Rolling over spending into the next month
I was just looking at my budget, and I can't figure out if there is a way to do this or not. I thought there was, but I'm not seeing it.
If I over spend in a category this month, but know that I'm going to get paid for something next month, I'd like that over spending to show up in my next month's budget. This would be spending on a credit card, so it's not going to put me over budget in cash flow. Is there a way to have that over spending roll over to next month?
Overspending does not stay within the category into the next month.
Overspending in cash comes out of your TBB in the next month.
Overspending on a credit card does not transfer the spending to your credit card payment available, implicitly increasing your credit card debt.
The money's gotta come from somewhere. In real life, you can't pay for something with an IOU in a zero-sum system. You should correct for the overspending now and then make adjustments to next month's plan to correct for the changes you make now.
YNAB is not about "cash-flow", it's about reality of your financial state at THIS moment in time. I mean, cash-flow in a traditional sense is essentially stealing money that you intended to use on Expense A to pay Expense B and hoping you don't get caught with your shorts down. In your particular case, you simply have a temporary debt increase.
Categorize the inflow back to the same category (so total spending = $0) and reallocate for debt reduction. (Move funds from that now higher category to the CC Payment category.)
Hi farfromtheusual !
Only positive amounts in your categories will roll over into the next month. Negative amounts will not. What happens to those overspending amounts depends on whether the overspending was with cash or credit.
- If cash, that amount will be deducted from To be Budgeted in the new month.
- If credit, the overspent amount will be represented as an increased balance on your credit card account.
The option to carry that negative from month to month was allowed in YNAB 4 but we did away with that option because we wanted to keep your budget honest. When there are negatives in your budget, you can't trust the amounts you're seeing.
Faness Thanks for your reply.
While I understand YNAB's stance on this, it makes it difficult when you KNOW there will be money coming in from somewhere, but it crosses over the month date marker, which is arbitrary anyway.
This isn't a situation that I'm making a habit of, but it happens once in a while, and it would be far easier to track it if YNAB allowed for the option to roll the over spending across the month. Most credit cards aren't even due on the 1st anyway, so the date as a marker that doesn't coincide with anything.
As it is, I feel like it's easier to "hide" the debt if you're over spending on a credit card by having the debt not roll into the next month. If it's credit card spending and you over spend in a category, then the category ends up at zero when the month changes, and that means you have to consciously go apply extra funds to the credit card in order to not accrue additional debt on the card. It's way easier to ignore the debt on the card and add new funds the categories with the next income in the new month. It's essentially a free pass to start over with your categories, while the debt hides over on the accounts column.
It would be helpful if this is a feature that could be turned on or off for specific categories.
Hopefully Jesse Mecham can work on some options to improve the system even more.
This seems like a major oversight. I have regular business expenses that I'm responsible to cover and commonly have to wait 6 weeks or more to see that money come back through reimbursement. In the current system I have no way to track the balance of my work spending/reimbursements over time to check how much I am owed. Without this information it nearly impossible to make sense of how much I'm saving.
I am in the same boat for work travel. Although my reimbursements are quicker they can still fall into the next calendar month. I log it as a debt when incurred and allow myself to be overspent that month, then allocate it to the debt when reimbursed. It is not perfect, and I wish there was a better way.
This problem is frustrating to me. I have budgeted a specific amount in each category for each month, based on annual income. For example, $500/month for family vacation. I paid for a $2,000 (for example) vacation on the CC. I wish YNAB would just show this category as a negative $1,500 in the current month and carry that over so that in month 2 there is negative $1,000. That way, I can see exactly how I am doing against my planned spending. I have cash available to cover the whole thing now but if I do that, I have to keep track, month to month of how much I didn't spend of that yearly plan to get back to where I wanted to be. This is doable but it is not easy. Am I really missing the boat here and not understanding? I don't want to cover it now and have to manually keep track of how much I was over and then manually adjust every month until I catch up? Again, I have enough cash that I could allocate it to Vacation and cover it but then I'll have to figure out, every month where I stand on my original targeted annual spend rate.
Further more, the current setup seems dangerously misleading. If I don't cover the budget this month it will show us negative $1500 and next month my budget will say I have $500 available again. This could mislead a lot of people because they may not remember that they overspent the previous month. I've seen lots of justification for this but I'm wondering if it has more to do with the way YNAB handles CC and a limitation in the software's ability to handle this. If I paid with an all cash account, this would work exactly the way I want it to correct? Please fix this or tell me what I'm doing wrong.
