspent. The fact that hours later there is income that comes in and then you budget to that category again is not relevant.

      You could cover the overspending from a category that you don't need to spend from before the income arrives.  Then once the income arrives, budget to the category that you covered the overspending from.

      Once you get a month ahead, you won't have to do that anymore, but until then, don't budget money you don't have yet.

      Reply Like 2
    • bevocat Okay, so I think I get it.: RIght now, I should allocate the money I actually have to the things I know I will need to spend it on (e/g/ groceries) in the next few weeks.  I should leave my mortgage at zero, but put it in my account as an upcoming bill.  When I get paid, I should then allocate money (which I will now have) against the mortgage.  Is that the correct way to use the system?

      Reply Like 1
      • bevocat
      • Crazy Cat Lady
      • bevocat
      • 2 wk ago
      • 1
      • Reported - view

      Turquoise Transistor YES, you've got it! Always ask yourself, for the dollars I have on hand right now, what jobs do they need to do before I get paid again? So yes, you budget for things that you will need to spend on, like groceries. Once you get paid again, the answer to the question will be different. It will be that these dollars need to pay my mortgage, so that's where you budget those dollars.

      I believe when you click on the mortgage category, it'll tell you "you've got an upcoming transaction for $X" and will show that the category is underfunded, so you know where to show some love the next time you get paid.

      Does that help? I know it's a bit of a learning curve. I had used Mint for about a year and a half before I switched to YNAB, and I could never get ahead or save, because it wasn't an envelope budgeting system. In one year of YNAB I was able to see where I was behind and focus on that so I could get off the credit card float. So I think it's worth the steep learning curve!

      Reply Like 1
      • bevocat
      • Crazy Cat Lady
      • bevocat
      • 2 wk ago
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      Turquoise Transistor Oh, I also wanted to add that when you get a month ahead, getting paid becomes much less exciting. The answer to the question is always "sit in my holding category for next month's expenses." Then when the month rolls over, I can empty out my holding category, flip to the new month and go to town, budgeting out the whole month just like you're used to doing.

      Reply Like 1
  • With YNAB, you only budget you actually have, not money you know you *will* have. You can budget for those expenses when you get paid near the end of the month. 

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    • Laura Coursen But the system is encouraging me to plan for expenses that I know I *will* have, not bills I actually have.  Why isn't the same principle appled for income?  I get a fixed income each month. I can guarantee it'll be paid.  I'm not being reckless.

      Reply Like
      • Laura Coursen
      • Technical Writer
      • lecoursen
      • 2 wk ago
      • Reported - view

      Turquoise Transistor You can plan for them, by adding goals. You just can't budget for them yet until you have money to budget.

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    • Laura Coursen Okay.... thanks.  I think I'll need to use this for a few weeks and see if it becomes clear.  I suspect it might make more sense after a monthly rollover.  Thanks for your help.

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      • Laura Coursen
      • Technical Writer
      • lecoursen
      • 2 wk ago
      • 2
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      Turquoise Transistor You might find this article helpful! https://www.youneedabudget.com/how-to-create-a-budget-template/

      Reply Like 2
    • Thanks Laura 

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    • Laura Coursen This is excellent - I actually think this is a much better way to budget than the traditional method. It ensures you are really keeping a close eye on everything - which should lead to more success. Thanks for pointing me in this direction. Just what I needed.

      Reply Like 3
  • Overspending and over budgeting are two different things in YNAB. Overspending means you spent more money than you had allocated to a category. Over budgeting means you have allocated more money to your categories than you have in your accounts. 

    Reply Like 2
  • There’s a very good tutorial video about setting up the budget and using scheduled transactions that was a lightbulb moment for me. 

    it was this one https://youtu.be/sQeS5kTE6wU

    Reply Like 1
  • I know it seems strange, but if you stick with it, it will start to make sense and get easier. Use the goals if that helps. If you want to automate the process more, you can schedule future income and expenses in transactions, but income won't show up in To Be Budgeted until that date. 

    Unlike Mint, Quicken, or others we tried before, YNAB doesn't want you to forecast your income and make decisions on money you don't have. Once you actually have the money is the best time to allocate it. It actually helps break the paycheck to paycheck cycle, not depending on the next check and trying to guess but dealing with what you have now.

    Why? Well, I see it like this: if a budgeted expense comes out of your account late or gets screwed up, oh well, sort out why. If an expected income shows up late or not at all, you are in trouble if you've already allocated it and expected it to be there. Or worse, scheduled transactions off the anticipated amount. HR can screw things up. Banks can screw things up. There are several stories on here about that. I'm sure there are other good reasons too but that's why I stick to it. The reason we started YNAB 8-ish years ago was a threatened gov't shutdown and subsequent furloughs.  Now, if a paycheck goes missing or reduced, eh no problem we have 30+ days to sort it out and move money around. Lesson learned.

    Reply Like 2
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