(Kind Of) New to YNAB - Best Way to Budget When Paid 2x a Month?

I tried YNAB a couple of years ago and eventually gave up because it didn't do what I thought I wanted at the time, which was budgeting future money I didn't actually have yet. I don't think I really understood the YNAB method back then, but now that I do I'm using it all day every day, all the time, and I love it so far.

However, I want to make sure I'm doing it correctly when budget my salary when I get paid twice per month. I *think* I'm doing it correctly, but please tell me if I'm wrong so I can correct it.

Right now, I go in and set up my budget after my paycheck imports to YNAB, and I budget *only* the money I currently have from that check - NO future budgeting at all. So, even if I have an item that I pay part of with my first check and part of with my second check, I only enter the amount from my first check when my first check hits, and then raise that budget with the amount from my second check when that check hits on the 15th.  I don't add any budget whatsoever to things I know I don't pay until the 15th, until my 15th paycheck hits the bank and is imported into YNAB, such as my car payment. It just sits at zero budget until the money is there and then I add it to the budget, even tho I'm literally making the payment that same day my 15th paycheck hits hah.

Is this correct? Sometimes it's really hard to wrap my head around not planning for my next check before I even have it lol, I guess old habits really do die hard!

I assume once I get to where I'm a full month ahead, I'll be able to just go in and budget everything for the month with last month's money, right? That's the whole point, I know. But for now I just want to make sure how I'm doing this is correct.

Thanks!

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  • I'm rather new to YNAB also, but that's what I do. I just got paid today, so I'm going to budget that money for all the bills that are due before the next paycheck. Then the next paycheck I will budget the rest of the bills. I do have goals set up for things like groceries and bills that I take a little from each check for. I am looking forward to the day when I'm a month ahead and can just budget everything at once. 

    Like 3
    • Green Mask I'm still trying to grasp the concept behind goals and haven't done much with them yet, but that may be my next move. And agreed, totally looking forward to being a full month ahead! Right now my money is 11 days old haha

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  • Yep, I think you're on it. I'm having to wait until I'm a month ahead too. 

    Like 1
    • Ben Khaki Storm I seriously just want to hurry up and get to where I'm a month ahead to make this all so much easier to budget lol

      Like 1
  • You've got it exactly right, except for one thing: You don't need to wait until your paycheck transaction downloads from the bang to start budgeting the money. As long as you check that it was actually deposited, you can start on payday morning rather than wait for Direct Import to catch up.

    Like 3
    • mamster How do I do this? I've tried entering transactions manually when I know it's there in my bank, but then sometimes I end up with what look like duplicate transactions - my manual one plus the imported one. Is there something I need to be doing differently? Thanks!

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    • mamster Also, how does this work if, for example, my 1st of the month paycheck is deposited on the last day of the previous month (like today, Feb 28). If I add it as a manual transaction, won't it go into the "February Budget" instead of March? Ugh I still have a lot to learn, I know.

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      • mamster
      • mamster
      • 2 yrs ago
      • 1
      • Reported - view

      Spring Green Horn If you receive money in February, you can budget that money in March, by just advancing to the next month in YNAB.

      When your transaction downloads, if it doesn't match automatically you can select both transactions (the one you entered and the downloaded one) and click Edit (at the top of the transaction list) | Match. But if the amount is the same, they should almost definitely match automatically.

      Like 1
  •  waiting also, here, to be caught up so I'm a month ahead. But to answer your question, yes, you're doing it right for how you're paid. 

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    • Bruce Thank you!!

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  • Yes and, because I hate having half funded budget items, I divide up my budget by week. Week 1 has the bills that came out (mortgage), and also Groceries #1.

    Week 2 has its monthly bills, and Groceries #2.

    Etc.

    Like 1
    •  Alia Gee So, you enter separate budget items for groceries 1, groceries 2, etc? That may actually be really helpful. Thanks!