Slate Blue Hail said:
I can have lots more money in "to be budgeted" than I have summed up in my categories.
Not if you're following the YNAB rules... Rule #1. Give EVERY dollar a job. To Be Budgeted is not a job. You need to stick them into categories. If you have extra, create some "savings" categories and stick the remainder in there. True Expenses, like Car Repairs, biannual insurance payments, health care expenses, etc. Those dollars should not be sitting in your TBB. Give them a job.
Slate Blue Hail said:
I realize that this might not be how YNAB was designed
This is the answer. Can't really add much to this. YNAB is a specific budgeting system. It's not designed the way you are trying to use it. So either you need to conform to how it works or you should use a different tool that works with what you want to do.
The difference is that I set aside the average before it is needed, not after the fact.
That's exactly what I do. When we had to cancel our Disney vacation last year, I continued saving my average Vacation amount each month, and by this Feb. we sure had a nice healthy balance where I could even afford some really nice extra souvenirs and meals. Thankfully, nothing got overspent, but if it did (like in many years past :( ) , I cover it from a lower priority. It's so simple. I don't know why people start YNAB and then blow up their whole budget in nearly an instant.
I will also add that in the olden days you COULD roll negative balances forward (the famous red arrow) and "pay yourself back." I did it with everything from restaurants to the electric bill. I considered myself very responsible and thought I was holding myself accountable to my overspending in the next month. Shyeah, right. Six months later, and half my categories were in the red, bleeding out my so-called buffer, until I was trying to catch up with myself every month and having no clue how much I actually had for the most important monthly priorities. I don't consider myself an idiot who just didn't know what I was doing, but the system was inadvertently reinforcing some bad habits. That's why YNAB it is the way it is now. It took me maybe 3 months, 6 years ago, to adjust to a different way of doing things and my budget has never been healthier.
I started using YNAB4 back in 2014 and I wanted to use averages both in budgeting and controlling my spending. I had been budgeting for years, so I already had a very good sense on what I spent, on average, in most of my categories (or I thought I did), so I wanted to budget those average amounts, and I wanted to spend no more than those average amounts each month.
I mean, I'm not stupid. I know how averages are calculated -- from adding highs and lows and then dividing by total of entries -- and how an average may have no bearing on today's actual numbers, so I'm not quite sure what my hang up on using averages in my budgeting and spending came down to. I do know that letting go of that obsession took effort and a leap in faith I wasn't ready to initially concede. I was also not satisfied with my old financial methods and seeking something better, so I was willing to at least give another method an honest trial.
I actually ran YNAB separately beside my other budgeting method for about three months, updating both daily. In YNAB, instead of trying to implement hacks to make it match what I was already doing, I put it through its honest paces using real-time numbers. Initially, I updated my old system first then YNAB. After about a month, I found myself updating YNAB first, then my old system. By the second month I was turning to YNAB for more accurate allocation and spending analysis because the actuals were more relevant to me in calculating how much was really left in the current month to invest, save for something special, or pay on debt. By the end of the third month, I noticed that regardless of how much I actually budgeted and spent each month, the average of how much I spent/needed in each category was beginning to close in on what I'd been trying to budget from day 1, at least in most categories. There were a few that were startlingly way off what I thought I spent and needed, and for the first time I could see why my previous budgeting method wasn't successful and why I was always borrowing from my future spending in those categories.
My take-away: averages are the end result that show up in reports; there is no such thing as an average month.
I may just have to increase the budget this month and then let the categories accrue as normal. I do like the system and it's the easiest I've found for managing categories like this and keeping track of everything. I still disagree with the statements about looking at categories differently if they are paid with a CC or a Cash account. The type of card the funds are paid with should be irrelevant. 100 dollars spent on groceries is the same whether I pay with cash or a credit card, in either case I've spent $100 dollars. The difference only appears if I've spent $100 that I don't have in which case it is a debt that I don't have money to pay back but if people are using YNAB correctly I think they will now if they are getting into that situation. Net worth, available assets are already reported separately. Regardless, I think it's important that there isn't one right way to do this and YNAB is certainly a good system that has helped a lot of people. Also, I'm also shocked at how active this forum is.