Bills due on the 1st w/ irregular pay cycles
Greetings! I am a former YNAB 4 user who, years and years and (oh man) years ago started using YNAB and was just starting to see it successfully help me achieve my financial goals when major life events occurred and I was derailed (and, I'll admit it, lazy) until now. I am desperate and highly motivated to get myself financially on track again.
Unfortunately, unlike last time I was using YNAB, I find myself in a "living paycheck to paycheck" cycle, instead of having my full month of money available to budget on the first of the month. Enter my issue as I try out the new YNAB.
I added all my accounts, and it imported my current checking account balance. Cool. I budgeted that money out, knowing I will be paid tomorrow (my first of two paychecks this month). This happens every month. My first check is not until the 4th or 5th of the month. But . . . I have several bills that are due on the 1st. I read the tutorial in the new YNAB as I was setting it up, about how to think of budgeting using the YNAB system. That one should input income as it comes in, budget that money toward what you need it for until the next paycheck arrives, then rinse and repeat with the next paycheck, whenever that is. Cool. Also, about setting up goals for big spending down the road, or categories that get paid at non-monthly intervals. I even set some of those up. Awesome.
Here is my issue . . . my paychecks arrive on the 4th and around the 20-21st each month from my employer. From what I can tell from playing around on YNAB today, when I input income I get paid in May, it's going to tell me to budget all that money to May expenses. But ... I currently need some of that money from the paycheck on the 20-21st to go toward the next month (since I don't have a buffer built up where all my money for the necessities is sitting there on the 1st). I cannot seem to wrap my head around what I need to do to address this issue, either by using YNAB to build up my buffer, so when the calendar rolls into June (or any hypothetical next month) I have a balance sitting there to budget that matches all necessities for June (including those 1st of the month bills) and maybe some extra for things like savings or vacation or debt snowball, OR how to tell YNAB to put some of the 2nd paycheck of the month toward the next month's budget, OR will it roll over into June if I just don't budget it for May?
I know I had a similar issue years ago before I had my full month of expenses built up, and I know I fixed it. I know I did. But it may have been from factors that I no longer have available, like bonus money or mooching off my parents for a month or I dunno it was so long ago ... or it may have been that YNAB 4 allowed me to do something with future planning which I am not seeing in the new YNAB.
I am totally down with trying to get my budgeting back into the YNAB system, because I remember that feeling of happiness and success last time I used it and had the buffer built up and was SO IN CONTROL OF MY MONEY I WAS SO HAPPY. I want that again. But I need some help! And I tried for hours now to find a thread on how to address my issue and I'm just not finding it. Or I need to have a conversation with someone about my particulars to make this work in my confused mind.
HELP! Please! AND THANK YOU!
The new YNAB encourages you to budget in the future. If you receive income during May that you know should go toward June expenses, then jump ahead into the June budget and allocate that money over there. Just keep budgeting until your "To Be Budgeted" balance reaches 0.
The big "gotcha" is that, once you've budgeted money into a future month, you need to be careful about "stealing from the future." Basically, the "To Be Budgeted" balance displayed at the top of your May budget won't be reliable anymore; you'll need to look at your June budget to make sure you haven't accidentally over-budgeted.
Alternatively, if you don't want to deal with the hassles of budgeting directly into future months, you could temporarily budget those funds you know you'll need for June into a category of some sort (e.g. "Income for Next Month"). When the month rolls over, you could redistribute those funds however you like.
Yet another option is to sufficiently "buffer" your May budget categories and allow the excess to carryover. E.g. if you know that some of your May income will be needed for a rent payment in early June, you could go ahead and budget that money in your May "rent" category and (as long as you don't spend it) the positive category balance will rollover into June. I'm not a big fan of this approach, however, because it means you can't rely on your category balances to guide your spending decisions -- you have to remind yourself that some of the money in your May budget is actually meant to be reserved / not-spent. I find it cleaner to keep that money separate (either in a future budget or in an explicit category.)Reply
Hi Gossamer_8 !
I'm so glad you're back on the YNAB wagon! You'll be back in control of things in no time. 😊
The YNAB Method will work with any pay schedule, and I think this is where YNAB shines the brightest! If you have a few minutes (five, to be exact!), watch this Whiteboard Wednesday episode for more info.
With YNAB, it’s not only about the calendar, it’s about the method. What you do when you’re paid is more important than the date itself. Just use these three steps:
- Record your income.
- Give those dollars a job. Ask yourself, “What does this money need to do before I’m paid again?”. Do you have an Immediate Obligation that needs to be taken care of before your next payday? Budget money there. If you have extra, budget towards your True Expenses.
- Spend. Don’t forget to check your category balances first! :)
Wash, rinse, and repeat! Once you get into that rhythm, you’ll notice how it’s not about the calendar, the pay period, etc. You’ll see that it comes right back down to those three steps, and that one very important question: “What does this money need to do before I’m paid again?”. Once you get in the habit of asking yourself that when you have money to budget, you'll notice that as you go, all this prioritizing will naturally create a longer delay between when you receive money and when you spend it. As your money ages, you'll be able to budget the money you receive this month for next month.
Anyway, to jump in to YNAB again with both feet, I recommend taking a workshop or two! A great place to start is with the “Learn the Four Rules” one. 😊Reply