Impact of Future Budgeted Items on Current Balance
When you budget for something in the next month, why doesn't that lower your balance that's available in an account today? For example, I will owe rent at the beginning of next month before I'm paid again. So I put that in next months budget and then had to move some money from a savings account item to cover the rent. However, when I jump back to this month, that amount that I moved still shows as available in that savings account.
Doesn't this make it easy for me to potentially overspend somewhere this month? Or do I also need to create a category like future rent somewhere and use that?
Budgeting funds to a category does not show the funds as spent. Only when they are actually spent, do they record as gone. The funds are available for you to move around to any other category and eventually even spend on anything else. How you avoid accidentally spending funds you need for something essential, like rent, is in using YNAB you learn to stop looking at your account balance for spending guidance, and you begin to rely on your categories in YNAB. If I have zero in my spending money category, I can have $3,000 in my chequing account and still consider myself too broke to stop at the drive-thru. 😉
Hi Cornflower Blue Wildebeest !
Just to echo the comments above, in YNAB you shouldn't focus on your account balance when deciding what to spend, you should look at your category balances instead. :)
When you have a moment, read our How To Create a Budget Template blog post or take a look at the Create a Budget Template Workshop. Both will teach you how to use scheduled transactions and goals to outline priorities and plan for those expenses! :)
Hi All - thanks for your replies.
I think I may not have been as clear as I initially thought in my question. I'm not looking at the balance in my savings account, I'm referencing the budget category that holds that amount. In other words, a bunch of stuff is budgeted in various categories and the remainder is in a "Rainy Day Fund" budget item. So, when I jump ahead by a month and budget for rent, which will be due before I'm paid again, I moved money from the "Rainy Day Fund" to cover this amount. But, when I come back to the present month, "Rainy Day Fund" hasn't been reduced by the amount I moved.
So if RDF has $5K in it today, next month I budget for rent and move $1500 from RDF to cover that amount. In March, RDF shows as $3.5K, but in February it still shows as $5K. If I don't mentally account for the rent next month, I could potentially overspend the RDF because it's not accounting for the incoming bill.
The reason February would still show $5k and it wouldn’t show $3,500 until March is because you moved the money around in March. Not February.
If you want to budget that $1500 to your rent in march and have the RDF show the budget value of $3500 in February, this is How i would do it.
In February, release $1500 from the RDF category to your TO BE BUDGETED category by basically moving $1500 from RDF to TBB. Then the RDF category will show $3500 in February and you will have $1500 in your TBB. Move to March then budget that $1500 in TBB to your rent category. That should take care of what you wanted. February showing only $3500 left in RDF and March rent fully budgeted for.