Bringing goals back into the picture: once you know  that, say, you need to plan for $1000 for Christmas, you can set a goal to ask for $1000 by December.  But goals are intended to help you allocate money; they're not really for helping you do a traditional style budget. 

Pink Boa said:
First, plan how much money of my month income to spend on different categories.  Second, track how much I am actually spending, so that I can avoid overspending on any particular category.

This is exactly what YNAB will do for you. Embrace the method. Study the first three rules. It will change your life. Goals are relatively new to YNAB and are just an enhancement to the method.

The main difference between traditional budgets and YNAB is that you only budget funds you have right now. You budget a paycheck at a time until you've gotten a month ahead. You don't budget a month at a time unless you have the funds to do that.

Are you paid once per month or do you have multiple income arrivals?

Allocating money to categories IS establishing the plan. The subtle difference is it's making a plan for money you can actually spend right now, rather than what you expect to receive.

You do consider expected income when making plans for what you have. For example, assume fully funding the $1200 car insurance bill that's due in 6 months is possible out of what you just received, but doing so obviously leaves less available for other spending now. If you believe your income will be consistent, a better option is to fund $200 from what you have now -- allowing $1000 to be put toward other things now.

Duncan said:
I know I have a car payment of $593 that I will have to pay every month

You should make categories for everything you want to spend money on at some point, including car payment and beer. Assuming you are paid monthly for what follows...

When you get a paycheck, all of it is shown in the To Be Budgeted value (TBB) at the top. Consider which category is most important to increase now. Assuming the car payment is more important, allocate enough to cover that bill. Consider what of the remaining things is most important to fund now and fund it, reducing TBB. Etc. At some point, either beer will be the most important thing left (and gets funded) or TBB will be $0.

If the latter, then you simply cannot afford beer AND all the previously allocated (planned) spending/saving. You either do without beer OR you adjust the plan for something else that was already funded.

The Goals in YNAB are just to remind you what things cost and fill in budget entries quickly. It is the priority examination, actual allocation, and staying within the constraint of what you can spend now that is the important part.

Are you on the desktop version of the program? If you’re using that you can check the boxes for every category you want to fund, and on the side they will be in underfunded amount. This is the amount you have yet to budget toward your goals. Which if you havent budgeted to anything, it would be the total of your goals amount

Duncan said:
I have about $100K in liquid funds, [...] But I'm not sure what that has to do with my question

Because it will allow you to plan in month-sized chunks. If all of this month is already covered from startup capital, then you can apply all of this months income (regardless of when during the month it arrives) to next months plan/budget.

How much of that startup money is needed to allow that to happen depends on your expense and income timing. Expenses incurred before you are paid obviously need to be funded out of startup money. Using some of it to cover expenses between your payday and the end of the month aligns the planning process with the expense recurrence cycle and the calendar boundaries. If you are paid on the last day of the month, there's zero startup capital required to do that. Being paid earlier may require more. 

The bottom line is things are much easier if you can budget (plan) in month-sized chunks. Given your startup capital, that will likely not be a problem.

The question you wanna ask when budgeting with YNAB is “what does the money that I have now need to do before I get paid again?”. Think of it as envelope budgeting where was the money in your envelope (categories) runs out, that’s all you have.

By setting goals for each category especially for monthly bills, do you know how much more do you need to put in that category to meet that goal each month. say I have a bill that’s $200, but I can only cover $100 this paycheck. It will be yellow until I am able to put the extra $100 in it then that goal will turn green, and my category has enough money in it to pay that bill. 

Getting started in YNAB 

https://m.youtube.com/watch?v=xPVEB759gkU

Duncan this recording of a YNAB workshop should answer a lot of your questions: https://www.youtube.com/watch?v=C9JJY9gIVOw

If you are trying to make the way you budget work in YNAB, YNAB software is not for you. If you want to try using YNAB's budgeting method to improve your financial life, then you need to use YNAB's budget method, which is what the software is designed to support.

There are a lot of us who were doing well before using YNAB, but are doing even better because we use it. Don't be afraid of trying something new and different.

Just my two cents.

I have an excel spreadsheet with the majority of my categories. In the spreadsheet is where I do a more traditional budget with my regularly expected income. This helps me figure out how I will allocate my money before I go into YNAB at the beginning of the month. I am the aware the goals feature could probably accomplish the same thing but I found them to be too clunky. 
I don’t include any variable money in this plan - tax refunds, cash gifts, interest payments, annual bonus. Those I just budget into categories that I feel are my top priorities at the time I receive it. 
This method has served me well since I joined YNABin September. And I have had a couple things happen recently (20% pay reduction) that this method has allowed me to make a plan before It was time to budget the money.

For me this method allows me to plan ahead but adhere to budgeting only money I have and rolling with the punches. I don’t reconcile anything back to my spreadsheet based on what actually happened that month. But I do use YNAB to help inform if I should consider making any adjustments to the excel budget category amounts.

Duncan said:
First, plan how much money of my month income to spend on different categories.  Second, track how much I am actually spending, so that I can avoid overspending on any particular category.
That's what a "budget" means to me.  However, I'm beginning to realize that's not necessarily what it means in YNAB.  And I'm not sure YNAB is able to do it.

 You are mistaken. That is exactly  what it is for.

When figuring out the nominal values to budget when money arrives (e.g., the Goal amounts), most people try to constrain the total to within the monthly expected income. Unfortunately, this complicates things when you are not paid once per month. As such, I find it easier to use Rule 2 on a paycheck basis to budget a consistent portion toward all categories.

Indeed, you already know you are living within your means since you stop budgeting when TBB is $0 (assuming any overspending is covered, of course).