"Month" rollover and savings
Not sure what subject this one needed, since I'm not entirely sure what I am asking either.. But I am now using ynab for a while, and so far like it. It really helps me organise expenses and income!
There is one thing, however, which I am not sure about.. And this has to do with the "month" rollover, and I intentionally placed it in quotes. The way I now see it, the idea is to budget money once it comes in, but when do I know I have any left over money?
I can't use the month rollover, since my income for the next month is available somewhere around the 20th of the previous month, so I don't have a clear moment in which I can use the "to be budgeted" value to know what is available for savings.
For me, a rollover setting would be great, I can set it to the 20th, which makes it clear what is left over.
One thing I can think of is to have enough budget to budget the entire coming month. Anything to be budgeted at rollover is available for saving, but with quite a lot of expenses at the end of the month, this will take some time...
But I am open to any other suggestions/ideas wrt this topic.
Cornflower Blue Cobra said:
when do I know I have any left over money?
You don't. There is only relative priority. Assign (or reallocate) funds in accordance with the latest priorities and all will be well.
Cornflower Blue Cobra said:
know what is available for savings
Savings is simply delayed spending. You should always be saving for "something". It's a bit of a mind shift, but one that I think will serve you well. Tying categories to concrete things/achievements allow them to be traded off / evaluated pairwise. Which do you want more? That's "priority" in a nutshell.
Whether you move dollars to a savings account is completely separate from "saving". Realistically, you just need to leave enough in checking to support upcoming outflows. The running balance & scheduled transactions makes this trivial to assess.
To dakinemaui's point, you will know over time. Your budget is fluid. You move funds around as needed (Rule 3). If all your category needs are met and you have more to budget, move it to savings categories. If later, you find you're short in a higher priority category, move it there. Over time, your savings categories will grow. That is assuming you have enough funds to cover your basic needs as well as extra for savings. If savings is a priority, then make your savings categories a priority but not at the expense of known expenses.
This is the beauty of a zero sum budget.
I do get what you are saying, and having these goals is not a problem, but that still leaves me with the issue about when to assign it to a goal. Priority wise it would be the lasts goals to assign budget to.
With the current fixed month rollover, this would still imply that I would first need to fully budget the coming months high prio goals, before I can assign the lower prio goals of the current month.
My actual accounts are not a problem, I can easily enough move money around if needed. It is strictly a budgeting question.
I would recommend allocating your payment on the 20th to a "Next Month Income" category. Then you release on the 1st of the month and budget for the next month. Once you have budgeted it all, you will know what you have remaining to fund your savings goals. I would also recommend that you give definition to those goals as stated by others.
By doing it this way, you will also see if you have enough to fully fund the next month with your income. If you need some of the income on the 20th to fund the current month, you can do so by reducing how much has been set aside in your Next Month Income category.
There have been lots of posts on this topic if you search "next month income"
I also get paid in the middle of the month and I agree that the approach Navy Blue Pegasus is suggesting does give you much more clarity with all of this. Or at least it did for me when I moved away from budgeting straight to the next months area and started putting income I didn't need in this month to a holding category. When you get to the point where you have enough money to fund all expenses for an entire month before it starts, it does also give you a way to see better how much you have to put towards savings.
Another thing that has helped me with (among other things) with allocating money to savings more regularly, has been following Nick True's end of month routine. Because YNAB guides you towards budgeting in a month sized junks, the moment when the month rolls over does actually give an ample opportunity to assign some of the money left over in other categories to savings.
It seems you're struggling with when to budget each check, and you are trying to identify TWO sets of priorities (one for each check). (Perhaps more if you get more than 2 checks!) You've hit upon the long-term solution, and as others have said getting ahead to where you can budget month-sized chunks helps a great deal. That's because you touch all categories at the same time. EVERYTHING must fit that income constraint -- yielding a single set of priorities.
You can actually do a similar thing when you're not that far ahead by employing the True Expense concept on a paycheck basis. If you are paid 2x per month, half of monthly expenses is taken out of each check. A non-monthly outflow in 3 months will consume 1/6 of the remaining amount needed, etc.
The point being, you're touching every category every time in an identical fashion. You now must ensure all the paycheck-sized contributions to every category sum up to your single check. Same concept and same advantages as the monthly approach. Yes, you do have to budget the first check without the benefit of Goals, but put the per-check amount in the category name and you can rip through in a couple of minutes.
As you may recall from when you started YNAB, there is a startup period where some things require larger than "nominal" contributions. You'll have to prioritize and some things may have to wait. However, things can soon be split over the nominal timeframes and you can catch up on the things that had to wait. Another option instead of waiting is to temporarily leverage an Emergency Fund or CC float to get you "over the hump", typically a month for most things. (You're not spending more, so it will work out to where you will quickly recover.)
Whether month-sized or paycheck-sized chunks, making the contributions consistent and the total constrained to "fit" that sized chunk is the key to eliminating the timing issue with which you struggle.