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    • Alia Gee For now I just have a single groceries budget, and on the 1st when I get paid, I budget the portion of that check to that budget, and then when my check hits on the 15th, I increase that budget by x amount, rather than, say, putting $800 for the month and looking like it's underfunded until my second check on the 15th, if that makes sense. :)

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  • Spring Green Horn said:
    I don't add any budget whatsoever to things I know I don't pay until the 15th, until my 15th paycheck hits the bank

    Everything you said is aligned with the methodology. However, you will never get "ahead" this way, specifically because of the part I quoted.

    In order to get ahead, you need to put part of your first check toward things you would ordinarily budget with your second check. Or you need to put part of your second check toward things you would ordinarily budget with your first check. Or both.

    If you have $100 from your first check that isn't "consumed" by first-check categories, you can put that toward a second-check category to get a head start. When check 2 arrives -- even if it would normally be entirely consumed by check 2 categories -- you will have at least $100 left over after all check 2 categories are filled that you can put toward the next set of first-check categories.

    When you get your next first check, it is $100 more than the categories it normally would cover PLUS those categories already have a $100 headstart. Thus, can put $200 toward check 2 categories and then $200 toward the following month's check 1 categories. . Category by category, you get ahead.

    Like 4
  • TBH, I dislike the gradually budget anead approach I described earlier because budget amounts from a given check will change from month to month. You're far more likely to make a mistake with an inconsistent process.

    Instead, I think the old-school approach that used to be taught is still the superior method. In order to get ahead, you need to save. You're used to saving. You do it all the time. Just put money in a category and it's saved.

    So that $100 extra from your first check (example in previous post)? Put it in a category called Transition to Monthly. Budget check 1 categories as you already do (and none of that money to check 2 categories). (If you're intentionally splitting a large expense over both checks, that's still fine.) Next month, put another $100 into the category. Easy and your plan is laid out on a single screen (no flipping between months). You do the same thing with your checks each month.

    At some point, you have enough in the transition category. To transition to monthly operation, you move all that money to TBB and budget the rest of the month (the things your first and second checks would normally cover).

    How much is "enough"? Take your normal income and subtract off any outflows incurred between the beginning of the month and when you receive your first check. That's enough. Income of $5k, with $3k mortgage and $500 miscellaneous expenses in the first part of the month before your check arriving on the 15th? You need 5000 - 3500 = $1500.

    If getting off this piecemeal/paycheck-to-paycheck budgeting style is important to you, then make this transition a priority. Pick a date, set a goal, and work toward it just like any other category in your budget.

    Notice when you released the transition category, it covered the rest of the month. This means you don't need your checks this month at all. Rename that Transition category to Income Next Month and stash check 1 in there. When check 2 arrives, stash it in there. When your interest, etc. posts, stash it in there. At the end of the month, you empty that category containing an entire month's worth of money, change to the new month's area and budget it all at once. Using Goals, you can do this in a couple clicks.

    Incidentally, this last part (Income Next Month) works even if you get to this month ahead point by budgeting increasingly to the future.

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      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 2 yrs ago
      • 1
      • Reported - view

      dakinemaui This is timely! I recently switched from (under)paid weekly to getting paid twice a month and I've been trying to figure out how to "get ahead" without the benefit of a 3rd/5th-paycheck month. 

      Like 1
    • Vibrant The good news is you should be getting more per month (because 2/24 is more than 2/26) assuming your salary hasn't changed (only the pay dates). Good luck with it all!

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    • dakinemaui Interesting! Thank you! I'll have to give that method a try. As of now, I have set up some goals in budgets I know are recurring, and my goals are all a bit higher than what I actually need for that expense. My plan was to use that as a way to kind of build up to my 30 days ahead goal, by adding more per budget than I'm going to actually spend. What you've described seems like it may be a bit more simple, though. My only worry, because I know how I am, is that when I want to go to dinner or whatever and see I don't have the budget for it, I'm highly likely to tap into my transition category much too often haha. But that's more about self control than anything, which I'm working on. :)

      Like 3
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